Changes Needed to Counterfeit, Diversion Penalties: Attorney
Attorney Sheldon Bradshaw (King & Spalding) says changes are needed to penalties in the Federal Food, Drug, and Cosmetics Act (FFDCA) for drug counterfeiting and diversion of drugs intended for foreign countries into the U.S. Writing in a Washington Legal Foundation Legal Backgrounder, Bradshaw says that the integrity of the drug supply chain in the U.S. is an ongoing concern that FDA frequently monitors. “Despite successes in preventing potentially dangerous or ineffective drugs from reaching consumers,” he writes, “sales of illegal products continue, due to the potential profits that can be made.”
He reviews the potential dangers posed by counterfeit drugs and those intended for sale in another country and some of FDA’s enforcement successes combatting the importation of counterfeit and diverted drugs. But, he says, “the differing levels of jail time and fines for drug counterfeiting and diversion is one major factor in the proliferation of illegal sales and the continued viability of businesses that make such sales. The financial cost-benefit of unapproved drug sales favors the criminal sellers in two ways: (1) the size of the profits vastly outweighs the potential punishments; and (2) the low penalties for counterfeiting and diversion act as a disincentive against aggressive enforcement of those laws.”
Often, Bradshaw says, violations fall under a generalized “catch-all” penalty provision in the FFDCA that FDA “trots out to penalize a wide range of prohibited actions and which carries light misdemeanor penalties.” He says that simply increasing penalties under the catch-all provision would give government prosecutors too much power and the cure would be worse than the disease. His preferred approach is to add specific language to the FFDCA to prohibit the diversion to the U.S. of drugs manufactured outside the U.S. and intended to be marketed outside the U.S. Penalties for drug counterfeiting could be equalized with those for diversion by adding language to the FFDCA provision governing counterfeiting allowing for the same punishment for violation of the section that governs diversion.
“Perhaps by closing gaps in the FFDCA’s penalty structure, the criminal penalties from importing the dangerous product will outweigh the perceived financial benefits for bad actors, thereby protecting American consumers and strengthening the supply chain,” Bradshaw concludes.