Deputy Assistant Attorney General Daniel Feith Delivers Remarks at the FDLI Enforcement, Litigation, and Compliance Conference | OPA

Remarks as Prepared for Delivery

Good morning.  Thank you Sonali for that introduction, and thank you to FDLI for inviting me today.  It’s an honor to join so many respected business leaders, industry experts, attorneys, and government colleagues to discuss some of the great work the Consumer Protection Branch has done over the past year.

I’m particularly honored to be speaking with you on the heels of FDA’s emergency use authorization for the first coronavirus vaccine.  Alongside the dedication and bravery of our healthcare workers, one of the bright spots of the past nine months has been the brilliance and dynamism of our pharmaceutical sector—a sector in which so many of you in the audience play important roles.  Through your work leading drug companies, counseling and guiding them, and regulating them, you have helped deliver therapeutics to the American people, and to people around the world, in record times, all while maintaining public confidence in the safety and efficacy of those treatments.  As a citizen, colleague, and parent to three young kids, I am deeply grateful for the work of so many of you to advance the public health and to help the nation recover from the pandemic.

For similar reasons, I consider it a great privilege to be leading the Consumer Protection Branch at this time.  In a period when Americans are worried about their health, safety, and economic security, the Consumer Protection Branch is working tirelessly, and with more resources than ever, to protect the welfare of American consumers.  Since 2017, the Branch has transformed from a small office known mainly to the folks in this virtual room to a large office with a budding reputation for cutting-edge work across a range of important enforcement areas.  Even as we continue to advance our core mission of enforcing the Food, Drug, and Cosmetic Act (FDCA) and other consumer protection statutes, we are also leading efforts to achieve two of the Department’s top priorities: stemming the opioid crisis and combating transnational elder fraud.  To be sure, COVID has complicated these efforts by causing courts to suspend grand juries and making investigations more difficult.  But it has also renewed our sense of mission, underscoring the importance of the work we do.  And I’m pleased to report that in just the last year, the branch has taken actions against scores of defendants in these areas, securing fines, forfeitures, and penalty awards of nearly $12 billion.

This $12 billion figure gives a sense of the Branch’s achievements, but I want to make clear that we don’t see the monetary recovery as an end in itself.  We recognize that food and drug law is a highly complex, highly technical area, in which it is possible to “foot fault” in ways that rack up large penalties.  But we are not interested in penalties for penalties’ sake.  Our focus is on consumer harm.  Before we pursue a matter, we ask: who was harmed, or at least put at risk of harm?  Who was injured, endangered, or defrauded?  Consumer harm is our lodestar for exercising prosecutorial discretion, and ensures that our resources are spent where they can do the most good for the most people.

With that in mind, I want to speak today about four areas of enforcement focus during the past year:  COVID fraud, opioids, clinical trial fraud, and general FDCA enforcement.

COVID fraud

I’ll begin with COVID fraud, an area that exemplifies how we’re applying our focus on consumer harm.

As I said out the outset, one of the success stories of the past year has been the dynamism and innovation of the private sector’s response to COVID.  Companies and individuals have raced to develop and supply tools to fight the pandemic, from PPE to tests to therapeutic agents and, of course, to vaccines.  That innovation has not occurred in a vacuum.  Our agency partners at FDA, HHS, and elsewhere have exercised enforcement discretion to encourage responsible innovation.  And the Consumer Protection Branch has done the same.

Take the example of serological test kits.  In the spring, when expanding access to testing was critical, FDA announced it would exercise enforcement discretion regarding some such kits if certain conditions were met.  These products were permitted to enter the market for certain uses even though they did not have clearance or even an emergency use authorization, and thus were technically unlawful.  But, given the public health imperatives, FDA judged it appropriate to temporarily exercise enforcement discretion with respect to such violations.  And given FDA’s judgment, the Consumer Protection Branch likewise did not prosecute such violations.  Indeed, these sorts of cases are why prosecutorial discretion exists, and during COVID we have exercised it to advance our shared mission with FDA of calibrating enforcement to protect public health.

Unfortunately, some individuals have sought to capitalize on the pandemic by peddling all manner of fake cures, vaccines, and PPE.  And this is where the Consumer Protection Branch has focused its efforts.  We have used—and will continue to use—every civil and criminal tool available to punish and deter those trying to cheat and harm the public during this time.  As the Attorney General has said, “The pandemic is dangerous enough without wrongdoers seeking to profit from public panic, and this sort of conduct cannot be tolerated.”

The Consumer Protection Branch has played a leading role in DOJ’s fight against COVID-related misconduct.  Early on, the Branch quickly established a multi-agency working group to identify, share, and de-conflict investigative leads.  The engine of this working group was a set of data-review teams stood up within the Branch.  To date, those teams have analyzed tens of thousands of consumer complaints received by the Department, FTC, and FDA, identifying the most troublesome schemes for action by the working group.

The Consumer Protection Branch has also led the Department in bringing enforcement actions.  Over the last nine months, we have taken more actions against actors peddling fraudulent products purporting to prevent, treat, or cure COVID than any Department component, bringing 13 of the 15 total civil actions filed nationwide to date and advancing a number of significant criminal prosecutions.  This work has included shutting down operations marketing ozone therapies, silver products, and even industrial bleach as cures for COVID, and one operation marketing a purported vaccine.  It also includes one of the most significant actions of the Department’s Hoarding and Price-Gouging Task Force, in which we brought fraud charges against a man who attempted to defraud the Department of Veterans Affairs out of $750 million for respirator masks.  And, through cooperation with FBI and industry partners, we have disrupted hundreds of other schemes by shutting down websites selling fake or unapproved treatments.

In these sorts of cases, our foremost concern is protecting the public from further harm by removing fraudulent and unlawful products from the market.  Here, some of the fake cures—the bleach, for instance—threaten direct harm.  Others risk giving consumers a false confidence that they have nothing to fear from COVID and can avoid taking prudent precautions.  And overall, these unlawful products risk eroding public confidence in COVID therapies at a time when such confidence is more important than ever.  Given these concerns, we have aggressively used civil injunctive authorities, under both the FDCA and the Anti-Fraud Injunction Act, to quickly shut down these operations, while pursuing parallel criminal investigations, often over a somewhat longer timeframe, to hold wrongdoers accountable.

Our actions against fake silver cures illustrate how we use both civil and criminal tools to protect consumers.  In one case in Utah, we first moved quickly to obtain civil injunctions against both the individual and the company behind the fake treatments.  Then, after shutting them down, we criminally charged them both, obtaining a guilty plea from the company for false and misleading marketing and bringing fraud charges against the owner, who had falsely held himself out as a doctor in marketing materials and promotional videos posted on YouTube, complete with lab coat and stethoscope.  Through this one-two punch, we were able both to act quickly to protect public health and to punish fraud. 

We will continue to work closely with FDA and other partners to ensure that our enforcement efforts are properly calibrated to protect public health and foster innovation.    Discretion is not abdication.  Anyone who seeks to unlawfully profit from people’s fear of the virus can expect to find themselves in the Department’s crosshairs.   

Opioid crisis

Let me turn now to the opioid crisis.  Combating this crisis has been one of the Justice Department’s top priorities during this Administration, and, prior to COVID, we had seen progress.  Since January 2017, for example, prescriptions for the seven most frequently diverted opioids are down over 33 percent.  But opioid abuse remains a serious problem, with tens of thousands of Americans still dying from opioid overdoses each year, and with COVID presenting challenges that exacerbate the opioid epidemic.  Tragically, according to the American Medical Association, at least 40 states have reported increases in opioid-related mortality during the coronavirus pandemic.

DOJ has prioritized combating both the traffic in illegal opioids and the diversion of legal prescription opioids to unlawful ends.  The Consumer Protection Branch has taken a leading role in this fight against prescription opioid abuse, and chairs the Department’s Prescription Interdiction and Litigation Task Force.  We are committed to working to hold accountable all actors, at all steps of the prescription drug supply chain, who have contributed to this crisis.  As the Deputy Attorney General recently said, “On the prescription side, that means any unlawful actions by manufacturers, distributors, pharmacy dispensers, or physician prescribers”

I am especially proud of the Consumer Protection Branch’s contributions in this area during the past year, and would like to highlight a few of our major successes.

First is the successful resolution of our investigation into Purdue Pharma.  Last month, as part of a global resolution of the Department’s criminal and civil investigations, Purdue pleaded guilty to three felonies, including conspiracy to defraud the United States and to violate the FDCA, and conspiracy to violate the federal anti-kickback statute.  Purdue admitted that, for nearly a decade, it actively thwarted the Drug Enforcement Administration’s efforts to prevent diversion of Purdue’s prescription opioid products, such as OxyContin.  In particular, Purdue continued to market its opioid products to more than 100 healthcare providers whom the company had good reason to believe were diverting opioids.  It also reported misleading information to the DEA to boost its manufacturing quotas, claiming all of its opioid sales as legitimate when its own data showed that a substantial portion were diverted.  Purdue also admitted that it facilitated the dispensing of its opioid products without a legitimate medical purpose and without lawful prescriptions.

The criminal resolution—secured in conjunction with our partners at the U.S. Attorney’s Offices in New Jersey and Vermont—is both backward and forward looking.  Redressing past wrongs is critically important, and the resolution does that through the largest penalties ever levied against a pharmaceutical manufacturer, including a $3.5 billion criminal fine, $2 billion in criminal forfeiture, and a civil settlement of $2.8 billion.  In addition, this resolution does not prohibit future criminal or civil penalties against Purdue’s executives or employees.  At the same time, with the opioid crisis ongoing, the resolution also aims to stem future harms.  If ultimately approved by the bankruptcy court, the resolution will reorient Purdue’s extensive resources towards the treatment and care of those affected by opioids addiction.  The resolution does this by requiring Purdue to dissolve and be reconstituted as a public benefit company, with its assets re-purposed entirely for the public’s benefit.  The new public benefit entity will deliver legitimate prescription drugs as safely as possible; will donate, or provide steep discounts for, lifesaving overdose rescue drugs and addiction-treatment medications; and will donate all its profits towards state and local opioid abatement programs.  This will be, perhaps, the most ambitious and important corporate compliance effort in history.  

Another recent success is the Branch’s prosecution, in partnership with the U.S. Attorney’s Office for the Western District of Virginia, of Indivior Solutions and its top executives over their marketing of the drug Suboxone.  Suboxone is meant to help recovering opioid addicts avoid or reduce withdrawal symptoms while they undergo treatment for opioid use disorder. But Suboxone itself contains a powerful opioid, buprenorphine, making it a controlled substance.

This past summer, Indivior’s marketing subsidiary, Indivior Solutions, pleaded guilty to a felony count charging false statements related to health care matters.  Indivior admitted that it sought to expand Medicaid coverage of Suboxone by giving Massachusetts State Medicaid officials false data indicating that Suboxone film, a particular formulation of the drug, had the lowest rate of accidental consumption by children of all buprenorphine formulations.  Shortly after receiving this false data, the Massachusetts State Medicaid program announced it would provide access to this formulation of Suboxone for patients with children under the age of 6.

As part of the guilty plea, Indivior and its subsidiary agreed to pay $600 million to resolve their criminal and civil liability—an amount that comes on top of the $1.4 billion resolution announced last year with Indivior’s former parent, Reckitt Benckiser Group, for the same and related conduct.  The Indivior resolution also imposes several novel compliance provisions, including requiring Indivior to permanently disband its Suboxone sales force and to remove healthcare providers from promotional programs who are at high risk of inappropriate prescribing.  Similarly, the resolution with Reckitt Benckiser Group uniquely bans that company for three years from the manufacture, distribution, or sale of dangerous controlled substances.

The Consumer Protection Branch has also held accountable the executives who oversaw Indivior’s misconduct—its CEO and chief medical officer.  Both pleaded guilty to FDCA misdemeanors related to Indivior’s misrepresentations to the Massachusetts State Medicaid program.  The CEO was just sentenced to six months in prison and $600,000 in criminal penalties.  The CMO will be sentenced in the upcoming days.

As I mentioned, the Consumer Protection Branch is also going after unlawful actions by others in the opioid supply chain, including pharmacies.  Pharmacies are the last lines of defense again prescription opioid diversion.  But too many pharmacies, for too long, abdicated that responsibility.  Together with our partners in U.S. Attorney’s Offices and DEA, we are responding with aggressive enforcement under the Controlled Substances Act to secure injunctions and penalties against pharmacies that helped flood communities with opioids.  Recently, we obtained consent decrees against two pharmacies in North Carolina that repeatedly ignored obvious red flags of diversion in filling opioid prescriptions, routinely filling prescriptions written by doctors hundreds of miles away, for dosages two to three times higher than the CDC guidelines recommend, and for customers who had received controlled substance prescriptions from ten or more prescribers.  And you can expect to see additional developments in the opioid arena in the coming year.  We encourage everyone in the prescription opioid supply chain to work with us to identify wrongdoing, fix it, and stem the damage this epidemic is causing.

Clinical Trial Fraud

Leaving opioids, another recent area of enforcement focus has been clinical trial fraud.  I imagine I don’t need to explain to this audience the centrality of clinical trials to FDA’s drug and device approval process or the importance of protecting and preserving the integrity of clinical trials.  Indeed, safeguarding public trust in the approval process has never been more important than it is today.

For that reason, the Consumer Protection Branch has prioritized enforcement against entities and individuals that have engaged in fraud or deception in conducting clinical trials.  Disturbingly, one published study found that one in six researchers involved in clinical drug trials reported that they were personally aware of fabrication in research.  Therefore, in partnership with FDA’s Office of Criminal Investigations, we are aggressively investigating and prosecuting misconduct ranging from falsifying and altering trial results and other data, to concealing conflicts of interest, to making misrepresentations in submissions to the FDA.   

Just a few weeks ago, for instance, the Branch secured a felony fraud conviction against the study coordinator at a research company that was hired by a large pharmaceutical manufacturer to conduct clinical trials on an asthma medication in children.  The coordinator admitted that, for nearly three years, she participated in a scheme to fabricate the data and participation of subjects in the trial by falsifying medical records to make it appear as though pediatric subjects made scheduled visits, took study drugs as required, and received checks as payment.

Similarly, in July, prosecutors charged eight defendants with multiple felonies for defrauding the FDA and falsifying records used in clinical research trials.  The defendants conducted trials for eight different pharmaceutical companies.  Subverting the FDA’s regulations, the defendants allegedly enrolled subjects in clinical trials under fictitious names, enrolled subjects without their knowledge, and enrolled other subjects who did not meet trial criteria.  They also are alleged to have fabricated medical records, informed consent forms, and other critical documents.

You can expect the Consumer Protection Branch to announce further actions related to clinical trial fraud in the coming months.  This misconduct puts patients at risk and exposes drug sponsors to liability for submitting false information and for failing to submit required reports.  Our enforcement efforts should serve as a reminder of the importance of rigorous oversight, recordkeeping, auditing, and reporting for clinical trials.  I will tell you that the Consumer Protection Branch uses cutting edge data analysis to ferret out fraud in this context and others.  So should you.  And I would urge you to report promptly any research misconduct to federal regulators whenever it is discovered.  The system depends on reporting to identify and address errors and improper conduct, and we calibrate our enforcement efforts to account for and incentivize such reporting.  Indeed, as an example, the action that the Consumer Protection Branch most recently prosecuted was first reported by the pharmaceutical company that had contracted with the defendant to conduct clinical trials, and that company faced no enforcement consequences.  Industry and government alike share responsibility to preserve the nation’s trust in the FDA’s approval process.

General FDCA enforcement

Finally, I’ll conclude with the mainstay of the Branch’s work: the civil and criminal enforcement of the FDCA. 

  1. Dietary Supplements

One continuing highlight of this work is our enforcement actions against manufacturers and distributors of fraudulent and dangerous dietary supplements.  The American dietary supplement market is well over $100 billion and growing, and this success has attracted a range of bad actors.  We are particularly concerned about dietary supplements with dangerous, undisclosed ingredients, and we have sought and obtained stiff penalties against individuals and entities that endanger public health by marketing such products.  This past October, we secured sentences of five years and two years, respectively, for two former executives of USPLabs, who last year were convicted of importing and marketing popular workout and weight loss supplements with misleading labels that concealed dangerous ingredients.  One recurrent feature we’re seeing in these cases, including USPLabs, is the role of Chinese suppliers of dubious ingredients.  Sometimes manufacturers are aware of these problem ingredients, and sometimes they’re not.  Either way, manufacturers need strong compliance programs and good visibility into their supply chains to ensure that their products are safe. 

  1. Post-Market Compliance

The Consumer Protection Branch has also taken several enforcement actions this year related to post-market compliance. 

For instance, earlier this year Pentax Medical Company entered into a deferred prosecution agreement and agreed to pay $43 million to resolve charges related to its shipment of endoscopes without FDA-cleared instructions for use and its failure to report adverse events.  Pentax put endoscopy patients at substantial risk when it decided not to use revised, FDA-cleared instructions for cleaning its reusable endoscopes, despite having agreed to FDA’s request for the revisions.  The revised instructions required a more rigorous cleaning procedure between uses of the device to ensure infectious material did not remain in the device and was not transmitted to subsequent patients.  Pentax predicted, internally, that the increase in cleaning time from five minutes to 25 minutes would cause customers to switch away from Pentax, causing it to lose business. 

Making matters worse, Pentax failed to timely file adverse event reports of multiple infections associated with its endoscope.  Pentax’s late reports hindered FDA’s ability to identify and monitor problems with medical devices.  These unlawful omissions jeopardized the health of patients. 

  1. Food Safety

One other example of traditional FDCA enforcement from the past year was our work on food-safety matters.  In addition to filing numerous civil injunctive actions to stop and prevent harm from adulterated food, the Branch this year secured two landmark criminal resolutions.

First, in the Chipotle case, we and our partners in the U.S. Attorney’s Office for the Central District of California filed criminal charges related to the company’s involvement in foodborne illness outbreaks that sickened more than 1,100 people between 2015 and 2018.  We charged Chipotle with adulterating food in violation of the FDCA, and the company agreed to a three-year deferred prosecution agreement that will allow it to avoid conviction if it complies with an improved food safety program.  As part of the DPA, Chipotle also agreed to pay a $25 million criminal fine, the largest ever in a food safety case.

Second, in the Blue Bell case, the company agreed to plead guilty to two misdemeanor counts of distributing adulterated ice cream products linked to a 2015 listeriosis outbreak.  Blue Bell paid $17.25 million in penalties and agreed to implement and maintain substantial compliance measures.  In addition, CPB attorneys indicted Blue Bell’s former CEO for his alleged unlawful conduct.

Lessons

I want to close with a few reflections on the keys to enforcement success—the partnerships, strategies, and principles that have guided and enhanced our enforcement efforts. 

First, we don’t work alone.  Our work depends on close partnerships with other agencies, foremost among which, of course, is FDA.  The Branch is very lucky to have such talented colleagues in FDA’s Office of Chief Counsel and Office of Criminal Investigations, both of which have demonstrated inspiring professionalism throughout the pandemic.  We work closely with both offices to enforce the FDCA, bringing to bear civil and criminal remedies to complement the FDA’s administrative tools for protecting public health. 

Another key partner in this work is DOJ’s Civil Frauds section.  Consumer Protection and Frauds have long collaborated on FDCA matters that come to the Department through qui tam litigation, and we now also are partnering on our opioid work and a range of consumer fraud matters.  This expanded work has strengthened the bonds between our groups.

Over the past few years, CPB has also created a close partnership with our colleagues at the DEA.  This partnership has made possible the successes I described in combating the opioid epidemic, and has yielded many new tools that will advance our continued effort to bring wrongdoers in the opioid space to justice.

Second, effective enforcement depends on the careful, coordinated use of both civil and criminal tools.  While we continue to bring criminal charges when appropriate, we have substantially increased our reliance on civil enforcement mechanisms, and civil injunctions in particular, to advance our mission across a range of areas.   These tools complement our criminal work and allow us to move with fast, surgical precision to stop misconduct and prevent further harm. 

Finally, I want to stress the importance of compliance programs and cooperation.  We know that the people attending this conference and the businesses they represent share our commitment to advancing public health and safety.  And when we see businesses reaffirm that commitment by coming forward and proactively reporting wrongdoing, we take notice and weigh that favorably in charging and resolution decisions.  In addition, cooperation allows us to advance investigations to a decision point so that a government investigation doesn’t hang over individuals and businesses longer than necessary.  In these ways, among others, robust compliance programs are not only good citizenship, but good business too.    

I want to end by thanking you again for your unflagging work to protect public health.  The Consumer Protection Branch looks forward to continuing to advance that shared mission in the months and years ahead.  Thank you.

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