FDA likely will pursue more criminal prosecutions in the dietary supplement and food industries, with the White House’s support, according to a Department of Justice official and food and drug attorneys.

Prosecutions in the area are a high priority for DoJ, says Jeffrey Steger, Civil Division assistant director in DoJ’s Consumer Protection Branch.

Speaking on Dec. 12 during an American Bar Association Litigation Roundtable conference call on criminal prosecution of food and supplement firms, Steger said DoJ’s Consumer Protection Branch presses criminal charges in some cases and files civil suits in others.

President Obama’s administration supports pressing criminal charges in cases of contaminated or adulterated supplements or food products, Steger noted.

“I believe that we’ll continue to see criminal prosecutions for violations of Food, Drug and Cosmetic Act” related to food and supplement manufacturing and distribution, under this administration, DoJ’s Consumer Protection Branch leadership and particularly FDA’s Office of Criminal Investigations, Steger said.

The Consumer Protection Branch is “working very closely” with the Center for Food Safety and Applied Nutrition as well as FDA’s Office of Criminal Investigations, he said. Civil cases, such as the DoJ/FDA 2011 consent decree with Johnson & Johnson covering manufacturing by its McNeil Consumer Health business, are more well-known to consumers, but the branch’s workload includes “a number of criminal cases,” Steger said Also see "FDA Enforces Consent Decree Over J&J/McNeil's OTC Manufacturing" - Pink Sheet, 14 March, 2011..

“It’s fair to say that the department will not be hesitant to use its other tools, including criminal charges and criminal prosecutions, when the facts warrant bringing such cases.”

The two other speakers on the call, former associate chiefs in FDA’s Office of Chief Counsel, agreed that the current regulatory environment, driven by the additional enforcement authorities established by the Food Safety Modernization Act, makes criminal cases in the food and supplement industries more likely.

“That would be consistent with the overall push in the food arena generally, particularly related to the overhaul of the nation’s food safety law,” said Ricardo Carvajal, of Hyman, Phelps & McNamara P.C. in Washington.

“Food producers should be prepared for further crackdown and scrutiny of their practices,” said Anne Walsh, also of Hyman, Phelps & McNamara.

Industry trade groups and compliant firms support bringing criminal charges against firms or persons responsible for adulterated supplements or ongoing good manufacturing practices. Stakeholders point out that although the Dietary Supplement Health and Education Act allows criminal charges for violations, FDA has been slow to use the authority, despite agency officials’ complaints of rampant marketing of adulterated products and widespread GMP problems Also see "FDA Using “All Available Tools” To Remove DMAA From Market" - Pink Sheet, 15 April, 2013..

CFSAN official Jennifer Thomas, speaking at a Food and Drug Law Institute conference in Washington on Dec. 10, said while FDA had not used that authority “for a number of years,” the agency’s investigations led to two food safety-related criminal prosecutions in 2013.

A 76-count indictment was returned in February against four officials of the now defunct Peanut Corporation of America, which was the source in 2009 of peanuts tainted with salmonella linked to widespread illnesses, multiple deaths and massive recalls; and in October the operators of Jensen Farms pleaded guilty to charges stemming from cantaloupes tied to a 2011 listeria outbreak that killed 33 people.

“Criminal cases are much more in our toolbox these days. We have a wonderful relationship with our Office of Criminal Investigations. We are very lucky to have them,” said Thomas, Division of Enforcement director in CFSAN’s Office of Compliance.

Criminal Charges Should Be No Surprise

Each of the attorneys on the ABA call said firms should not be surprised when they learn they are a target of a criminal investigation. Their FD&C Act violations should be clear to them by that point because FDA would ask DoJ to file criminal charges only after a firm fails to comply with the agency’s instructions to correct its problems.

“Companies should take seriously the observations that FDA marks down in the [form] 483s and strive to correct them and not allow them to become repeats,” Walsh said.

Candor with FDA officials is important, and could determine whether an inspection that finds GMP or other problems eventually leads to a criminal investigation, she added. “There should not be some sort of concealment or fraud … in your engaging with the government. That leads to its own violation, independent of violations of the Food, Drug and Cosmetic Act.”

“Government officials are human, too, and they are going to be offended when they find out that someone lies to them. When a case is on the fence whether to proceed civilly or criminally, I would say that the majority of times that there’s evidence that somebody was lying to the government, it will lean criminal,” Walsh said.

However, some firms in the supplement and food industries probably are not aware they could face criminal charges despite receiving communications from FDA about repeated violations, Carvajal said.

“It would be a mistake that, because there are no bodies in the street, to assume that you are not at risk of being investigated,” he said.

Questions Prosecutors Consider In Criminal Cases

DoJ Consumer Protection Branch official Jeffrey Steger says DoJ determines whether to file criminal charges on a case-by-case in dietary supplement and food safety investigations, but questions considered for each case include:

“Does the conduct pose significant danger or risk to the public?”
“Is there fraud involved? Are there misrepresentations to customers or to the public? Is there a concealment of material information?”
“Is there obstruction of federal inspectors or investigator? For example, lying to FDA inspectors, providing untrue or misleading answers.”
“Are these repeated violations that have not been corrected despite notice from the FDA? Not that notice is required, but if there is notice [such as a warning letter] and the violations are continuing and they’re serious, that is certainly a factor that we will take into consideration.”
“What is the inspectional history related to the firm or the plant or the facility assuming that FDA has been out there before?”
“How serious is the violation in our view, and how long has it existed?”
“Is there a court-ordered injunction in place that is being ignored for some reason, either intentionally or not?”

“Those are specific factors that we would look to with respect to either opening a criminal investigation or what factors would lead to prosecution,” he said.

Walsh said firms are notified of a criminal investigation either by receiving a subpoena to provide evidence or other information, or by federal officials showing up at their facilities to execute a search warrant, “a lot more of a violent way to learn about a criminal investigation.” In civil cases, FDA contacts firms by letter or telephone with findings from an inspection and an offer to enter into a consent decree.

“Either way, it’s still very disturbing and impactful on a company. It’s very stressful and will be expensive to defend against,” she said.

DoJ attorneys refer to a consent decree offer as the “sign or sue” letter, Steger said.

By that point of FDA’s efforts to allow a firm to correct violations, its choice is either to agree to a consent decree with a permanent injunction that imposes FDA-controlled sanctions on manufacturing and marketing, or be the target of litigation aimed at a complete shutdown.

“If we don’t hear back we’ll proceed to filing in that matter,” Steger said firms are told in consent decree offers.

Investigators Consider Firms’ People Power

Steger said firms also should evaluate whether their staffing is adequate and appropriate. “It is very important to focus on the people working there. The people are really the heart of what these companies do and it’s typically the failure of people, often combined with failures of a group of people which result in noncompliance,” the DoJ attorney said.

Steger said supplement and food product manufacturers and their attorneys should ask:

“Does the company have the right people? Do the people have the right training and expertise to recognize problems that can arise?
“Do the employees have the right incentives to see problems, to report problems and to fix problems? We sometimes see in our cases that individuals and companies cut corners in order to meet production goals or to reduce costs. You want to make sure that there are strong incentives … for people to see problems, to report them and to fix them. The key to that obviously is internal communications and systems designed to encourage that communication.”
“Are the employees satisfied and engaged? What we see is … often the departure of key employees can be a crucial turning point for an organization. It can be a red flag of existing problems or problems to come, particularly if the departure leaves a vacuum in key positions or leaves remaining employees overwhelmed and unable to meet the dictates of safety.”
“Are the people and the policies working in harmony? … Do the company’s policies acknowledge how real people work and what they’re capable of doing? Quality assurance processes that rely on unreasonable expectations are doomed to failure.”
“Do the compliance people have visibility into what the other employees are actually doing? This is a certain factor to consider in that, depending on [a firm’s] size, has the company set up a system of compliance or have they set up the system to avoid knowing problems in the organization?”

“Ask those types of questions with regards to not only the policies and procedures that the company has, but looking at the actual people and the people doing the work,” Steger added.

More Criminal Cases Likely In Supplement, Food Safety, DoJ Official Says

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