Transcript www.hpm.com

Are Attorneys the FDA’s New
Enforcement Target?
John R. Fleder, Esq.
[email protected]
(202) 737-4580
Douglas B. Farquhar, Esq.
[email protected]
(202) 737-9624
Webinar presented by
Thompson Interactive
December 20, 2010
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Hyman, Phelps & McNamara, P.C.
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Largest dedicated food and drug law firm in the
country.
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Visit us at www.hpm.com.
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Visit our blog at www.fdalawblog.net.
Jamie K. Wolszon, Esq., an Associate at Hyman, Phelps & McNamara, P.C.,
is the principal author of this presentation.
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Copyright 2010 Hyman, Phelps & McNamara, P.C.
Presenters
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John R. Fleder
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Former Director, Department of Justice,
Office of Consumer Litigation (1985-1992)
Served in other capacities in that office (1973 to 1985)
Douglas B. Farquhar
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Former Assistant United States Attorney,
District of Maryland (1990-1997)
Disclaimer: The presenters and authors do not possess
any knowledge of the facts of the Stevens’ case except
what is available in the public domain.
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Copyright 2010 Hyman, Phelps & McNamara, P.C.
Indictment of Attorney Lauren Stevens
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November 9, 2010 Indictment in the United States District Court
for the District of Maryland.
The six-count Indictment was against Lauren Stevens, former
Vice President and Associate General Counsel for
GlaxoSmithKline.
Four of the counts allege false statements (concealment of fact
and false statement offenses).
The other two counts allege obstruction of justice (falsification
of documents and obstruction of justice).
All these counts were brought under Title 18 of the United
States Code. None of the counts allege violations of the
Federal Food, Drug, and Cosmetic Act (FDCA).
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Allegations in the Stevens’ Indictment
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FDA’s DDMAC launched an investigation in October
2002 into the company’s alleged off-label promotion
of the anti-depressant Wellbutrin for weight loss.
Ms. Stevens was then the corporate attorney
responsible for, and who signed and sent in, the
responses to FDA.
Ms. Stevens allegedly signed several letters stating
that the company had not engaged in off-label
promotion, when she knew that to be false.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Allegations in the Stevens’ Indictment
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Ms. Stevens allegedly promised FDA that she would gather and
provide to the agency presentations from those speaking on
behalf of the company.
She allegedly requested slides from over 500 of the company’s
promotional speakers. At least 28 responded with materials
containing evidence of off-label promotion, but she did not
provide those materials to the agency.
She allegedly consulted a memorandum that laid out the pros
and cons of providing the promised materials to FDA.
She allegedly told the agency that the response to the agency
was complete despite withholding these materials.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Allegations in the Stevens’ Indictment
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When a whistleblower sent evidence of off-label promotion to
the investigators, Ms. Stevens allegedly stated that this
evidence represented an aberration that was not part of the
normal practice, when she allegedly knew this to be false.
Ms. Stevens informed FDA that the firm did not compensate
attendees of company-sponsored presentations for anything
but parking, when in fact the firm allegedly provided attendees
with gifts and entertainment.
Ms. Stevens allegedly removed the evidence of the gifts and
entertainment of the attendees from documents sent to the
agency.
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Potential Jail Time for Ms. Stevens
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Each of the obstruction charges carries a maximum
penalty of twenty years in prison.
Each of the false statement charges carries a
maximum of five years in prison.
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Statutory Basis for False Statements in
the Stevens’ Case
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18 U.S.C. § 1001(a)- “[w]hoever, in any matter within
the jurisdiction of the executive, legislative, or judicial
branch of the Government of the United States,
knowingly and willfully-- (1) falsifies, conceals, or
covers up by any trick, scheme, or device a material
fact; (2) makes any materially false, fictitious, or
fraudulent statement or representation; or (3) makes
or uses any false writing or document knowing the
same to contain any materially false, fictitious, or
fraudulent statement or entry; shall be fined under
this title, imprisoned not more than 5 years….”
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Statutory Bases for Obstruction of
Justice in the Stevens’ Case
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18 U.S.C. § 1512(c): “Whoever corruptly-- (1) alters,
destroys, mutilates, or conceals a record, document,
or other object, or attempts to do so, with the intent
to impair the object's integrity or availability for use in
an official proceeding; or (2) otherwise obstructs,
influences, or impedes any official proceeding, or
attempts to do so, shall be fined under this title or
imprisoned not more than 20 years, or both.”
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Statutory Bases for Obstruction of
Justice in the Stevens’ Case (Cont.)
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18 U.S.C. § 1519: “Whoever knowingly alters,
destroys, mutilates, conceals, covers up, falsifies, or
makes a false entry in any record, document, or
tangible object with the intent to impede, obstruct, or
influence the investigation or proper administration of
any matter within the jurisdiction of any department
or agency of the United States or any case filed
under title 11, or in relation to or contemplation of
any such matter or case, shall be fined under this
title, imprisoned not more than 20 years, or both.”
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Statutory Basis for Criminal
Prosecutions Under the FDCA
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21 U.S.C. § 333(a)(1) – “Any person who violates a
provision of [21 U.S.C. § 331 (“prohibited acts”)] shall
be imprisoned for not more than one year or fined . . .
or both.”
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No “knowledge” or “intent” requirement.
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Compare with 21 U.S.C. § 333(a)(2) – “if any person . .
. commits such a violation with the intent to defraud or
mislead, such person shall be imprisoned for not more
than three years or fined . . . or both.”
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United States v. Park
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Misdemeanor criminal case can be instituted against company
officials for violations of the FDCA—even if a corporate official
did not know of the violation—if the official was in a position of
authority to prevent or correct action and omitted to do so.
FDA officials have indicated heightened interest in use of the
Park doctrine by targeting corporate officials even when they
have not necessarily intentionally violated the FDCA.
See HPM’s October 8, 2010 webinar: FDA and the Park
Doctrine. http://www.hpm.com/devitem.cfm?RID=412.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Stevens’ Trial Scheduled for
February 2011
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Ms. Steven’s legal team says their client is “going to
trial and looking forward to it, and we fully expect her
to be vindicated.”
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Duff Wilson, Ex-Glaxo Executive is Charged in Drug
Fraud, The New York Times (Nov. 9, 2010).
Trial is scheduled to begin on February 1, 2011 in
Greenbelt, Maryland.
Ms. Stevens Pled Not Guilty on November 30, 2010.
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Motion Reveals Ongoing Gov’t. Probe
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The government has filed a motion for protective
order alleging that its investigation is ongoing.
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“These charges are part of a broader, ongoing
investigation. The discovery relevant to the instant
case thus contains information not only about this
case, but also relates to the ongoing, underlying
health care fraud investigation, including potential
criminal activity by others.”
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Ms. Stevens Appears Poised to Raise
An Advice of Counsel Defense
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One press account suggests that she may invoke
the advice of counsel defense.
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“Everything she did in this case was consistent with
ethical lawyering and the advice provided her by a
nationally prominent law firm retained by her employer
specifically because of its experience in working with
FDA.”
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Duff Wilson, Ex-Glaxo Executive is Charged in Drug
Fraud, The New York Times (Nov. 9, 2010).
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Advice of Counsel: Negating Intent
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An Advice of Counsel defense can negate the intent element of specific
intent crimes such as obstruction of justice and false statements.
Some cases say that it is an absolute defense.
– See, e.g., U.S. v. Walters, 913 F.2d 388,391 (7th Cir. 1990); U.S. v.
DeFries, 129 F.3d 1293, 1309 (D.C. Cir. 1997); U.S. v. Ragsdale,
426 F.3d 765, 778 (5th Cir. 2005).
Other cases say it is not an absolute defense, but rather one factor to
consider in determining intent and good faith.
– See, e.g., U.S. v. Winans, 612 F.Supp. 827, 848 (S.D.N.Y. 1985),
aff’d in part rev’d in part, 791F.2d 1024 (2d Cir. 1986); U.S. v.
United Medical and Surgical Supply Corp., 989 F.2d 1390,1403 (4th
Cir. 1993); Securities and Exchange Commission v. Savoy
Industries, Inc., et. al., 685 F.2d 1310, 1315 n.28 (D.C. Cir. 1981).
Copyright 2010 Hyman, Phelps & McNamara, P.C.
An Advice of Counsel Defense Generally
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“If a man honestly and in good faith seeks advice of a lawyer as
to what he may lawfully do… and fully and honestly lays all of
the facts before his counsel and in good faith and honestly
follows such advice, relying upon it and believing it to be
correct, and only intends that his acts shall be lawful, he could
not be convicted of a crime [sic] which involves willful and
unlawful intent[,] even if such advice were an inaccurate
construction of the law.”
– U.S. v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1194-95
(2d. Cir. 1989) (quoting Williamson v. United States, 207
U.S. 425, 453 (1908)).
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Elements of An Advice of Counsel
Defense
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Complete disclosure to attorney of material relevant
facts.
Client requests advice of counsel on the legality of
an action the client is considering taking.
The lawyer concludes that conduct would be legal.
The client relies in good faith on that advice.
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See, e.g., Securities and Exchange Commission v.
Savoy Industries, Inc., et. al., 685 F.2d 1310, 1315
n.28 (D.C. Cir. 1981); U.S. v. Lindo, 18 F.3d 353, 356
(6th Cir. 1994).
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Person May Not Invoke Defense if
His/Her Lawyer Is a Partner in Venture
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The advice of counsel defense is not available
“[w]hen the lawyer is a partner in a venture, takes a
share of the profits, or is ‘not a lawyer who had no
interest save to give sound advice for a reasonable
fee.’”
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U.S. v. Carr, 740 F.2d 339, 347 (5th Cir.1984); Sorrell
v. Securities and Exchange Commission, 679 F.2d
1323 (9th Cir. 1982).
Copyright 2010 Hyman, Phelps & McNamara, P.C.
The Advice of Counsel Defense Affects
Privilege and Work Product
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Invoking the advice of counsel defense requires waiver of the
attorney-client privilege for “communications and documents
relating to the advice.”
“[A]s result [of assertion of advice of counsel], a party must
produce not only other communications and opinions of the
same attorney, but also privileged information from other
counsel involving the same subject.”
Also may constitute waiver of work product doctrine protections.
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Chiron Corp. v. Genentech, 179 F.Supp.2d 1182, 118790 (E.D. Cal. 2001); see also Trouble v. Wet Seal, Inc.,
179 F.Supp.2d 291, 304 (S.D.N.Y. 2001).
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Crime Fraud Exception to AttorneyClient Privilege
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No protection for communications “‘made for the
purpose of getting advice for the commission of a
fraud’ or crime.”
The attorney-client privilege is intended to
encourage frank conversations between client and
attorney about client’s past wrong-doing, not to
encourage future wrong-doing.
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U.S. v. Zolin, 491 U.S. 554, 562-63 (1989).
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Dangers of Relying on Oral Statements
of Others
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If a company attorney signs a document, he or she
often relies on oral statements made by other
officials within the company.
Both the attorney who signs the submission and
persons making oral statement upon which the
attorney relies could be liable if the statement
submitted to FDA is incorrect or omits material
information.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Reliance on Oral Statements:
U.S. v. W. Scott Harkonen
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DOJ begins to investigate InterMune, Inc. for alleged marketing
drug Actimmune for off-label use idiopathic pulmonary fibrosis
(IPF) in 2004.
Dr. Scott Harkonen, former InterMune CEO, was indicted for
alleged federal mail fraud and making false statements with
“intent to defraud and mislead” about the efficacy of the drug,
leading to misbranding charges under the FDCA.
– Convicted of wire fraud; acquitted of FDCA violations.
Statements at issue were in press releases.
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Reliance on Oral Statements:
Rosenfield Testimony
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InterMune General Counsel testified that while on vacation he
approved the press release.
He testified that he relied on statements of Dr. Harkonen and
other employees.
– He approved language indicating that the company
“demonstrated” clinical benefit for IPF after discussions with
Dr. Harkonen and other employees.
On cross-examination he testified that the defendant withheld
relevant information.
– He thought Dr. Harkonen had consulted with other officials.
– He did not know of informal communications with the
agency.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Prior Prosecutions of a lawyer of FDARegulated Firm: Paul Kellogg
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The Stevens case is not the first time the
government has prosecuted an in-house attorney at
a FDA-regulated company.
Paul Kellogg was former in-house counsel for
Berkeley Nutraceuticals (Berkeley).
He was convicted on one count of conspiracy to
obstruct proceedings before FDA, and one count of
conspiracy to obstruct proceedings before the FTC.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Prosecution and Sentencing of Paul
Kellogg (Cont.)
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Conspiracy to obstruct an FDA proceeding.
– In connection with an FDA inspection, Mr. Kellogg allegedly directed
Berkeley staff to drive a truckload of the company’s dietary
supplement Rovicid “old labeling” to an off-site location so the
agency inspectors would not discover the labeling.
– After the inspectors left, the employees purportedly drove the truck
with the documents back to the company.
Conspiracy to obstruct an FTC proceeding.
– Mr. Kellogg allegedly named as trustee in two trusts created to hide
money from FTC.
– Mr. Kellogg did not create documents, and was in hospital at time.
Mr. Kellogg was sentenced to a year and a day in jail; the company’s
founder Steven Warshak was sentenced to a 25 year prison term.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Example of Prosecutions of Officials
Who Are Not Lawyers for Obstructing
FDA: Thomas Farina
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Former Pfizer, Inc. District Manager Thomas Farina was
convicted of obstruction of justice (falsification of documents).
Mr. Farina was sentenced to six months home arrest with
electronic monitoring and three years of probation.
After being told that government was investigating off-label
promotion practices, Mr. Farina allegedly directed a sales
representative that he managed to alter and backdate the
alterations on the computer to hide off-label promotion.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Lessons Learned from the Allegations in
the Stevens Case.
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In house lawyers and other company officials who provide oral or written
information to FDA must take great care to make sure that information
conveyed to the agency is correct.
Do not guess as to whether information being provided is correct. Where
available, put disclaimers on information that is submitted orally or in writing
such as: “Based on the information available to us”; “We have been unable to
undertake a full investigation”; “We believe” (as opposed to “We know”); “We do
not know the answer to your question”.
Avoid making unnecessary affirmative statements in writing about company
actions or documents.
Do not say something orally or in writing just because you think it is what FDA
wants to hear. They want to hear the truth. Making statements to FDA just to
keep the agency happy usually does not work. For an in-depth discussion
about some “do’s and don’ts” for responding to FDA inquiries you can consult
the following article: Responding to FDA Form 483 and FDA Warning Letters,
http://www.hpm.com/devitem.cfm?RID=22.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Verify All Oral and Written Statements
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Do not blindly incorporate oral statement obtained
from other company officials.
Where possible, prior to signing any document for
submission to FDA or any other government agency
that is based on information obtained from another
company official, attempt to independently verify
those statements.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Document Retrieval
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Carefully document the steps taken to retrieve
company records for the purpose of responding to
subpoenas or information requests from FDA and
other government agencies.
Document the process that the company used to find
documents, including where the company did and
did not search.
Make sure relevant documents are searched for, and
if responsive, produced to the government.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Avoid Cover-ups
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Cover-ups in the face of an agency investigation
leave officials extremely vulnerable to obstruction
charges.
In today’s enforcement environment every company
employee is a potential whistleblower. Thus, any
company person who knows of a company cover-up
can potentially “spill the beans” to FDA.
Paul Kellogg was prosecuted for participation in
cover-up, not for his legal advice.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Conclusion
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It is certainly not unusual for the government to criminally
prosecute in-house or attorneys or other officials at FDAregulated companies for obstruction of justice or making false
statements.
The Stevens’ case presents serious risks to the defendant.
Moreover, the government has indicated that Ms. Stevens’
indictment may be followed by charges against others.
Attorneys and other officials at FDA-regulated companies need
to be careful to take all appropriate steps to protect themselves
against such prosecutions.
Copyright 2010 Hyman, Phelps & McNamara, P.C.
Questions?
John R. Fleder, Esq.
[email protected]
Douglas B. Farquhar, Esq.
[email protected]
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Copyright 2010 Hyman, Phelps & McNamara, P.C.