Cgmp Violations Should Not Be Used as a Basis for Fca Actions Absent Fraud

JurisdictionUnited States,Federal
CitationVol. 38 No. 01
Publication year2014


cGMP Violations Should Not Be Used as a Basis for FCA Actions Absent Fraud

Kyle Faget(fn*)


Since Congress amended the False Claims Act (FCA) in 1986, the statute has evolved into a seemingly boundless weapon for enforcing other statutes and regulations applicable to every industry that accepts any form of government funding. Use of the FCA by the Department of Justice (DOJ) and by private citizens bringing actions on behalf of the U.S. government to enforce other statutes and regulations is particularly evident in the field of health care.(fn1) The FCA has been utilized in actions where the allegations include offlabel promotion of drugs, kickbacks, and violations of current good manufac-turing practices (cGMPs) by linking the alleged violation with the government reimbursement under Medicare and Medicaid. cGMP violations, however, are historically enforced by the Food and Drug Administration (FDA) under the Food, Drug, and Cosmetic Act (FDCA), which regulates the safety and ef-fectiveness of drugs and devices. Whether alleged cGMP violations are sub-ject to enforcement by the FDA under the FDCA or by the DOJ and private citizens on behalf of the United States government under the FCA, or both, has been heavily debated recently.(fn2)

The DOJ successfully used the FCA as the statutory hook to enable its enforcement authority in an action against GlaxoSmithKline (GSK)(fn3) and Ranbaxy USA, Inc.(fn4) DOJ alleged that both companies released adulterated drugs into the stream of commerce in violation of FDCA cGMPs.(fn5) The action against GSK resulted in a $750 million settlement with the United States At-torney's Office for the District of Massachusetts;(fn6) Ranbaxy settled with the District of Maryland for $500 million.(fn7) These enforcement actions seem to indicate that the FCA may be used to enforce FDCA cGMP, quality system regulation (QSR) violations, or both.(fn8) However, in February 2014, the Fourth Circuit in United States ex rel. Rostholder v. Omnicare, Inc. seemingly put the brakes on DOJ's ability to invoke the FCA to enforce cGMP violations when the court held that "adulterated drugs are not barred from reimbursement by Medicare and Medicaid and, therefore, claims for reimbursement for these drugs cannot be 'false' under the FCA."(fn9) While the Rostholder decision may indicate that using the FCA to enforce the FDCA-and cGMP violations specifically-may not be the fer-tile ground for sweeping DOJ enforcement as originally imagined; the deci-sion may have simply clarified that the DOJ's enforcement reach is limited to fraud on the FDA, which may include underlying cGMP violations.

This Article examines the statutory background of cGMPs and QSRs, considers enforcement of cGMP violations by both the FDA un-der the FDCA and the DOJ under the FCA, and proposes that fraudulent and felonious violations of cGMPs should be enforced by the DOJ under the FCA because DOJ has the resources and the expertise to investigate and prosecute such violations. Non-fraudulent cGMP violations, on the other hand, should be enforced by the FDA under the FDCA because the FDA has both the subject matter expertise and the statutory mandate to regulate drugs and medical devices.


The government heavily regulates the manufacturing of drugs and medical devices. under the FDCA, the Secretary of Health and Human Services may prescribe regulations requiring that the methods used in, and the fa-cilities and controls used for, the manufacture . . . of a device con-form to current good manufacturing practice, as prescribed in such regulations, to assure that the device will be safe and effective and otherwise in compliance with this [Act].(fn10)

Consistent with this statutory mandate, the Secretary has created a "quality system regulation," or "QSR," that sets forth current good manufacturing practice requirements, commonly referred to as cGMPs.(fn11) The FDA has statutory authority to enforce violations of the FDCA.

A. Setting QSR and cGMP Standards

QSRs "govern the methods used in, and the facilities and controls used for, the . . . manufacture . . . of all finished devices intended for human use," and are "intended to ensure that finished devices will be safe and effective and otherwise in compliance with the [FDCA]."(fn12) These regulations require manufacturers to establish specifications and controls for quality and safety.(fn13) The FDA's Medical Device Quality Systems Manual specifies: [cGMPs] require that domestic or foreign manufacturers have a quality system for the design and production of medical devices in-tended for commercial distribution in the united States. The regulation requires that various specifications and controls be established for devices; that devices be designed under a quality system to meet these specifications; that devices be manufactured under a quality system; that finished devices meet these specifications; that devices be correctly installed, checked and serviced; that quality data be analyzed to identify and correct quality problems; and that complaints be processed.(fn14)

The regulations are flexible, however. The FDA notes that "'[e]ach manufacturer shall establish and maintain a quality system that is appro-priate for the specific device(s) designed or manufactured, and that meets the requirements of this part.' The word 'appropriate' means that the rule is a flexible regulation."(fn15) The FDA explains:FDA has identified in the QS regulation the essential elements that a quality system shall embody for design, production and distribution, without prescribing specific ways to establish these elements. Be-cause the QS regulation covers a broad spectrum of devices and production processes, it allows some leeway in the details of quality system elements. It is left to manufacturers to determine the necessi-ty for, or extent of some quality elements and to develop and im-plement specific procedures tailored to their particular processes and devices.(fn16)

It is not practical for the FDA to delineate quality system elements for each of the numerous devices on the market. Instead, general objec-tives are specified and manufacturers are left to determine the best meth-ods to attain quality objectives.(fn17)

The FDA also requires that drug makers' manufacturing facilities comply with cGMPs, which establish the minimum requirements for the methods, facilities, and controls used in manufacturing and processing human drugs in order to prevent the production of unsafe and ineffective products.(fn18) To ensure compliance, the agency conducts inspections peri-odically and in conjunction with drug applications. Compliance with the cGMP requirements assures that drugs and devices meet the safety re-quirements of the FDCA and have the quality, purity, identity, and strength characteristics that they purport or are represented to possess. Drugs and devices not manufactured, processed, packaged, or held in conformance with cGMP requirements are deemed adulterated within the meaning of 21 U.S.C. § 351(a)(2)(B).(fn19)

Because the FDCA does not provide a definition of what constitutes cGMPs, the determination of what constitutes cGMPs is often a matter of judgment and interpretation20 The FDA uses the concept of "current" GMP to continuously advance industry best practices and to advance practices not yet used in the industry but that the FDA determines could improve manufacturing controls and drug or device product integrity.(fn20) As a result, the FDA establishes cGMP requirements informally via speeches, guidance documents, FDA investigators' inspection observa-tions, and letters to manufacturers.(fn21) A violation may "result from a good faith technical dispute about what cGMP requires in a particular set-ting."(fn22) Theoretically, a conclusion by a field investigator that a particu-lar practice violates cGMP may reflect nothing more than miscommuni-cation between the agency and industry.(fn23)

Significantly, as noted, failure to comply with the QSR "renders a device adulterated under section 501(h)" of the FDCA, and "[s]uch a device, as well as any person responsible for the failure to comply, is subject to regulatory action."(fn24) Under 21 U.S.C. § 351(a)(2)(B), a drug is adulterated if:[T]he methods used in, or the facilities or controls used for, its manufacture, processing, packing, or holding do not conform to or are not operated or administered in conformity with current good manufacturing practice to assure that such drug meets the require-ments of this chapter as to safety and has the identity and strength, and meets the quality and purity characteristics, which it purports or is represented to possess . . . .(fn25)

Once the FDA deems a drug or device adulterated, the FDA has several enforcement tools in its arsenal to remedy the manufacturing failure and to protect consumers from exposure to the drug.

B. FDA's cGMP Violation Enforcement Tools

The FDA is responsible for investigating violations of the FDCA, including those related to adulterated drugs and devices.(fn26) The Agency may exercise its enforcement authority, derived from 21 U.S.C. § 331, when a prohibited act has been identified. Prohibited acts include Interstate shipment of adulterated drugs and devices, and selling devices not made in conformance with QSR or cGMP requirements.(fn27) The...

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