Policy Changes and More Enforcement Coming?

Three Skadden Arps attorneys say life sciences companies may face policy changes and increased enforcement activity from FDA and the Department of Justice (DoJ) as 2022 plays out. Writing in an online post, the attorneys say that so far the Biden administration’s FDA and DoJ have focused their efforts on Covid-related conduct.

That could change, they write, if Robert Califf takes over as FDA commissioner and additional DoJ officials are appointed and confirmed.

They note a dramatic drop in FDA inspections in 2021 with a corresponding drop in the level of enforcement action. “FDA issued 56% fewer Warning Letters and brought 60% fewer injunctions in FY 2021 than the year before, and product recalls dropped by approximately 27%,” the attorneys say. They also point out that many of the Warning Letters that were issued involved Covid violations rather than the result of violations found through inspections.

Because FDA has again paused non-mission-critical inspections, due to the omicron variant, the post says it remains to be seen whether inspections will return to pre-pandemic levels in 2022 and whether that leads to more enforcement against prescription drug, biologic, and medical device manufacturers.

The attorneys say that DoJ enforcement in 2021 also focused on Covid issues. In traditional areas of life sciences enforcement — violations of the anti-kickback statute; the Federal Food, Drug, and Cosmetic Act; and the False Claims Act — in 2021 DoJ announced only 11 settlements of more than $1 million involving drug, biologic, or medical device manufacturers. “In contrast,” they say, “by the end of September 2019 DoJ had announced 18 such settlements with life sciences manufacturers.”

One sign the attorneys describe that may signal more intense enforcement in the future is the 10/2021 announcement of several changes to DoJ corporate enforcement policies. The changes were: 

•          a focus on individual accountability and reversion to the Obama-era expectation that companies wanting to earn cooperation credit must produce all non-privileged information about the involvement of all individuals implicated in wrongdoing;
•          an intent to consider a company’s total history of criminal, civil, and regulatory misconduct in assessing corporate prosecution factors, rather than focusing only on previous misconduct of a similar nature; and
•          an intent to closely scrutinize companies that commit wrongdoing while bound by non-prosecution agreements or deferred prosecution agreements, which have been used to resolve some life sciences cases because of the potential for exclusion from federal healthcare programs that can result from a conviction.

The authors conclude that FDA-regulated companies can assume that if Califf is confirmed, he will direct the agency’s resources to align with his policy priorities, such as further emphasis on real-world evidence. Likewise, they say, DoJ enforcement activity is likely to increase as additional new U.S. attorneys are confirmed, assume their roles, and launch enforcement initiatives reflecting their priorities.