Individual Responsibility : How FDA Determines Who to Hold Accountable for Violations AOAC Southern California Section M

1. Individual Responsibility:How FDA Determines Who to Hold Accountable for ViolationsAOAC Southern California Section MeetingDecember 4 & 5, 2008 David L. Chesney, Vice President, Strategic Compliance Services PAREXEL Consulting, Lowell, Massachusetts +1-978-848-2256 dave.chesney@parexel.com

2. Objectives • Explain “strict liability” aspect of the Federal Food, Drug and Cosmetic Act • Highlight the importance FDA places on individual (personal) responsibility for the acts of corporations • Explain techniques FDA uses to develop evidence of individual responsibility • Point out pitfalls to avoid

3. Strict Liability:What Every Pharmaceutical Executive Should Know • The FD&C Act is a strict liability statute; this means: • To charge a company or individual with a violation, FDA does not have to show that the person intended to violate the Act • Two Supreme Court Cases: U.S. v.Dotterweich and U.S. v.Park

4. Chapter One: The Dotterweich Case • U.S. v. Buffalo Pharmacal, Inc. and Joseph H. Dotterweich, President and General Manager • US Supreme Court ruling in 1943 – before the GMP requirement was in the law • Interstate shipment of misbranded drug products • Dotterweich tried to avoid personal responsibility on several grounds • He lost at the Supreme Court, 5-4 (split decision)

5. The Dotterweich Case U.S. Supreme Court [320 U.S. 277, 284 (1943)]: “The prosecution to which Dotterweich was subjected is based on a now familiar type of legislation whereby penalties serve as effective means of regulation. Such legislation dispenses with the conventional requirement for criminal conduct: Awareness of some wrongdoing. In the interest of the larger good it puts the burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger.” “The Act makes any person who violates (it) guilty of a misdemeanor. It specifically defines ‘person’ to include ‘corporation’. But the only way a corporation can act is through the individuals who act on its behalf.”

6. The Dotterweich Case • Addressing the question of whether strict liability is a fair standard: • “Hardship there doubtless may be under a statute which thus penalizes the transaction though consciousness of wrong-doing be totally wanting. Balancing relative hardships, Congress has preferred to place it upon those who have at least the opportunity of informing themselves of the existence of conditions imposed for the protection of consumers before sharing in illicit commerce, rather than to throw the hazard on the innocent public who are wholly helpless.”

7. Chapter Two: The Park Case • 1975 Supreme Court Case, U.S. v. Acme Markets, Inc., and John R. Park, President • Filthy food warehouse in Baltimore • Track record of continuing violations despite repeated warnings • Park’s primary excuses: • It wasn’t me; I delegated responsibility • My subordinates were “dependable”; I had “great confidence in them” • The jury was not properly instructed in how to apply strict liability • He lost at the Supreme Court, 6-3 (no more split decision on strict liability; no one has challenged it since)

8. The Park Case • U.S. v. Park, 1975:“The Act imposes not only a positive duty to seek out and remedy violations when they occur but also, and primarily, a duty to implement measures that will ensure that violations will not occur.” “The requirements of foresight and vigilance imposed on responsible corporate agents are beyond question demanding and even onerous, but they are no more stringent than the public has the right to expect…We are satisfied that the Act imposes the highest standard of care and permits conviction of responsible corporate officials, who in light of this standard of care, have the power to prevent or correct violations”

9. GMP Reference Related to Strict Liability Doctrine • 21 CFR 210.1(b): “The failure to comply with any regulation set forth in this part and in Parts 211…shall render such drug to be adulterated…and such drug, as well as the person who is responsible for the failure to comply, shall be subject to regulatory action.” • The word "person" is defined in section 201(e) of the FD&C Act to include corporations and partnerships as well as individuals.

10. Enforcement Actions • Warning Letters are usually addressed to the President and CEO of a company • Consent Decrees and Criminal Prosecutions typically name individuals in addition to the corporation • The FDA Investigator’s job includes development of evidence as to whom to charge in any regulatory action that results from the inspection

11. FDA Instructions to Investigators and Compliance Officers • “The identification of those responsible for violations is a critical part of the inspection, and as important as determining and documenting the violations themselves. Responsibility must be determined to identify those persons to hold accountable for violations, and with whom the agency must deal to seek lasting corrections.”--FDA Investigations Operations Manual, Section 5.3.6

12. FDA Instructions to Investigators and Compliance Officers • “In every case, carefully consider citing* individuals. Prior warning is a prerequisite except where the violation involves a danger to health, fraud, or where the violation is extremely gross. “It is FDA policy to cite* officers of corporations and members of partnerships and associations, when the available evidence establishes that the individual stood in a ‘responsible relationship’ to the violation. As the U.S. Supreme Court stated in U.S. v. Park: ‘The Act imposes not only a positive duty to seek out and remedy violations when they occur but also, and primarily, a duty to implement measures that will insure that violations will not occur.’“Persons who have the power and authority, and therefore the responsibility, to carry out these duties and fail to do so, are logical candidates for citation*.”--FDA Regulatory Procedures Manual • *Although this reference is specifically to citation under Section 305 of the Act as a predicate to possible filing of criminal charges, the principle illustrated by these instructions illustrates the FDA’s general position on individual responsibility.

13. FDA Instructions to Investigators and Compliance Officers • “Duty - An obligation required by one's position; a moral or legal obligation. • “Power - Possession of the right or ability to wield force or influence to produce an effect. • “Responsibility - An individual who has the duty and power to act is a responsible person. • “Three key points to consider are: • “Who had the duty and power to detect the violation? • “Who had the duty and power to prevent the violation? • “Who had the duty and power to correct the violation?” --FDA Investigations Operations Manual, Section 5.3.6.1

14. Reminder Card RESPONSIBILITY DETECT PREVENT CORRECT DUTY POWER

15. How FDA Documents Individual Responsibility • “Obtain the correct name and correct title of all corporate officers or company officials. Obtain pertinent educational and experience backgrounds, and the duties and powers of the officers and employees in key managerial, production, control, and sanitation positions. Ascertain the experience and training of supervisory personnel, in terms that will describe their qualifications to carry out their responsibilities.” -FDA Investigations Operations Manual • Investigators may ask questions about such things as… • The person’s general responsibility • Their number and type of direct reports • To whom they report • Limits on their authority to act without higher approval, e.g.: • To make capital expenditures • To stop production • To hire, discipline or terminate employees • To release product to next stage of production

16. How FDA Documents Individual Responsibility • “In order to establish relationships between violative conditions and responsible individuals, the following types of information, would be useful: • “Who knew of conditions? • “Who should have known of the conditions because of their specific or overall duties and positions? • “Who had the duty and power to prevent or detect the conditions, or to see they were prevented or detected? • “Who had the duty and power to correct the conditions, or to see they were corrected? What was done after person(s) learned of the conditions? Upon whose authority and instructions (be specific)? • “What orders were issued (When, by whom, to whom, on whose authority and instructions)? • “What follow-up was done to see if orders were carried out (when; by whom; on whose authority and instructions)? • “Who decided corrections were or were not complete and satisfactory? • “What funding, new equipment, new procedures were requested, authorized or denied in relation to the conditions; who made the requests, authorizations, or denials.” --FDA Investigations Operations Manual

17. How FDA Documents Individual Responsibility • Investigators may determine what others say about… • Who is in overall charge • Whose approval is needed to make expenditures or institute changes • “What the organization chart says” versus “What real life is like” • How issues are escalated, and who can (and does) overrule whom • A good Investigator will consider such statements to be leads requiring corroboration, and will pursue documented evidence to support what is learned from oral statements

18. How FDA Documents Individual Responsibility • Investigators observe the activities and behavior of company personnel during the inspection • Who issues orders, to whom, and how do people react? • Who takes the lead on discussions with the agency? • Who makes commitments about corrective action? • Who is present in the facility, and who demonstrates understanding of the equipment, process, and issues? • Who supervises staff, and how to supervisors monitor staff performance?

19. How FDA Documents Individual Responsibility • Investigators may request documents that formally establish aspects of individual responsibility, for example… • Organization charts • Unit charters / Team charters • Job descriptions • SOP contents • Types of documents you sign and meaning of your signature

20. How FDA Documents Individual Responsibility • Investigators may request other documents that help to clarify the extent of individual responsibility, for example… • Opinions expressed in writing in investigation reports • Posted memoranda to staff • Notes to the file with recommendations or decisions • External communications to FDA, vendors, etc. • Quality agreements and other contractual documents • Emails

21. How FDA Documents Individual Responsibility • Affidavits prepared by FDA Investigators • Mainly used to document the connection with interstate commerce needed to establish Federal jurisdiction • Sometimes Investigators “slip in” admissions of responsibility • Most companies have a policy not to read, sign, or have FDA affidavits read to them, but some do sign after review and approval by legal counsel

22. Standard FDA Affidavit (example from FDA’s “IOM” as published on the web site) In this section, FDA is “qualifying the affiant”, that is, explaining how she/he comes by the knowledge attested to in the affidavit. This is sometimes expanded beyond what is shown here to say something like “I am have held this position for __ years. In this capacity I am responsible for…”

23. Even After the Inspection is Over… • “In some circumstances, documenting of individual responsibility requires investigative techniques that lead to sources outside the firm. These sources may include contractors, consultants, pest control or sanitation services, local health officials and others. Copies of documents between the firm and outside parties may help establish responsibilities. Do not overlook state officials as another possible source of information in selected cases.”--FDA Investigations Operations Manual • This once again points out the importance that FDA places on this topic

24. Pitfalls to Avoid • The bottom line is, you cannot avoid responsibility resulting from your exposure under strict liability, and your answers to FDA’s questions must be truthful • Bearing that in mind, here are some things to watch out for: • Do not misrepresent the extent of your authority • Do not admit that a condition or practice represents a “violation” of GMP; avoid terms that condemn your actions or those of your company or your colleagues • Do not provide FDA with documents that exceed the scope of the agency’s inspection authority; if FDA requests something you are not certain you should release, do not refuse, but clear the request with your management and/or legal counsel before you provide it

25. Pitfalls to Avoid • Insist that FDA obtain copies of documents only through channels established by your company for the management of inspections • Do not leave sensitive documents FDA has no right to see in plain sight, such as personnel data (other than data as to qualifications of technical and professional personnel performing functions subject to the FDA’s jurisdiction) • Do not sign, read, or agree to the content of FDA affidavits unless cleared by your management and legal counsel (counsel may decide that it is ok; practices do vary on this, so be guided by your company’s policy) • Do not fix blame on others; you may not have all the facts • Be certain everyone in your organization understands their personal responsibility and authority

26. Summary • The FD&C Act is a strict liability statute • FDA takes the position that corporations act through the actions of individuals • Part of an FDA Investigator’s job is to document individual responsibility for violations noted during an inspection • It is incumbent upon industry to understand this aspect of FDA inspections, and to prepare for and manage it as part of the overall approach to managing FDA inspections

27. Summary • The FDA uses observation, inquiry and documentation to develop evidence of responsibility, just as it does for violations • Companies must understand and respect FDA inspection authority; FDA, for its part, must “play by the rules” and should not overstep its legitimate authority • Company personnel should understand this aspect of the FDA’s job, and not interpret questions about their responsibility and authority as personal attacks; the FDA Investigator is just doing a job