Del Monte Drops Suit Against FDA After FDA Lifts Import Alert

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On September 27, 2011, Del Monte Fresh Produce N.A., Inc. (Del Monte) voluntarily dismissed its suit against the U.S. Food and Drug Administration (FDA) which alleged that the Agency had no basis to suggest its cantaloupes were the source of a salmonella panama contamination. The Notice of Dismissal cites the lifting of the import alert that formed the basis of the suit as its reason for seeking dismissal. The Import Alert, which prevented cantaloupes from Guatemala from being imported into the United States, was lifted the same day.

As we previously reported, companies sometimes forced to challenge importation restrictions imposed by the FDA. In Del Montes case, the Company filed suit on August 22, 2011, and was able to obtain the relief it sought in only one months time. Similarly, we previously reported on the Seagate case, where we successfully challenged the FDAs detention of Seagates shipments, and secured the release of the goods soon after bringing suit against the Agency. While companies are often reluctant to bring suit against the FDA, these cases show that litigation may be a companys only means of successfully challenging unlawful regulation.

For more information on FDA enforcement measures or import compliance, please contact us at contact@fidjlaw.com.

FDA Moves to Streamline De Novo Process

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On September 30, 2011, the U.S. Food and Drug Administration (FDA) announced the release of its draft guidance, entitled “De Novo Classification Process (Evaluation of Automatic Class III Designation).” The Guidance comes as a part of the FDAs overhaul of its medical device review scheme, as the FDA intends to implement to streamline the way medical devices are reviewed and cleared. As previously reported, the FDA announced its plans to overhaul its entire system for reviewing and clearing medical devices earlier in 2011 and highlighted its intentions to target the “de novo” review process as a means to lessen the burden for manufacturers, while continuing its mission of public safety.

Unlike the de novo review process, the 510(k) program requires a new device to demonstrate substantial equivalence to a previously cleared device in order to obtain clearance from the FDA. The de novo process is different, as it is a means to obtain clearance for medical devices that have no clear predicates. While the de novo process currently is only open to medical device manufacturers that have submitted a 510(k) and have received a “not substantially equivalent” (NSE) determination, the FDA proposes changes to this requirement in its draft guidance.

Found here, the Guidance discusses FDAs additions to the de novo process, allowing for de novo petitions where no 510(k) has previously been submitted. The FDA proposes to institute a new pathway for de novo submissions initiated by a “pre de novo submission” (PDS). A PDS, the Agency explains, is a means for a submitter to show the FDA why its device would be suitable for the de novo process. If the FDA determines that the device would be appropriate for the de novo process, a suitability letter will be issued and the next step will be for the device sponsor to submit both a 510(k) and de novo petition concurrently with the FDA. Because the Agency would have already determined that the device is appropriate for de novo review, the idea is that the device sponsor will not have to wait for a NSE letter because the Agency will already have all the documentation it needs to clear the device through the de novo process.

While the FDA expresses optimism for the new additions to the de novo process, it remains to be seen whether the changes will bring the streamlined change that all have hoped for. Although FDA has attempted to simplify the de novo process, its proposed changes do little to combat key flaws, like the lack of transparency, that have caused so much criticism of the review of medical devices. The FDA has only published five of its de novo approval decisions to date, all of which have been published within the last year as part of FDAs Transparency Initiative.

Further, it appears that the FDAs new approach may actually complicate matters, as the Agency seeks to review two distinct submission types at once, the 510(k) and de novo petition. Because each of these submissions center largely on mutually excusive stances, with the 510(k) submission arguing that the device is substantially equivalent to a cleared device and the de novo petition asserting that the device has no clear predicates, it is unclear how the Agency will actually review the submissions.

The FDAs review of medical devices through the PMA, 510(k), and de novo processes are complex. Fuerst Ittleman has extensive experience successfully navigating medical devices through FDA review. For more information on FDAs review of medical devices, please contact us at contact@fidjlaw.com.

Scientists Appeal Ruling Allowing Federal Funding for Embryonic Stem Cell Research

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On September 19, 2011, two scientists who have been challenging government funding of human embryonic stem cell (hESC) research filed their Notice of Appeal in the U.S. Court of Appeals for the District of Columbia Circuit, seeking relief from the District Courts July 27, 2011 Order dismissing their complaint and attempting to revive their case to block federal funding of hESC research.

As previously reported, the District Court granted the governments Motion for Summary Judgment in July. In granting summary judgment and dismissing the Plaintiffs claims, the Court found that the National Institute of Health (NIH) Guidelines, which permit federal funding for hESC research, did not violate federal law. While the Plaintiffs argued that the Guidelines violated the 1996 Dickey-Wicker Amendment, which prohibits funding for “research in which a human embryo or embryos are destroyed,” the Court found that the NIH Guidelines do not violate this mandate because embryos are not actually subject to destruction during such research. Found here, the Court reasoned as follows:

The NIH reasonably concluded that the Dickey-Wicker Amendment prohibited federal funding for research projects “in which” human embryos are knowingly subjected to risk, such as preimplantation genetic diagnosis, but did not prohibit research projects, such as embryonic stem cell research, that do not involve embryos and so cannot knowingly subject them to risk “in” the research.

Because the Court found that the Guidelines promulgated by NIH were a permissible interpretation of the Dickey-Wicker Amendment, the Court concluded that the Guidelines did not contravene federal law and dismissed the Plaintiffs claims. While it is yet to be seen what the plaintiffs in the case will argue its appeal, Fuerst Ittleman will continue to closely monitor the progress in this case, as well as other issues pertaining to stem cell research.

If you have any questions pertaining to NIH Guidelines, or stem cell funding issues generally, contact Fuerst Ittleman PL at contact@fidjlaw.com.

Federal Prosecutors Take Aim At Corporate Officers For FDCA Violations With Revived Use Of The Park Doctrine

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Although criminal sanctions against corporate officers for violations for the Food, Drug & Cosmetic Act (FDCA) have been on the books since 1938, federal prosecutors have taken aim at corporate executives personally with renewed vigor through the use of the “responsible corporate officer doctrine,” better known as the Park doctrine.

As we previously reported here and here, the Park Doctrine is named after a Supreme Court case called United States v. Park, 421 U.S. 658 (1975). In that case, Acme Markets, Inc. and Park, its president, in his personal capacity, were charged with violating § 301(k), now 21 U.S.C. § 331 (k), of the FDCA because interstate food shipments being held in Acme’s Baltimore warehouse were contaminated by rodents. At Parks trial, the trial court instructed the jury that, although Park need not have personally participated in the activity which cause the violation, he must have had "a responsible relationship to the issue" in order to be convicted. The jury convicted Park on all counts.

In affirming his conviction, the Supreme Court, noted that food and drug laws have historically been applied to persons by virtue of their managerial position if the person ultimately had the power to prevent the alleged unlawful act. Id. at 670-672. As a result, corporate executives have an affirmative duty to ensure the safety of their corporations products under the FDCA. Today, based on that decision, an executive may be criminally prosecuted for violations of the FDCA if he or she had, by reason of his or her position in the corporation, responsibility and authority to either prevent in the first instance, or promptly correct the violation.

The Park Doctrine does not require that the corporate officer be aware of wrongdoing within the company. Instead, these offenses are “strict liability” misdemeanors, and the government is only required to prove that the prohibited act occurred and that the executive had the authority to prevent or correct it. (More information on strict liability offenses can be found in our previous report here.) Additionally, should a corporate officer be convicted under the Park Doctrine, any subsequent violations of the FDCA are treated as felonies under 21 U.S.C. 333, even without proof that the defendant acted with the intent to defraud or mislead.

Initially used by the government in the 1960s and 1970s to regulate insanitary conditions in food warehouses, the Park Doctrine has reemerged as a tool for federal prosecutors in enforcement of misbranding and adulterated drug offenses. Although the FDAs position is that “misdemeanor prosecutions, particularly those against responsible corporate officials, can have a strong deterrent effect on the defendants and other regulated entities,” the practical effects of such prosecutions can be devastating. Indeed, a misdemeanor conviction can serve as a basis for exclusion from participation in numerous federal programs.

The Purdue Fredrick Co. case is an example of the potential collateral consequences of Park Doctrine prosecutions. In Purdue Fredrick, the corporation pled guilty to a felony count of misbranding OxyContin with the intent to defraud or mislead. Prosecutors alleged that the company falsely claimed that OxyContin was less addictive and less subject to abuse than other pain medications. Additionally, federal prosecutors sought Park Doctrine misdemeanor misbranding charges against the CEO, the general counsel, and the medical director of Purdue Fredrick. Ultimately, the three corporate officers pled guilty, were sentenced to probation, and disgorged millions of dollars of income.

However, soon after the officers entered their guilty pleas, the U.S. Department of Health and Human Services excluded the three officers from any participation in federal health care programs for 12 years because their convictions were based on fraud and the unlawful manufacture of a controlled substance. HHSs decision was upheld by the United States District Court for the District of Columbia and is currently on appeal. As a consequence of this exclusion, the corporate officers will be unable to engage any in business which participates in federal health care programs such as Medicare and Medicaid.

The FDA and white collar criminal defense lawyers at Fuerst Ittleman are experienced in handling even the most complex cases where clients are facing allegations of criminal actions. Fuerst Ittleman attorneys have represented clients in a variety of FDA-related criminal investigations and prosecutions including violations of the FDCA under 21 U.S.C. §§ 331 and 333 as well as prosecutions of corporate officials for FDCA violations under the Park Doctrine. For more information regarding Fuerst Ittlemans white collar criminal defense practice, contact an attorney today at contact@fidjlaw.com.

FDA Issues Letter to Industry Regarding Imports of Medical Devices

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On September 6, 2011, the U.S. Food and Drug Administration (FDA) issued a Letter to Industry focused on the import entry review process. Importers of medical devices are encouraged to provide sufficient documentation in order to avoid time-consuming FDA review of each line offered for entry. Found here, the Letter sets forth several recommendations to importers of medical devices aimed at expediting the importation process. For instance, the FDA sets forth the various categories of medical devices that are subject to federal performance standards, noting that importers must provide a form certifying that the devices offered for import conform to these standards. The Letter, which is a follow-up to a March 24, 2011 letter published by the FDA, also reiterates the importance of using Affirmations of Compliance (AofC) codes.

Found here, the March 24, 2011 Letter to Industry regarding the import entry review process details the benefits of using AofC codes, including how they will expedite the importation process. AofC codes are specific identifiers of FDA-regulated products that may be used by importers to certify that the line offered for import meets the requirements of the particular code. Generally, when FDA-regulated goods are offered for import into the country, U.S. Customs and Border Protection (CBP) forwards import entry information to the FDA in order to verify that the goods meet all necessary FDA regulations. The FDA warns that without proper documentation, including the use of AofC codes, the review process will often be delayed, as FDA may have to undertake a manual review of the entry. Because of the complexities of the importation process, particularly when FDA-regulated goods are involved, importers should be aware of the various means of expediting the review process in order to avoid unnecessary set-backs upon entry.

For more information about the import process or FDA compliance, please contact us at contact@fidjlaw.com.

Google Agrees to Forfeit $500 Million As Part of Non-Prosecution Agreement

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On August 19, 2011, Google entered into a non-prosecution agreement with the United States Department of Justice to settle allegations that the search engine knowingly and improperly assisted Canadian online pharmacies in advertising prescription drugs and controlled substances that targeted the United States in violation of  21 U.S.C. § 952 and 21 U.S.C. § 331 though its AdWords advertising program. As part of the non-prosecution agreement, Google agreed to forfeit $500 million to the United States government. A copy of the non-prosecution agreement can be read here.

Generally speaking, the Food, Drug, and Cosmetic Act (“FDCA”) prohibits pharmacies located outside the United States from selling and shipping prescription drugs to consumers in the U.S. See 21 U.S.C. § 331(a) and (d). One of the more popular ways for international pharmacies to engage in business with U.S. consumers is via the internet. Federal prosecutors alleged that since 2003 Google has been aware of the illegality of prescription drug sales by online Canadian pharmacies advertising on its AdWords program. (AdWords is an online advertisement program run by Google which allows advertisers to post ads, for a fee, that specifically target selected regions or countries for business.) The non-prosecution agreement also alleges that Google knew that many of these online pharmacies distributed prescription drugs and controlled substances through their websites without valid prescriptions from a doctor. Additionally, federal prosecutors allege that between 2003 and 2009, Google provided customer support to these online pharmacy advertisers to optimize their ads and improve the effectiveness of their websites.

As a result of these allegations, Google agreed to forfeit $500 million to the federal government. The $500 million total includes both the revenues earned by Google from the advertisements as well as the estimated revenues the online Canadian pharmacies received through the sale of drugs to American customers. Google has also agreed to enhance its compliance program for online ads. Upon learning of the governments investigation, Google made several changes to its advertising policies regarding online pharmacies. Google has since required all online pharmacies to be certified by either the National Association Boards of Pharmacy in the US or the Canadian International Pharmacy Association. Additionally, Google now prohibits foreign online pharmacies from advertising in the United States on AdWords. Google has also brought suit against several pharmaceutical advertisers for violating its advertising rules.

The governments non-prosecution agreement with Google may signal a new approach at combating illegal drug trafficking. In this case, though Google was not involved in the actual sale, distribution, or transfer of drugs from foreign pharmacies to the United States, the Department of Justice has treated Google as an aider and abettor of these pharmacies, and thus liable for the unlawful conduct of the pharmacies. However, it should also be noted that because this is a non-prosecution agreement and not a plea bargain, no judicial approval is needed for its terms. Therefore, it is conceivable that had Google not agreed to enter into this agreement, federal prosecutors may not have been able to obtain an indictment and conviction.

Lawyers at Fuerst Ittleman are experienced in representing individuals and corporations facing scrutiny from the government regarding regulatory and white collar criminal allegations. For more information regarding Fuerst Ittlemans white collar criminal defense practice, contact an attorney today at contact@fidjlaw.com.

FDA Announces Implementation of Traceability Projects under FSMA

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On September 7, 2011, the U.S. Food and Drug Administration (FDA) announced two new pilot projects to aid tracking of food products, in an effort to prevent the spread of foodborne illness outbreaks. Through collaborative efforts with the Institute of Food Technologists (IFT), the FDA is implementing these projects, one concerning produce and the other involving processed foods, as directed by the Food Safety Modernization Act (FSMA). Under the pilot projects, available technologies and methods for tracing foods will be evaluated, including tracking at different points in the supply chain and monitoring how rapidly data reaches the FDA.

The recently-enacted FSMA directs the FDA to establish a number of measures aimed at ensuring the nation’s food supply remains safe for public consumption. While we previously reported on other FDA actions pursuant to the FSMA, these pilot projects remain among the first measures taken by the Agency in implementing this legislation. Ultimately, the FDA intends to use data collected from the projects to undertake rulemaking concerning the new recordkeeping requirements. As directed by the FSMA, FDA must adopt regulations pertaining to recordkeeping requirements for high-risk foods. Through the data collection efforts undertaken in these projects, FDA intends to have the information necessary to define “high-risk” foods and establish the required recordkeeping activities of the facilities that handle them. An overview of some of the other requirements under the FSMA may be accessed here.

Fuerst Ittleman will continue to monitor the FDA’s measures under the FSMA. For more information regarding the FSMA or FDA regulations, please contact us at contact@fidjlaw.com or (305) 350-5690.

Researchers Find that Stem Cells May Prove Useful for Blood Transfusions

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On September 1, 2011, researchers announced that they may have discovered what may become a new option for blood transfusions. Appearing in this months issue of the journal Blood, found here, the study findings detail how researchers were able to take cultured red blood cells (cRBC) derived from a patients stem cells and re-infuse the cultured cells back into the patient.

According to the findings, the red blood cells survived approximately as long as native RBCs. Although researchers have previously had success culturing red blood cells from hematopoetic stem cells (HSCs), this study is the first showing that these blood cells can survive in the human body. While researchers caution that the findings are still preliminary, this process may change the way blood transfusions are administered in the future. Potentially serving as an alternative to traditional sources of transfusable blood in the coming years, research regarding the capabilities of HSCs has been ongoing.

As we previously reported, researchers have been studying the potential of HSCs in a variety of areas, such as tissue repair and in the treatment of blood disorders. However, because questions surround the regulation of stem cells and other tissues, progress has not been as fruitful as researchers once hoped. The U.S. Food and Drug Administration (FDA), the agency tasked with regulating these emerging areas, has been slow moving as compared to the rapid pace of innovation. While the FDA has regulations pertaining to human cells and tissues, the intricacies of these regulations have yet to be refined. For instance, the FDA currently regulates stem cells as human tissues, biologics, new drugs, etc., depending on a number of factors, including where the cells are derived from, how they are cultured, and the purpose they will be used for. Thus, compliance with applicable federal regulations can be tricky, and medical advancement may outreach the potential of the current regulatory scheme.    

While scientific advances in this area are continually being made, Fuerst Ittleman will continue to monitor the progress and development of HSC research and other stem cell-related issues.

For more information, contact us at contact@fidjlaw.com.

USDA Warns Public of Organic Certification Fraud

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On August 30, 2011, the U.S. Department of Agriculture (USDA) issued a press release notifying the public that a fraudulent organic certificate had been disseminated. The press release, found here, discusses how the certificate was brought to the Agencys attention when an accredited organic certifier, whose name falsely appeared on the certificate, notified the USDAs National Organic Program (NOP). According to the USDA, no products bearing the fraudulent certification were sold in the United States.

As we previously reported, the USDAs NOP sets forth several requirements that foods and other products must meet before being designated “organic.” This includes periodic inspections and the implementation of an organic production and handling plan to ensure the goods are fit for organic designation. Without this designation, products may not bear the widely-recognized organic seal. USDA regulations provide for hefty fines for the fraudulent use of the organic certificate or label, which may be up to $11,000 per violation.

For more information about food labeling or USDAs National Organic Program, please contact us at contact@fidjlaw.com.

University of Miami Research Complex Paves Way for Biotech Companies in Miami

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This September the University of Miamis Tissue Bank will be relocating to a new $11.5 million facility. Moving from its current building to what is envisioned as a multi-enterprise commercial complex, the tissue bank is expected to prompt research and other medical companies to consider Miami as the new hotspot for biotechnology ventures. With the first building in the complex already nearly two-thirds leased, it appears that the University of Miamis efforts are having some success in bringing companies (and jobs) to the area.

The new complex will serve as an incubator for biotechnology companies seeking to test the market in South Florida. This idea is not new for the State, as the Sid Martin Biotechnology Incubator, housed in Alachua County, has been attracting biotech companies to Florida since 1995. Considering the success of the Sid Martin Biotechnology Incubator, those involved in the University of Miamis new project are confident that Miami will soon serve as a focal point for start-up companies, as well as established biotechnology operations in the coming years.

While many biotechnology companies are currently concentrated in the Northeast region of the U.S., Florida has been experiencing rapid growth in this industry over the last decade. Partially due to efforts of the Florida legislature and BioFlorida, the states bioscience industry association, biotech companies are moving from the northeast and west coast of the U.S., in order to become part of this emerging market. For example, Scripps Research Institute, a biomedical research institute headquartered in California, opened its sprawling research facility, Scripps Florida in 2009. Located in Palm Beach County, the research facility moved to Florida in part due to efforts by the Florida legislature. Seeking to stimulate growth of the biotech industry within the State, legislators offered support for the project by way of a $310 million appropriation. Additionally, Palm Beach County provided various incentives aimed at bringing Scripps to the area, including funding for land and related start-up costs.
By seeking to establish Florida as a hub for the biotechnology industry, Scripps Florida is but one example of how the States incentives have lured companies to the state. For instance, one of the biggest advantages of “setting up shop” in Florida is its extremely favorable tax structure. There is no state income tax imposed on partnerships, limited partnerships, limited liability companies, limited liability partnerships, or subchapter S-corporations. Additionally, the state income tax imposed on C-corporations is only 5.5%. Also, as guaranteed by the Florida Constitution, employees of all of Florida based entities enjoy the absence of a state personal income tax.  
In addition to favorable income tax treatment, there is no sales tax on purchases of raw materials incorporated into a final product for resale, including non-reusable containers or packaging. Furthermore, Florida offers sales and use tax exemptions for numerous business processes such as:

  • Machinery and equipment used by a new or expanding Florida business to manufacture, produce or process tangible personal property for sale;
  • Labor, parts and materials used in repair of and incorporated into machinery and equipment;
  • Electricity used in the manufacturing process;
  • Certain boiler fuels (including natural gas) used in the manufacturing process;
  • Semiconductor, defense and space technology-based industry transactions involving manufacturing equipment;
  • Machinery and equipment used predominantly in research and development; and
  • research and development labor expenditures.

Despite all of the benefits built into the taxing scheme of Florida, there are additional incentives available to certain industries and businesses that achieve certain goals. For instance, the Qualified Target Industry Tax Refund Incentive (QTI) provides refunds on corporate income, sales, ad valorem, intangible personal property, insurance premium, and certain other taxes for businesses that create high wage jobs in targeted high value-added industries. Also, the Capital Investment Tax Credit is an annual credit that is provided for up to 20 years against the corporate income tax. It is specifically available for designated high-impact portions of the certain sectors, including clean energy, biomedical technology, financial services, information technology, silicon technology, transportation equipment manufacturing, or be a corporate headquarters facility. 
Florida also provides a negotiated grant under the High Impact Performance Incentive to pre-approved applicants in certain high-impact sectors designated by the Governor’s Office of Tourism, Trade and Economic Development (OTTED). In order to participate in the program, the project must:

  • operate within designated high-impact portions of the following sectors– clean energy, corporate headquarters, financial services, life sciences, semiconductors, and transportation equipment manufacturing;
  • create at least 50 new full-time equivalent jobs (if a R&D facility, create at least 25 new full-time equivalent jobs) in Florida in a three-year period; and
  • make a cumulative investment in the state of at least $50 million (if a R&D facility, make a cumulative investment of at least $25 million) in a three-year period.

The biotech market fits perfectly within the purview of Floridas numerous incentives aimed at bringing industry to the state. Coupled with the states advantageous tax structure, this provides a favorable environment for these industries to make the shift to Florida.  

For more information regarding biotechnology issues or any information regarding starting a business in Florida, please contact us at contact@fidjlaw.com.