The Department of Justice is “committed to prosecuting individuals” in the dietary supplement, food and cosmetic industries on criminal charges, expecting to “effect positive change” in those markets.

In a frank warning at a Food and Drug Law Institute meeting in Washington Dec. 8, DoJ Consumer Protection Branch Director Michael Blume said the agency’s role is clear when it takes on a case investigated by FDA. He also noted increased attention at DoJ to non-compliant conduct by firms in the dietary supplement space.

“We are committed to prosecuting individuals, and we're seeing that now, more and more. We are going to look for any crime that fits the conduct we find,” Blume said.

“The reality is that it's not just that [company executives] happen to be a director for some plant where something happened. No, they knew something, they didn't take some action.” – DoJ Consumer Protection Branch Director Michael Blume

That diligence is for good reason, beginning with public opinion and Congress passing the Food Safety Modernization Act and the FDA Safety and Innovation Act.

“The public has made it clear. Congress has made that clear – that when people engage in contact that is criminal, that we, the government should do something about it. We've heard that message loud and clear, and we're responding to that,” Blume said

Prosecutions can send “signals” to the rest of industry, which should consider why a firm or its executives were prosecuted and how to avoid a similar fate, he said.

“The reality is that it's not just that [they] happen to be a director for some plant where something happened. No, they knew something, they didn't take some action.”

In enforcing food product and supplement manufacturing and marketing regulations, FDA’s enforcement tools against non-compliant firms include submitting warning letters, ordering recalls, gaining court orders to block the distribution of violative products and seizing products.

FDA allows regulated firms opportunities to take corrective actions or otherwise comply with warnings or other communications about violative products or products; in only the most severe cases, the agency asks DoJ to file criminal or civil complaints.

DoJ steps in when there is evidence of criminal wrongdoing, and defendants face fines and possible imprisonment. DoJ/FDA civil cases include the 2011 consent decree Johnson & Johnson entered covering manufacturing by its McNeil Consumer Health business Also see "FDA Enforces Consent Decree Over J&J/McNeil's OTC Manufacturing" - Pink Sheet, 14 March, 2011..

Blume and food and drug lawyer Angela Spivey both acknowledged an uptick in prosecutions involving violations of FDA regulations, partly due to additional enforcement authorities that FSMA established for FDA.

Additionally, in 2013 the Obama administration gave its support to filing criminal charges in cases of contaminated or adulterated supplements or food products, which DoJ said it is “working closely” on with FDA's food safety center Also see "More Criminal Cases Likely In Supplement, Food Safety, DoJ Official Says" - Pink Sheet, 13 December, 2013..

“We are seeing companies being prosecuted and seeing a lot of consent decrees coming and [firms] pleading guilty to misdemeanors,” said Spivey, a partner at McGuire Woods LLP.

‘Emphasis’ On Supplements

Blume noted dietary supplements are a “huge” and growing market and the category “has become something of an emphasis for us in the department.”

He said criminal prosecution related to health care products marketed as dietary supplements usually targets firms that have included an active pharmaceutical ingredient in a product, or when they fail to comply with FDA warnings or Federal Trade Commission orders.

While most adulterated supplements are recalled from the market, many remain on shelves. A Journal of the Medical Association study found 6.5% – 18 out of 274 – products marketed as supplements and recalled from January 2009 through December 2012 remained available at least six months after the recall ([A#05141027003]).

“There is an intent to go against corporate officers, so we are seeing definitely an increase in that.” – Angela Spivey, partner McGuire Woods

Failure to substantiate claims on labels, charges made following FTC investigations, also is a hot button issue for DoJ.

“We've done a number of these cases. In fact, we're in litigation right now with one that is pretty big,” he said.

While Blume declined to identify the firm targeted in the case, an FTC-related item currently on DoJ’s plate – one that the supplement industry considers significant – is a complaint filed in September against Bayer AG.. The complaint alleges that claims for BayerHealthCare’s Phillips’ Colon Health violate a 2007 consent decree that required the firm to substantiate all supplement product claims with competent and reliable scientific evidence.

FTC requests that Bayer conduct randomized, placebo-controlled clinical trials to support claims that Phillips’ Colon Health – capsules containing a three-bacteria-strain probiotic formula – helps defend against occasional constipation, diarrhea, gas and bloating. The firm and other industry stakeholders argue FTC’s request exceeds the recognized standard for structure/function claims and would impose the same standard FDA requires for drug claims, although no drug claim is being made ([A#05141027007])

More recently, DoJ in November filed a complaint in federal court in California against dietary supplement contract manufacturer SciLabs Nutraceuticals Inc. for violating good manufacturing requirements; the firm has entered a consent decree for permanent injunction preventing distribution of its adulterated supplements ([A#05141117015]).

Contingency Planning

Spivey said many FDA-regulated firms targeted in misdemeanor convictions fear being found again in violation of agency regulations, as a second offense is considered a felony under the Food, Drug and Cosmetic Act.

“A lot of my clients who are large corporations with multiple, different brands spanning 30 or 40 states, they are cautiously optimistic [about avoiding a second violation], but monitoring the situation,” Spivey said. “I have clients making contingency plans for if that happens.”

Some companies re-structure their manufacturing facilities so each one is considered a separate entity, which limits the impact from FDA reporting a second violation to a single facility and not an entire company.

Spivey said executives or other key individuals at the top of a firm are at the greatest risk when it comes to prosecution. “There is an intent to go against corporate officers, so we are seeing definitely an increase in that,” she said.

She pointed to the prosecution of Jensen Farms, the source of cantaloupe linked to a listeria outbreak that killed 33 people in 2011. In that case, two brothers who owned the firm pleaded guilty to misdemeanor counts for introducing adulterated product into commerce.

Yet, “from everything I've seen, there was no evidence of any known wrongdoing on the part of the Jensen brothers, and they pleaded guilty to misdemeanor as a result of the wake of that recall,” Spivey said.

Spivey also cited a 76-count indictment in 2013 against four officials of the now defunct Peanut Corporation of America, which was the source in 2009 of peanuts and peanut ingredients tainted with salmonella that were distributed to manufacturers worldwide and linked to widespread illness, including multiple deaths Also see "Calls For Reporting Requirements, Recall Authority Remain As PCA Crumbles" - Pink Sheet, 16 February, 2009..

Blume said there was clear wrongdoing by the CEO in the PCA case, which was a substantial impetus behind Congress passing FSMA in 2009. PCA’s CEO was convicted of multiple felony charges and faces up to three decades in jail when sentenced in 2015.

“The bulk of those charges were fraud charges, and they arose from an investigation into emails, computer files, witnesses. That's the kind of thing we looked for,” Blume said of the case.

Offering advice to industry, Blume said once companies are targeted in a prosecution, they must put all cards on the table from the start. “That's not always easy to do, neither psychologically or from a tactical perspective,” he admitted.

However, “if you gave us A or B but not C, that is immediately going to get us interested in not only what is C about, but now D and is there also an E or F?” he said.

Further, when executives at companies facing prosecution meet with DoJ officials, “it's got to be fully transparent and open, because the last thing you want us to learn is that you're wrong, or you're not giving us information,” Blume added.

FDA officials emphasize corporate integrity when it comes to manufacturing mistakes that draw the agency's attention. During a July FDLI meeting on good manufacturing practices, an FDA official said evasive maneuvers and cover-ups will create bigger problems for a company ([A#02140728003]).

DoJ Aims To ‘Do Something About’ Crime In FDA-Regulated Industries

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