DoJ Enforcement Directive Signals More Scrutiny of FDA-Regulated Firms

A new Department of Justice directive identifying violations of the Federal Food, Drug, and Cosmetic Act (FDCA) among potential targets for fraud enforcement could expose FDA-regulated firms to increased federal investigations and criminal prosecutions, according to an analysis by attorneys at Holland & Knight. The 10/1 directive outlines factors prosecutors should consider when deciding whether to pursue criminal charges, negotiate plea agreements or enter into other corporate resolutions.

Although the directive addresses corporate fraud broadly, its explicit reference to fraudulent activities violating the FDCA is significant because it does not identify particular types of violations that prosecutors intend to prioritize, the law firm said. The attorneys cautioned that the broad language could expose companies to heightened scrutiny across a range of FDA-regulated activities, including drug and device manufacturing, distribution and marketing.

The directive also raises the prospect of greater cooperation between DoJ and FDA in criminal investigations. The agency currently conducts criminal investigations through its Office of Criminal Investigations and works with federal prosecutors, but additional DoJ involvement could expand the resources available for enforcement, particularly amid staffing changes at the agency.

Holland & Knight said the directive should be viewed alongside other Trump Administration initiatives to coordinate enforcement across federal agencies. Those efforts include an 8/31 memorandum of understanding between FDA and the Securities and Exchange Commission intended to strengthen cooperation between the two agencies.

The law firm also pointed to increased HHS scrutiny of waste, fraud and abuse in federal healthcare programs as evidence of a broader enforcement emphasis that could extend to pharmaceutical and medical device manufacturers.

Companies involved in manufacturing, distributing, importing, selling or administering FDA-regulated products should review their compliance programs and assess potential exposure to investigations, the attorneys advised.

The directive does not itself establish new FDCA violations or demonstrate that DoJ has increased prosecutions against FDA-regulated companies. However, Holland & Knight said its broad enforcement language and emphasis on interagency coordination suggest that more aggressive federal enforcement may be forthcoming.