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Jan 14, 2016

Do You Really Want to Be An Executive In An FDA-Regulated Company?



If you don't want a visit from the 
Department of Justice, pay attention 
to the new enforcement policies 
the DOJ is following.

by James R. Phelps 

Hyman Phelps & McNamara, P.C


Reprinted with permission.  First appeared October 22, 2015 in FDA Law Blog.

Last Thursday, at the 16th Pharmaceutical Compliance Congress and Best Practices Forum, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division, Benjamin Mizer, reviewed enforcement policies that the Department of Justice will follow.  Appropriate to the forum, he focused on the industries regulated by FDA.  The emphasis he gave to the requirements for settling civil and criminal cases brought against organizations gives sharp focus to the problem of doing business when governed by a law that operates with a malum prohibitum standard of liability, a law that permits findings of criminal guilt without proof of intent or guilty knowledge.


If an organization wishes to settle a criminal or civil case, in order to receive credit for cooperation and therefore a reduced penalty, the DOJ will require that organization “…to identify all individuals involved in the wrongdoing, regardless of the individual’s position or seniority in the company.  This includes providing all relevant facts about the individual’s misconduct.”   Mr. Mizer was clear to say that failure to provide this information means no partial credit will be given; in other words, that would be a failure to cooperate that would be brought to the attention of the court. 

Mr. Mizer said investigations would, for criminal and civil cases, from the outset focus on individuals.


This article is related to the Whitepaper: 21 CFR Part 11 Industry Overview - Ready for an FDA Inspection?. To get the full details, please download your free copy.


Individuals in FDA-regulated business who stand in what is considered to be a “responsible relation” to a violative activity can be held liable in the absence of intent or actual knowledge of that activity.  In practice, operating under this standard, the DOJ and FDA have charged presidents of companies when the violation occurred at the other end of the country, and plant managers whose plant did the physical production of a product that had a design flaw – unknown to him – caused by faulty engineering designs in another part of the country.  In short, what is a responsible relation depends pretty much on what a prosecutor decides and just about anyone, from top to bottom in the executive suites, who had an association with an activity deemed violative, is at risk.

In the past, DOJ and FDA personnel have said they would only pursue a criminal case when some real wrongdoing was involved.  Of course, the DOJ and FDA personnel leave it to themselves to decide what is the ‘wrongdoing’ that merits prosecution, and they know that, at a trial, the judge will give the jury instruction that criminal intent or knowledge is not necessary for conviction.  So as a practical matter, there is a very slim protection against the effect of the malum prohibitum standard.

The effect of the DOJ policy is, then, that in civil and criminal litigation, to be “cooperative” and avoid being labeled “uncooperative,” an organization must identify an array of potential defendants for the prosecutors to select.  When there is deliberate criminality or palpable negligence, corporations and most organizations are responsible to separate themselves from such people, so identifying the perpetrators could be reasonable.  However, the experience in the FDA-regulated industry is that most of the problems arise when people simply cannot anticipate adverse things that occur because of unforeseen issues of design, manufacture, or use of their products; subjecting personnel to risk of criminal prosecution in these circumstances is unfair.

The Supreme Court read the malum prohibitum standard into the Federal Food, Drug, and Cosmetic Act in the 1940s.  The DOJ and FDA have enjoyed the power it gave them, and have successfully defeated any effort by legislation or litigation to ameliorate that standard. The DOJ policy provides – promotes – a process to give the malum prohibitum standard fuller implication in all cases where there is conflict with the regulated parties.  Personnel in the regulated industry, those who are doing their best to provide health-related products, have reason to be uncomfortable.


Does this article make you uncomfortable?  Do you think employees should risk criminal prosecution because of manufacturing situations beyond their control? Comment below.



James R. Phelps is one of three founding members of Hyman, Phelps & McNamara, P.C. Before establishing the firm in 1980, Mr. Phelps was vice president and general counsel of G.D. Searle & Co. In addition to his experience as a private practitioner and in-house counsel, Mr. Phelps was a trial attorney for the FDA and an assistant United States attorney for the District of Columbia. Mr. Phelps began his professional career in 1965 as a trial attorney in FDA's office of Chief Counsel, and in 1967 he became an Assistant United States Attorney in the District of Columbia. 










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