Life Science Compliance Update

October 17, 2017

AmerisourceBergen Specialty Group Pleads Guilty to Distributing Misbranded Drugs

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On September 27, 2017, AmerisourceBergen Specialty Group (ABSG), a wholly-owned subsidiary of AmerisourceBergen Corporation, one of the nation’s largest wholesale drug companies, pled guilty to illegally distributing misbranded drugs. ABSG agreed to pay a total of $260 million to resolve criminal liability for its distribution of oncology supportive-care drugs from a facility that was not registered with the Food and Drug Administration (FDA). The guilty plea and sentencing took place before United States District Judge Nina Gershon. 

As set forth in court records, between 2001 and 2014, two of ABSG’s Alabama-based subsidiaries, Medical Initiatives Inc. (MII) and Oncology Supply Company (OSC), prepared millions of syringes that had been pre-filled with oncology supportive care drugs: Aloxi®, Anzemet®, generic versions of granisetron injection, Kytril®, Neupogen® and Procrit®. The syringes were shipped to oncology centers, medical practices, and physicians for administration to immunocompromised cancer patients undergoing chemotherapy treatment in all 50 states.

To prepare pre-filled syringes (PFS), MII removed FDA-approved drug products from their original glass vials and repackaged them into plastic syringes through a process that allowed MII to access and sell excess drug product in the vials, known as “overfill.” As alleged in the Information, however, MII prepared PFS in an unclean, unsterile environment. Accordingly, MII’s process for creating PFS resulted in some PFS that contained particles or foreign matter, which MII employees identified and termed “floaters.” PFS were also at times not of the quality or purity that MII and OSC represented them to be to their customers. 

MII’s business model was to combine the contents of multiple vials in a process known as “pooling.” However, as set forth in the Information, many of the vials used by MII to prepare PFS were designated by the drug manufacturer as “single use” vials, meaning that the manufacturer could not guarantee the sterility of the drug product if the vials were breached. However, in the pooling process, MII’s technicians frequently breached drug vials multiple times, thereby increasing the risk of contamination.

To avoid the FDA’s regulatory oversight, ABSG did not register MII as a re-packager or manufacturer with the FDA as required by the Federal Food, Drug and Cosmetic Act.  Instead, ABSG inaccurately portrayed MII to its customers and to state agencies as a state-regulated pharmacy in the business of dispensing drugs pursuant valid prescriptions. By holding MII out as a pharmacy, ABSG unlawfully exploited an exemption to the FDA registration requirement that is reserved for legitimate pharmacies, not for manufacturers or re-packagers. 

As part of its guilty plea, ABSG has agreed to pay a $208 million criminal fine, plus $52 million in criminal forfeiture, for a total financial penalty of $260 million. In addition, ABSG has entered into an agreement with the Office and the Department of Justice’s Consumer Protection Branch to maintain a compliance and ethics program designed to increase accountability of individuals and corporate board members, to increase transparency, and to strengthen ABSG’s compliance with the FDCA. The compliance and ethics program requires corporate board members to review annually the effectiveness of the company’s compliance program and for ABSG to maintain a hotline that will receive and process complaints about any improper practices.

September 22, 2017

To Disclose or Not to Disclose… That is the Question: The DOJ’s FCPA Pilot Program – Insights from Year One and Beyond

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It has been over one-year since the US Department of Justice has launched its pilot program aimed to incentivize companies to self-report potential Foreign Corrupt Practices Act violations. Since its launch on April 5, 2016, the Justice Department resolved nine investigations. However, the question still remains – “Is the carrot bigger than the stick?” This article examines settlement trends before and during the Pilot Program to answer the question of whether or not it is sensible to self-disclose.

Last month, Sandra Moser, the acting chief of the DOJ’s Fraud Section made it clear that the DOJ would be increasing its enforcement efforts of healthcare related companies. Although life science companies have not been immune to Foreign Corrupt Practices Act (“FCPA”) investigations in the past, Moser stated that the DOJ viewed the healthcare industry as ‘one that faces serious compliance and corruption challenges not only in high risk markets overseas but right here at home as well.’ Simply put, life science companies will be under the FCPA microscope more than ever.

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September 12, 2017

FDA Warns Cipher Over “Misleading” Marketing Materials

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The United States Food and Drug Administration (FDA) Office of Prescription Drug Promotion (OPDP) sent a warning letter to Cipher Pharmaceuticals over promotional materials for its combination immediate- and extended-release opioid tramadol hydrochloride, ConZip.

The warning letter, addressed to Cipher President and CEO Robert Tessarolo, states that marketing materials for ConZip directed at healthcare providers are “false or misleading” because they omit “important risk information” regarding the use of ConZip and because of other “material facts.”

The FDA said the promotional materials for ConZip make claims about its efficacy, such as "All Day Pain Relief," but fail to mention any of its risks, which include addiction and the potential for abuse and life-threatening respiratory depression.

The FDA also notes that the materials do not communicate any information about risks associated with use of the product. The letter states, "by omitting the risks associated with ConZip, including serious and potentially fatal risks, the detail aid fails to provide material information about the consequences that may result from the use of the drug and creates a misleading impression about the drug's safety, a concern heightened by the serious public health impacts of opioid addiction, abuse and misuse.”

The FDA also says the promotional materials leave out important parts of ConZip's indication, which specifies that the drug should be reserved for patients for whom alternative treatment options, such as nonopioid analgesics or immediate-release opioids, are ineffective, not tolerated, or would be otherwise inadequate to provide sufficient pain relief.

In the letter, the FDA requested the company: (1) stop distributing the promotional materials, (2) provide the agency with a list of all other materials that make similar representations of the drug, and (3) develop a plan of action to disseminate "truthful, non-misleading, and complete corrective messages about the issues discussed in this letter to the audience(s) that received the violative promotional materials,” on or before September 8, 2017.

The OPDP closed the letter by reminding the company,

The violations discussed in this letter do not necessarily constitute an exhaustive list. It is your responsibility to ensure that your promotional materials for ConZip comply with each applicable requirement of the FD&C Act and FDA implementing regulations. Failure to correct the violations discussed above may result in FDA regulatory action, including seizure or injunction, without further notice.

After sending eleven warning letters last year, the OPDP only issued two so far in 2017. That would continue a years-long trend of declining activity since 51 letters were sent to drug makers in 2010.

Last year's total of eleven letters was boosted by a late-year burst of six letters that came in the month of December, so 2017 may still wind up matching the number of letters issued in 2016. As we’ve discussed before, the continuing drop in warning letters to industry may reflect a change in focus for the FDA.

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