This year the government aggressively pursued Manufacturers under the enhanced provisions of the False Claims Act (FCA), as well as under the provisions of the Food, Drug and Cosmetics Act (FDCA). In addition, the government pursued actions against individual executives under the Responsible Corporate Officer Doctrine (“RCO Doctrine”) because it does not believe sanctions against the companies provide sufficient deterrence to inappropriate behavior. Companies need to focus on implementing effective compliance programs in order to prevent the occurrence of allegedly improper activity. It should be noted that the existence of an effective program will not protect executives from liability under the RCO Doctrine if improper behavior takes place.
The Food and Drug Administration’s (FDA’s) has undertaken a number of initiatives during the past year in an attempt to counter claims that its review processes for domestic products is driving the development of drugs and devices to overseas markets. The Agency also has improved its capacity to review products imported from overseas by undertaking initiatives with foreign agencies and stationing more FDA employees in foreign countries. The FDA increased the number of warning letters and other enforcement actions. The FDA added two new topics of enhanced authority during the year. One was an expansion of its regulatory authority over foods, and the second was new authority to regulate certain tobacco products. The former is being subjected to some review by the courts, and the scope of its authority over tobacco is the subject of ongoing major litigation.
The Federal Trade Commission (FTC) and Securities and Exchange Commission (SEC) are unlikely to experience significant change regarding their regulation of Manufacturers. The FTC, as it has for many years, continues to try to prevent “reverse” payments to generic drug manufacturers by Innovator Manufacturers to diminish generic drug competition, and proposed legislation is before Congress. The SEC still appears focused on the Foreign Corporate Practices Act with respect to enforcement against pharmaceutical and device manufacturers. Federal preemption of State law continues to be a topic of concern, with Court’s taking different positions on the effect of the various Supreme Court decisions made in the last two years.