FDLI Publications: Food and Drug Law Journal 58-2

Volume 58 Issue 2

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> Can FDA Seek Restitution or Disgorgement?
by Jeffrey N. Gibbs & John R. Fleder, Members in the law firm of Hyman, Phelps & McNamara, P.C., in Washington, D.C.

> The Authority of a Court to Order Disgorgement for Violations of the Current Good Manufacturing Practices Requirement of the Federal Food, Drug, and Cosmetic Act
by Erika King, Assistant General Counsel, Pharmaceutical Research and Manufacturers of America, Washington, D.C. She was an associate at Covington & Burling when the firm represented Schering-Plough in connection with its 2002 consent decree, and was involved in that representation. The views expressed in this article are her own.

Elizabeth M. Walsh, Associate in the law firm of Covington & Burling, Washington, D.C. Ms. Walsh was involved in Covington & Burling's representation of Schering-Plough. The views expressed in this article are her own.

> Universal Management, Abbott, Wyeth, Schering-Plough, and . . . : Restitution and Disgorgement Find Another Home at the Food and Drug Administration
by Eric M. Blumberg, Deputy Chief Counsel for Litigation, U.S. Food and Drug Administration, Rockville, MD. The views expressed herein are solely those of the author and do not necessarily reflect the views of FDA.

> Remarks of the Commissioner of Food and Drugs
by Mark B. McClellan, M.D., Ph.D., Commissioner of Food and Drugs, Food and Drug Administration (FDA), Rockville, MD. These remarks were presented by the Commissioner at the Food and Drug Law Institute's (FDLI's) 46th Annual Educational Conference, Washington, D.C. (Apr. 1-2, 2003).

> Remarks at FDLI's 46th Annual Educational Conference
by Henry A. Waxman (D-CA), Member of the U.S. House of Representatives and the Ranking Member of the House Government Reform Committee. This article was the basis of Rep. Waxman's keynote address at the Food and Drug Law Institute's 46th Annual Educational Conference, Washington, D.C. (April 1-2, 2003).

> Scientific Dispute Resolution: First Use of Provision 404 of the Food and Drug Administration Modernization Act of 1997
by Karen M. Becker, Ph.D., President of Becker & Associates Consulting, Inc., Washington, D.C.

Ellen J. Flannery, Partner in the law firm of Covington & Burling, Washington, D.C.

Thomas O. Henteleff, Managing Partner in the law firm of Kleinfeld, Kaplan and Becker, Washington, D.C.

> Proving Causation: The Use and Abuse of Medical and Scientific Evidence Inside the Courtroom-An Epidemiologist's Critique of the Judicial Interpretation of the Daubert Ruling
by David Egilman, M.D., M.P.H., Clinical Associate Professor of Bio-Medicine and Community Health at Brown University, Providence, RI. He has served as an expert witness in toxic tort cases at the request of both individuals and corporations.

Joyce Kim, J.D. candidate at Columbia University School of Law, New York, NY

Molly Biklen, J.D. candidate at Columbia University School of Law, New York, NY

> Financial Conflict of Interest in Medical Research: Overview and Analysis of Institutional Controls
by Jennifer A. Henderson, J.D., M.P.H., Administrative Director and Senior Research Associate, Regulatory Affairs Program, Center for Integration of Medicine and Innovative Technology, Boston, MA

John J. Smith, M.D., J.D., Associate Radiologist, Massachusetts General Hospital; Associate Professor of Radiology, Harvard Medical School; and Director of Regulatory Affairs, Center for Integration of Medicine and Innovative Technology, Boston, MA

> Recent Developments in Pharmaceutical Products Liability Law: Failure to Warn, the Learned Intermediary Defense, and Other Issues in the New Millennium
by Bernard J. Garbutt III, Partner at Morgan, Lewis & Bockius LLP, New York, NY

Melinda E. Hofmann, Associate at Morgan, Lewis & Bockius LLP, New York, NY

> A State of Extinction: Does Food and Drug Administration Approval of a Prescription Drug Label Extinguish State Claims for Inadequate Warning?
by James T. O'Reilly, Visiting Professor, University of Cincinnati, College of Law, Cincinnati, OH

Can FDA Seek Restitution or Disgorgement?
Authors: Jeffrey N. Gibbs & John R. Fleder
Issue: 58 Food and Drug Law Journal 129 (2003)

In the last few years, the Food and Drug Administration (FDA) has collected for the U.S. Treasury hundreds of millions of dollars-including $500 million from one company alone—using theories of liability that cannot be found in FDA's governing statute, the Federal Food, Drug, and Cosmetic Act (FDCA), namely the theories of "restitution" and "disgorgement of ill-gotten profits." Only one court has clearly granted FDA restitution or disgorgement of profits in a contested proceeding. This decision, however, is inconsistent with the terms of the FDCA, prior court decisions, FDA's assertions in a subsequent filing with the U.S. Supreme Court, and applicable principles of statutory construction. This article examines the asserted legal underpinnings for FDA's invocation of these powerful enforcement tools, as well as the arguments for and against the use of restitution and disgorgement. The authors explain how FDA's use of restitution and disgorgement is unsupported by statutory authority, case law, and fundamental canons of statutory construction.

The Authority of a Court to Order Disgorgement for Violations of the Current Good Manufacturing Practices Requirement of the Federal Food, Drug, and Cosmetic Act
Authors: Erika King & Elizabeth M. Walsh
Issue: 58 Food and Drug Law Journal 149 (2003)

This article responds to an article, published in the Food and Drug Law Journal in 2000, in which the Food and Drug Administration's (FDA's) Deputy Chief Counsel for Litigation presented a legal justification for the disgorgement award included in the agency's 1999 consent decree with Abbott Laboratories. It explains that the Sixth Circuit case on which FDA relies does not support disgorgement for distribution of drugs manufactured in a facility that is not fully good manufacturing practice (GMP)-compliant. Neither the text nor the legislative history of the Federal Food, Drug, and Cosmetic Act (FDCA) supports a statutory disgorgement remedy. While a court may fashion equitable remedies to effect the purposes of a remedial statute, courts in fact have been cautious about ordering any nonstatutory remedy in cases arising under the FDCA. Further, the limited jurisprudence permitting equitable disgorgement in lawsuits brought under remedial statutes cannot be applied logically to GMP violations. The authors conclude that FDA has, without congressional approval or judicial review, forced several companies to agree to a remedy that Congress never intended and that a court would not order.

Universal Management, Abbott, Wyeth, Schering-Plough, and . . . : Restitution and Disgorgement Find Another Home at the Food and Drug Administration
Author: Eric M. Blumberg
Issue: 58 Food And Drug Law Journal 169 (2003)

Co-authors Gibbs and Fleder, in an article entitled "Can FDA Seek Restitution or Disgorgement?" and co-authors King and Walsh, in an article entitled "The Authority of a Court to Order Disgorgement for Violations of the Current Good Manufacturing Practices Requirement of the Federal Food, Drug, and Cosmetic Act," raise a question that is being asked by many Food and Drug Administration (FDA)-regulated companies and their counsel. This article will show that although the question has acquired a new currency following the Sixth Circuit's decision in United States v. Universal Management Services, Inc. and three recent consent decrees obtained by FDA, the answer is not in serious doubt. The basic premise of both articles-i.e., because the Federal Food, Drug, and Cosmetic Act does not expressly provide for equitable relief, FDA may not obtain it-misapprehends, in the most fundamental way, the principle of inherent equitable relief. Courts must presume that they have the power to grant equitable relief unless there is express statutory language depriving the courts of such power.

Remarks of the Commissioner of Food and Drugs
Author: Mark B. McClellan
Issue: 58 Food and Drug Law Journal 191 (2003)

The text of this article is based on Dr. McClellan's prepared remarks, as presented at the Food and Drug Law Institute's (FDLI's) 46th Annual Educational Conference, held in Washington, D.C. in April 2003. The Commissioner suggests that, for the sake of the public health, FDA must find fundamentally better ways to address its regulatory responsibilities, including the threat of terrorism and the need to control healthcare costs without sacrificing the great potential of medical innovation in the twenty-first century. In some cases, this is requiring re-examination and updating of the way FDA does its job. To bring all this together—new challenges, new opportunities, and the most creative thinking from inside and around the agency to prioritize and address them—FDA has undertaken a major strategic action plan within the agency. That process identified five top priorities for the agency, including three specific areas of major new initiatives and two general approaches that are being reinforced to achieve FDA's mission objectives. This article provides an update on the agency's progress and highlights some of the challenges and next steps ahead.

Remarks at FDLI's 46th Annual Educational Conference
Author: Henry A. Waxman
Issue: 58 Food and Drug Law Journal 205 (2003)

In this article, based on a presentation at the Food and Drug Law Institute's (FDLI's) 46th Annual Educational Conference in April 2003, U.S. Representative Henry A. Waxman (D-CA) suggests that the Food and Drug Administration (FDA) will be "front and center" in dealing with the most pressing health challenges facing the United States. Successfully facing these challenges will depend upon how well the agency performs its key role-supporting medical progress and public health through science-based regulation. Congressman Waxman argues that failure lurks where politics and ideology are allowed to skew the agency's mission, and he warns against the trend toward the politicization of health science.

Scientific Dispute Resolution: First Use of Provision 404 of the Food and Drug Administration Modernization Act of 1997
Authors: Karen M. Becker, Ellen J. Flannery & Thomas O. Henteleff
Issue: 58 Food and Drug Law Journal 211 (2003)

Utilizing a formal dispute resolution process provided for in section 404 of the Food and Drug Administration Modernization Act of 1997, the Center for Devices and Radiological Health (CDRH) convened in September 2001 the first, and to date only, Medical Devices Dispute Resolution Panel (MDDRP) to adjudicate a scientific controversy between CDRH and a sponsor pertaining to the approvability of a premarket application (PMA). This proceeding was convened at the sponsor's request, prompted by a not-approvable determination issued by CDRH. The MDDRP concluded that the not-approvable determination by CDRH was incorrect, and the Center Director concurred with this finding. Subsequently, the PMA was approved. This article reviews the legal and scientific basis for the request for formal dispute resolution by the sponsor, describes the procedures utilized and precedents established in the course of this administrative process, and explores the potential use of this process to resolve future scientific disputes.

Proving Causation: The Use and Abuse of Medical and Scientific Evidence Inside the Courtroom-
An Epidemiologist's Critique of the Judicial Interpretation of the Daubert Ruling
Authors: David Egilman, Joyce Kim & Molly Biklen
Issue: 58 Food and Drug Law Journal 223 (2003)

This article explores the issues relating to the exclusion of expert testimony under the Daubert and Joiner decisions. In recent years, the legal and scientific methods relied on for the establishment of disease causation have diverged. Several courts' exclusive reliance on epidemiology and statistical bright-line tests are discussed, and these judicial standards are compared to accepted scientific standards for determining general causation. Courts have misinterpreted epidemiologic evidence by requiring a doubling of the disease rate in exposed populations as a sine qua non for the establishment of causation. In their quest for a simple quantitative rule, courts have created an erroneous standard that serves as a one-sided gate to courtroom entrée. This deviation from normal science flouts the spirit of justice to which our courts should aspire.

Financial Conflict of Interest in Medical Research: Overview and Analysis of Institutional Controls
Author: Jennifer A. Henderson & John J. Smith
Issue: 58 Food and Drug Law Journal 251 (2003)

Collaboration between academia and industry, while creating new opportunities, has given rise to financial conflicts of interest. Institutional policies, influenced by regional conditions, institutional values, and state and federal controls, represent local approaches to financial conflict issues, resulting in widespread policy variation. More importantly, institutional practices, in terms of the way in which policies are interpreted and the manner in which policies are implemented, influence the complexity of financial conflict issues. To maximize the potential benefits of industry-academia partnerships and to avoid eroding public trust in important medical research endeavors, existing institutional variations, both at the policy and practice levels, must be thoughtfully addressed.

Recent Developments in Pharmaceutical Products Liability Law:
Failure to Warn, the Learned Intermediary Defense, and Other Issues in the New Millennium
Authors: Bernard J. Garbutt III & Melinda E. Hofmann
Issue: 58 Food and Drug Law Journal 269 (2003)

Failure-to-warn claims against pharmaceutical companies are typical in products liability cases involving both prescription and over-the-counter (OTC) drugs. Under the learned intermediary doctrine, a pharmaceutical company is relieved of its duty to warn a patient of side effects associated with a drug when the company has provided an adequate warning to the patient's physician, but this defense has come under greater attack lately. This article discusses the basis of a failure-to-warn claim generally, and reviews some new issues that impact the learned intermediary defense, including direct-to-consumer (DTC) marketing, the Internet, and OTC sales. Also considered are new claims that plaintiffs have asserted in an attempt to avoid the learned intermediary doctrine, such as claims based on state consumer fraud and unfair trade practices statutes. Finally, the article reviews the judicial response to section 6 of the products liability section of the new Restatement (Third) of Torts, which was intended to replace section 402A and comment k of the Restatement (Second) of Torts.

A State of Extinction: Does Food and Drug Administration Approval of a Prescription Drug Label Extinguish State Claims for Inadequate Warning?
Author: James T. O'Reilly
Issue: 58 Food and Drug Law Journal 287 (2003)

Federal and state courts in the twenty-first century, as well as Federalist Papers author Alexander Hamilton in the eighteenth century, would regard state courts as competent to determine the adequacy of warnings on prescription drugs. Department of Health and Human Services (DHHS) General Counsel, Alex Azar, told FDLI's 2003 Annual Educational Conference that states should be preempted from such tort findings, because Food and Drug Administration (FDA) label decisions are exclusively within federal control. This article dissents from that view, and explores the history and policy debates about federal-state coordination of various aspects of drug regulatory controls. Congress might someday settle the issue by granting such preemptive authority, but until it does, DHHS's view of preemptive power appears to stretch beyond FDA's ability to invoke Supremacy Clause powers.