Tucked away on the sixth floor of the Parklawn Building in Rockville, FDA's Office of Chief Counsel is calm and quiet. Beneath the surface, however, there is a surge of activity. One of the main engines driving the agency, the 80-lawyer shop helps craft regulations, manages dozens of lawsuits and oversees every enforcement action.

The office also is in charge of one of the biggest tasks confronting the agency: implementing the FDA Amendments Act. The longest piece of legislation governing FDA, the bill vastly expands the agency's authority. The OCC has beefed up its ranks to take on the extra work, hiring 14 new lawyers within the last year. And it gained a new leader when Gerald Masoudi took the helm as chief counsel in October just as the FDAAA was enacted into law.

It is uncertain how long he will be in the post since the upcoming election will usher in a new administration. But grappling with this major law gives the 40-year-old Masoudi a chance to make a mark on the office. He also is helping to shape the agency's response to congressional inquiries about its overseas inspection capabilities and response to heparin contamination.

Masoudi had a previous stint at the helm of the OCC, serving as acting chief counsel for five months after Dan Troy resigned as the office head in November 2004. Troy had hired Masoudi to be his deputy a few weeks before his resignation. When Sheldon Bradshaw was appointed chief counsel in April 2005 Masoudi jumped to the Department of Justice's antitrust division where he served as deputy assistant attorney general in charge of international policy and appellate matters.

Current and former OCC attorneys and lawyers outside the agency say he is a good listener who is very responsive and decisive. And they say having a strong leader at the helm draws lawyers to the office and keeps them there.

"I think he's the perfect person for the job," Troy said. "He's enormously popular with the staff, smart and charming."

On a warm March afternoon Masoudi met with "The Pink Sheet" in a conference room off his office. The space is sparsely furnished with a long table, television set and an electronic whiteboard. A copy of Webster's New International Dictionary is opened on an ornate metal stand in front of a wall of windows. Photos of the New York Mets, Baltimore Orioles and a gymnast on parallel bars are tacked on the walls. Like the office, Masoudi is unpretentious. Friendly and engaging, he talks with ease about the new era facing the agency.

"It's an enormous amount of work and an enormous amount of responsibility, which makes it exhilarating and exciting," Masoudi said.

The FDA Amendments Act is demanding much of the OCC's attention. Masoudi says the statute takes up 15 to 20 percent of his time. He routinely meets with staff to discuss questions raised by the centers on how to interpret various provisions. FDA has issued two guidances on the law, one advising sponsors what clinical trial information does not require certification and another identifying the manufacturers that have adequate risk management plans.

The Two Arms Of OCC

The office is dealing with a lengthy list of other matters as well. The work is split between the OCC's two units, litigation and counseling. There are 27 lawyers on the litigation side, which is headed by deputy chief counsel Rick Blumberg. The counseling unit, headed by deputy chief counsel Ann Wion, has 45 staff attorneys. Six more lawyers joining the office have not yet been given an assignment. The other top lawyer in the office is principal deputy chief counsel Jeffrey Senger.

On the litigation side, the office worked on approximately 80 lawsuits last year, 45 on the offense and 35 on the defense. It scored two major victories in the past year. In August, an appeals court ruled that terminally ill patients do not have a constitutional right to receive experimental drugs, ending a lawsuit brought by the patient advocacy group Abigail Alliance and the Washington Legal Foundation (¹ Also see "Abigail Alliance Looks For Paths Forward After Court Blocks Drug Access Suit" - Pink Sheet, 27 August, 2007., p. 9). And in February, the U.S. Supreme Court ruled in Riegel v. Medtronic that FDA pre-market approval of devices bars suits challenging their safety and efficacy (² Also see "FDA Preemption Deadlocks Supreme Court; Congress Pushes To Resolve Issue" - Pink Sheet, 10 March, 2008., p. 16).

Litigators devote a major chunk of time to a steady stream of lawsuits challenging FDA's award of 180-day exclusivity to generic manufacturers under the 1984 Hatch-Waxman law. In the most recent case, Teva sued FDA over its delisting of a patent in the Orange Book in an effort to get 180-day exclusivity for its generic version of Johnson & Johnson's schizophrenia drug Risperdal (risperidone).

Alan Bennett, a partner at Ropes & Gray, who was an associate chief counsel at OCC in the 1970s, said the Hatch-Waxman legislation is a source of endless legal debate. "Every day a question comes up I haven't seen before and don't know the answer to," said Bennett, who helped write the bill as counsel to a coalition of research-based companies on the innovator side.

The agency has won the majority of these disputes. In an article published in the March/April issue of the Food and Drug Law Institute's Update magazine, Covington & Burling attorneys analyze FDA's 10-year track record in federal court. They note that of the 80 court decisions from 1998 through 2007, 44 involved Hatch-Waxman issues, pediatric exclusivity or orphan exclusivity. Of the cases involving Hatch-Waxman litigation, FDA lost 11. For all cases, the agency's win-loss record was roughly 55 to 25.

One of Troy's points of emphasis during his tenure as chief counsel was ensuring the agency's "legal credibility." While he told stakeholders "I prefer to see you in my office than in the court," Troy also worked to ensure that FDA's operational record created a presumption of deference if the agency did end up before a judge (³ Also see "FDA Warning/“Untitled” Letters Will Be Reviewed By Chief Counsel" - Pink Sheet, 17 December, 2001., p. 30).

Among the cases currently on its docket, the OCC is defending the agency in a suit brought by 10 pharmacies in Texas challenging FDA's position that compounded drugs are new drugs. A district court ruled against the agency and an appeal is now pending before the Fifth Circuit U.S. Court of Appeals. Oral arguments in the case, Medical Center Pharmacy v. Mukasey, were held in January.

The office also is working with the Department of Justice on Wyeth v. Levine, which is to be taken up by the U.S. Supreme Court in its October term. The case could determine whether drug manufacturers can claim FDA approved labeling as a defense against state product liability suits.

In addition to handling lawsuits, the litigation group also reviews all warning letters issued by the agency and manages FDA enforcement actions (see chart: " ⁴ FDA Lawyering By The Numbers ").

A few litigators also advise the Office of Criminal Investigations, which was created in 1992 in response to prescription drug counterfeiting, illicit drug diversion and importation of unapproved drugs, among other things. Last year, the OCI was responsible for 485 arrests and 333 convictions.

OCC litigators also have helped boost the government's coffers. Blumberg helped implement the policy of disgorgement, whereby companies pay restitution to the government for harm done to individuals who cannot be compensated directly. FDA reached several major settlements involving violations of good manufacturing practices - a $500 million agreement with Schering-Plough, a $385 million settlement with Abbott and a $30 million settlement with Wyeth. Since 1999 it has brought in about $1 billion in disgorgement payments to the U.S. Treasury.

The counseling staff, meanwhile, provides legal advice to the Commissioner and the agency's centers. The unit is divided into teams devoted to each center - drugs, biologics, devices, food and veterinary products. The attorneys help draft regulations and guidances, review proposed legislation and participate in policy discussions and international negotiations.

In addition to the FDAAA guidances, the counselors worked on a recent draft guidance specifying when companies can distribute published results of clinical trials on unapproved uses of drugs (⁵ Also see "FDA’s Off-Label Reprint Guidance Is Unlikely To Clarify Anything Very Soon" - Pink Sheet, 28 April, 2008., p. 14). And they also helped craft a proposed rule that would limit when companies could alter their product labeling without first getting approval from FDA (⁶ Also see "FDA’s Labeling Rule Should Be Tweaked, Firms Say; Dems Want It Squashed" - Pink Sheet, 14 April, 2008., p. 12).

Masoudi could not discuss details about specific matters the OCC is handling. But former staff and other lawyers who work with the office say it is involved in reviewing proposed legislation governing follow-on biologics and helping the agency respond to congressional inquiries about drug safety problems and its inspection of overseas drug plants.

Retention Is A Challenge

As the FDAAA has increased the OCC's workload, having a solid staff has become crucial. The office endured a hiring freeze for a number of years, and when it broke last year the office brought in 14 attorneys and is looking to hire more.

Masoudi said one of his goals is to make the office of chief counsel a better place to work by making lawyers feel they are playing an important role and are valued.

The office faces a regular loss of attorneys. Many are drawn to private practice where they can double or triple their salary. While a first-year associate at a big law firm earns $160,000, starting salary for FDA lawyers is $58,000. The top salary for FDA staff attorneys (grade salary level 15) is $149,000. There is also little opportunity for advancement as those in the deputy chief posts have been with the agency for decades.

Former FDA chief counsel Dan Troy noted that several experienced lawyers have taken other posts within the centers where they serve as regulatory counselors. They include Mike Levy, who joined the office of compliance at the Center for Drug Evaluation and Research and Leslie Kox, who jumped to the Center for Biologics Evaluation and Research. Mark Raza was detailed to the Center for Devices and Radiological Health but has returned to the office.

The shift of lawyers from the OCC "extends the office's influence and contacts and makes the office an attractive place as a launching pad for other positions in the agency," said Troy, who headed the office from 2001 to 2004. "But it means an enormous outflow of expertise."

The office also effectively lost one of its full time equivalent positions to Congress. More than five years ago, the OCC detailed David Dorsey to work as a legislative assistant to Senator Edward Kennedy, D-Mass.

It's unclear when and why Dorsey was assigned to Kennedy's office, if there is any precedent for such a move and why he has remained a paid member of OCC's staff. Masoudi declined to discuss the arrangement and Dorsey did not return phone calls.

Forty Years of Evolution

The OCC has changed dramatically in the last four decades. In 1970 the office had 17 lawyers, almost all of whom were litigators who enforced the law through seizures and injunctions. Peter Hutt transformed the office when he became chief counsel in 1971.

"Hutt started a movement toward rulemaking as a way to do enforcement," recalls Arthur Levine, who left the post of deputy chief counsel of litigation in 1991 and is now senior counsel at Arnold & Porter. Instead of getting companies to change their behavior through court action, the office moved to do so through regulation. As a result, attorneys began spending more time on counseling and less on enforcement.

Appointed by the White House, Hutt also boosted the role of the OCC within the agency. Former OCC attorneys say few decisions were made without his input. Those who succeeded him - Richard Merrill, Richard Cooper, Nancy Buc and Thomas Scarlett - also were political appointees and played a significant role in setting agency policy. But during the tenure of Margaret Porter in the 1990s, HHS made the chief counsel a career position and the influence of the office waned.

The office also experienced a shift in its relations with the centers following passage of the Prescription Drug User Fee Act in 1992. Coleen Klasmeier, who served in the OCC as Troy's special assistant, said user fees enabled program areas, particularly CDER, to begin funding the office more directly and to get more involved in setting its day-to-day priorities.

The OCC gained prominence again, however, when the Bush Administration appointed Troy to head the office in 2001. He was hired by then HHS General Counsel Alex Azar, who had previously been partners with Troy at Wiley Rein. The White House had been having trouble finding a commissioner and Troy became its first political hire at the agency. Troy said he ended up serving as an informal liaison to HHS and to a certain extent the White House, a role no one else had previously played.

At that time HHS Secretary Tommy Thompson was promoting the concept of "one HHS," whereby the FDA, National Institutes of Health, Centers for Disease Control and Prevention and what became the Centers for Medicare & Medicaid Services would be regarded more as part of the department rather than separate agencies acting on their own. As an influential member of the department, Troy was able to make controversial changes within the agency.

"Troy came in with White House support to change the agenda and was again making policy," said Peter Safir, a partner with Covington & Burling.

Office of Chief Counsel Comes Under Fire

Two of Troy's policy decisions drew the ire of some FDA staff along with members of Congress and the media, who claimed Troy was acting on behalf of industry. He required all warning and untitled letters issued by the agency to be reviewed by OCC and he advocated FDA intervention in state product liability litigation. As part of the latter initiative, the agency began filing amicus briefs arguing FDA-approved labeling pre-empts claims that a drug or device company failed to adequately warn of a product's dangers.

Some OCC staff complained that the review of letters slowed them down and took their attention away from other things. But Klasmeier noted that the office had always reviewed these letters until Commissioner David Kessler took that task away during his tenure.

Critics also pointed out that the number of warning letters issued by the agency plummeted with the new policy. In 2000, 1,154 letters went out while in 2002 the number dropped to 755. Troy said the decline was not because the OCC was rejecting the letters - he said well over 90 percent cleared the office - but that "districts stopped sending letters they thought wouldn't pass muster."

Troy said he was not surprised by the criticism on the agency's stand on pre-emption. But, he said, "I was flabbergasted by the vehemence" of those who felt FDA lawyers should not review letters accusing someone of violating the law. The OCC also required districts to send out letters within six months of an inspection. Troy said that prior to that the agency would send out warning letters a year after conducting an inspection.

The issue of pre-emption drew the most opposition from Congress. Rep. Maurice Hinchey, D-N.Y., denounced Troy, asserting in a 2004 press release that he was "making it the agency's mission to protect the drug companies from being held accountable when their products do serious harm."

Hinchey sponsored an amendment, which passed the House, to shift $500,000 from the OCC budget to CDER. Former OCC leaders came to Troy's defense. Hutt and four other former chief counsel sent a letter to the chairmen of the Senate and House agriculture appropriations subcommittees contending there was a precedent for the pre-emption briefs. Others in the agency, however, said Troy's policy reversed FDA's long-held position on the issue.

FDA has faced off against Congress numerous times, of course, but the OCC is usually behind the scenes. One other chief counsel, Thomas Scarlett, came under attack in the wake of the generic drug scandal in the late 1980s. Generic manufacturers were found to have falsified data and paid illegal gratuities to FDA staff while agency reviewers gave preferential treatment to some companies, approving their applications more quickly.

In 1989, members of Rep. John Dingell's staff went to FDA to collect documents relating to the scandal. A former OCC lawyer said Scarlett physically blocked the building exit to prevent them from removing the material. "Dingell's staff got miffed and suggested Scarlett was not tough on crime and had him fired," the attorney said.

Dingell, D-Mich., is once again Chairman of the Energy and Commerce Committee and is still at loggerheads with the Office of Chief Counsel, which House investigators say has thwarted their probe into heparin contamination (see ⁷ Also see "Congressional Investigator Faults FDA Office of Chief Counsel" - Pink Sheet, 5 May, 2008.).

Critiques of the OCC seem destined to continue as long as the office continues to serve as the fulcrum for many of FDA's activities.

That's not likely to change as Congress intensifies its scrutiny of the agency. The Supreme Court is set to take up a major FDA pre-emption case in October, and legislators continue to craft a bill that would clear the way for approval of generic biologics.

- Brenda Sandburg (b.sandburg@elsevier.com)

FDA’s Office of Chief Counsel Is Growing Its Ranks As It Amends Its Act

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