Transcript OCRA Ethics Program -- Generic Drug Scandal Retrospective

Ethics in Regulatory Affairs
Ethical Challenges and the Generic Drug Scandal –
A Brief Retrospective
ORANGE COUNTY REGULATORY AFFAIRS (OCRA)
DISCUSSION GROUP
Monday, August 30, 2004
Michael A. Swit, Esq.
FDACounsel.com
LAW OFFICES OF MICHAEL A. SWIT
539 Samuel Ct., Suite 229
Encinitas, CA 92024
760-815-4762 ♦ fax: 760-454-2979
[email protected]
www.FDACounsel.com
FDACounsel.com
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60 Seconds of History
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1984 – Hatch-Waxman Act passes –
liberalizing generic drug approval process
Generic Industry’s Challenge – being first to
approval for brand name drug
Upside – set price, size, shape & color;
ensure market penetration
Downside – if not first, entering a commodity
market; price drives & margins disappear
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Then What Happened?
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Mylan – thought it kept losing the race;
reaction – hired a private eye; went
through Charlie Chang’s trash
Result –
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Congressional investigation -- July 1988
Gratuity pleas/convictions
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Industry – including a Par Senior VP
FDA Generic Drug officials
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But, we’re not finished yet …
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Maxzide Samples Switch – Par – announced just a
few weeks after gratuity conviction – July 1989
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Why FDA asked for sample – tip from disgruntled
fired employee
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Immediate Consequences
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another senior VP resigns in a cloud
Voluntary marketing moratorium of all drugs
New CEO – and other management team, including: VP/GC,
VP/RA, VP/QA, VP/QC, VP/Ops, VP/R&D
Additional grand jury proceedings
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What Allowed This to Occur?
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Corporate culture –
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Ethics must come from the top – simply put, here, the
wolves were guarding the hen house
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Training – little or none on liability & consequences of
violations
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Staff composition – lack of diversity and other factors
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Fear – see staff composition
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No mechanisms existed to allow employees to question
supervisors/managers’ orders without fear
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Why It Happened?
GREED.
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What We Had to Do to
Correct?
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Complete overhaul of corporation and
operations
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Procedures
Training
Audits by outside experts
Code of conduct
Ethics training – access to outside board
members
Cooperation with federal investigators
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The Cost?
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Immense
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Lost sales -- $102 mm in ’89 vs, $55 mm in
‘90
Fired employees – 900 to 450
Criminal and civil fines -- $2.75 mm
Outside auditors & attorneys -- ~$5 mm
Interference with business operations –
little R&D for three years
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Could it happen again?
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Of course – people are fallible
Your job – be prepared to be able to
address if it happens on your watch.
"The price of freedom is eternal vigilance."
-- Thomas Jefferson &/or Wendell Phillips
"Noncooperation with evil is as much a duty as
cooperation with good." -- Gandhi
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Questions?
Write, call, fax or e-mail:
Michael A. Swit, Esq.
FDACounsel.com
LAW OFFICES OF MICHAEL A. SWIT
539 Samuel Ct., Suite 229
Encinitas, CA 92024
760-815-4762 ♦ fax: 760-454-2979
[email protected]
www.FDACounsel.com
FDACounsel.com
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About your instructor…
Michael A. Swit has over 20 years of experience addressing critical FDA legal and regulatory
issues. His vast and varied experience, which he is now providing as a solo practitioner, includes
serving for three and a half years as vice president and general counsel of Pharmaceutical
Resources, Inc. (PRI) a prominent generic drug manufacturer through its Par Pharmaceutical
subsidiary, and brings an industry and commercial perspective to his representation of FDAregulated companies. While at PRI from 1990 to late 1993, Mr. Swit spearheaded the company’s
defense of multiple grand jury investigations, other federal and state proceedings, and securities
litigation stemming from the acts of prior management. Mr. Swit then served from 1994 to 1998
as CEO of Washington Business Information, Inc. (WBII) a premier publisher of FDA regulatory
newsletters and other specialty information products for the FDA-regulated community. From
May 2001 to May 2003, Mr. Swit was special counsel in the FDA Law Practice Group in the San
Diego office of Heller Ehrman White & McAuliffe. Before that, he was twice in private practice
with McKenna & Cuneo, from 1988 to 1990 and, most recently, from 1999 to 2001, first in that
firm’s D.C. office and most recently, in its San Diego office. He first practiced FDA regulatory
law with the D.C. office of Burditt & Radzius from 1984 to 1988. Mr. Swit has taught and
written on a wide variety of subjects relating to FDA law including, since 1989, co-directing a
three-day intensive course on the generic drug approval process and editing a guide to the generic
drug approval process, Getting Your Generic Drug Approved. He is a member of the California,
Virginia and District of Columbia bars, an avid hockey, basketball and baseball fan (and explayer), and the father of triplet sons, born Feb. 29, 1996, and is married to Vera Caccioppoli, an
accomplished creative writer, artist, and proud owner of Hi-Way Haven, a boutique and creative
hub for jewelry, art and writing, in Leucadia, California.
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