August 2017

Are your company’s press releases a ticking time bomb?

As a compliance officer, it is important to review how communications are reviewed and approved before being made public. Having improper controls or no controls at all can lead to U.S. Food and Drug Administration (FDA) enforcement action, jeopardize the company’s chances of FDA approval of an investigational drug, and if the company is publicly listed on the U.S. stock market, the Securities and Exchange has the authority to charge the company and even its employees for making misleading statements, among other charges. Before you say, “We’re fine,” see the case examples below.

FDA Untitled Letter: In 2012, FDA’s Office of Prescription Drug Promotion (OPDP) issued a letter against a company regarding the firm’s websites, including posted press releases and videos, promoting the company’s investigational products. Promotion of an investigational new drug is prohibited under FDA regulations at 21 CFR 312.7(a). However, this section does not “restrict the full exchange of scientific information concerning the drug, including dissemination of scientific findings in scientific or lay media.”

Thus, OPDP found the totality of claims made throughout the websites, press releases, and videos suggested the product was safe and/or effective. OPDP further added, “[t]hese claims are concerning from a public health perspective because they make promotional claims about the safety and efficacy of investigational new drugs that have not been approved by the FDA.”

FDA Untitled Letter: In 2016, FDA’s OPDP issued a letter to two pharmaceutical manufacturers regarding websites promoting the company’s investigation drug, then under FDA review, as safe and effective. The websites for the product failed to clearly convey it was an investigational new drug, not authorized for marketing in the United States for any indication. OPDP stated the following:

Conclusory statements regarding safety and effectiveness of a drug, made while an application for the product is under review, suggest an effort to shape public impressions of the drug in the lead-up to its launch, before FDA’s evaluation of the product is complete and reflected in approved drug labeling. Such statements raise considerable public health concerns and may remain probative evidence later when a product is in broad distribution. The statements are particularly irresponsible and alarming with respect to an opioid drug product. [emphasis added]

Like the previous case example, companies can freely exchange scientific information and findings in scientific or lay media. Companies cannot “represent in a promotional context that an investigational new drug is safe or effective for the purposes for which it is under investigation or otherwise promote the drug.” See 21 CFR 312.7. Shortly after receiving the Untitled Letter, FDA issued its denial of the manufacturers’ new drug application.

SEC Action: In 2016, the SEC charged a pharmaceutical manufacturer, including the company’s chief executive officer, chief financial officer, chief medical officer, for making misleading claims in a press release, as well as other corporate disclosures and statements, related to the company’s investigation product. As part of the government’s complaint, the SEC alleged that one press release was misleading because it failed to disclose the FDA’s recommendations to conduct a second trial. A Form 10-Q was also filed that contained the CEO’s certification that “it did not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements therein not materially misleading.” The SEC alleged the CEO’s certification was also misleading because it failed to disclosure FDA’s recommendation.

The company and its officers were charged with violations of the antifraud provisions of the federal securities laws and various. The company agreed to pay a $4 million penalty to settle the SEC’s charges without admitting or denying the allegations in the complaint. The case continued against the corporate officers, as the SEC seeks disgorgement plus interest and penalties, permanent injunctions, and officer-and-director bars against them.

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April 2017

On April 24th at the Ethics and Compliance Initiative Annual Conference, Attorney General Jeff Sessions made clear that the Department of Justice (DOJ) remains committed to enforcing the nation’s fraud and abuse laws. While health care fraud will continue to be investigated, special emphasis was placed on the Foreign Corrupt Practices Act (FCPA).

Under the FCPA, it is unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. This anti-bribery statute applies to all U.S. persons, as well as certain foreign firms and persons; additional accounting provisions apply to publicly traded companies listed in the United States. Attorney General Sessions said it was “critical” to enforce the FCPA in order to “protect honest businesses.”

The Attorney General also discussed the importance of holding individuals accountable for corporate misconduct and bringing these individuals to justice. In addition, he stressed how when making charging decisions, the DOJ will continue to take into account a company’s “good” compliance program, their cooperation, self-disclosure, and acceptance of responsibility for their misconduct

Similar remarks were made a week ago by Acting Principal Deputy Assistant Attorney General, Trevor McFadden, at the Anti-Corruption, Export Controls & Sanctions 10th Compliance Summit, who added that the DOJ was “making a concerted effort to move corporate investigations expeditiously.” Their statements, including the February 8th publication of the “Evaluation of Corporate Compliance Programs” on the DOJ Fraud Section’s website, are strong reminders for companies to ensure they have an effective compliance program.

If you’re looking to assess your compliance program or need a hand in carrying yours out effectively, G&M Health has you covered!