WASHINGTON _ In round one, David defeated Goliath.David in this instance is a Laerdal Manufacturing Corp., of Portland,Ore., which makes a device paramedics use to shock-start a fibrillatingheart. Goliath is the FDA, which moved to shut Laerdal down forbreaking rules on good manufacturing practices.In a case likely to have repercussions throughout the medical andbiotechnology industries, Laerdal refused to consent to the FDA orderto shut down and decided to fight the FDA in court. On May 26,Laerdal won. A trial judge quashed the FDA's request for an injunctionhalting the company's assembly line.The decision prompted much discussion Thursday at a seminar on FDAenforcement by the Food and Drug Law Institute, which holdscontinuing education sessions for lawyers, regulators and executives.The session _ intended to convey tips on "How to Avoid Becoming aTarget [of the FDA] by Doing the Right Thing" _ also suggested that"there are viable, good alternatives to signing a consent decree," said aLaerdal attorney, Daniel Johnson, of Washington.Lessons For Biotech"There's a lesson in [the Laerdal case] for anyone regulated by FDA _the biotech industry included," Johnson said. "Despite the expenditureof a good deal of resources, FDA wasn't able to prove the existence ofa single violation."To underscore the point, he cited the example of a rival company, withfewer FDA violations, which consented to shut down more than a yearago, while it upgraded its manufacturing practices, and still is barredfrom manufacturing its defibrillators.Had Laerdal shut down, Johnson said, the company would have lost$600,000 in revenues a month _ far less than the cost of the litigation.He declined to say precisely how much the litigation cost.The FDA still may appeal the decision, however, and Goliath may yetwin. Washington Attorney John Fleder, formerly the JusticeDepartment lawyer who established policies concerning the FDA, citeda recent case in which the FDA successfully prosecuted a man morethan a 30 years after an initial failed attempt.The FDA is just one of several federal agencies, including the JusticeDepartment, FBI and the Secret Service, that are cracking down onmedical fraud and abuse in an effort to curb rising health costs.Statistics show that the agency has ratcheted up its enforcement effortsin recent years. For instance, the agency sent companies 1,755 warningletters in 1993, compared with 450 in 1988. The agency recalled 2,375products lasts year, compared with 1,526 last year. Specific numberson how many letters or recalled products were directed to biotechcompanies were not available.Daniel Michels, the FDA's director of enforcement, said that biotechfirms face the same risks as any manufacturer of medical drugs ordevices, limited perhaps by the age of the firm and the extent of itsoperations.New biotech companies, for instance, face the risk that the FDA willwithhold licensing approval for a firm's genetically engineered drugsor foods. The agency is particularly interested in cases in which acompany setting out to market a new product makes claims withoutsufficient supporting data.Established firms with products to sell, must make certain that its plantsmeet FDA regulations ensuring "good manufacturing practices" likeany other drug or device maker.Like other firms, biotech companies are subject to unannouncedinspections, which could produce a list of possible violations or awarning letter _ which he characterized as "a shot across the bow"that warrants a prompt response.Most Companies ComplyFDA statistics indicate that 75 percent of warning letters promptcompanies to comply with federal regulations, officials said.Other civil remedies include product seizures; injunctions to haltmanufacturing until violations are rectified; and weighty fines aspunishment for severe, non-criminal activities.Michels said the FDA also has the power to bring criminal charges,both for misdemeanors and felonies. When the agency brings criminalaction, it makes a point of naming executives to underscore the pointthat they "should have known" whether the company was engaging inunlawful practices.Eric Blumberg, the FDA's deputy chief counsel for litigation, said theagency takes infractions seriously because of the "potential forenormous harm" _ including injuries or death _ that could resultfrom shoddy production of foods or drugs.In deciding whether to bring a case against a firm, Blumberg said, theagency weighs the seriousness of the violation; any resulting injuriesand deaths; the dollar value of the violation; the vulnerability of thevictims; the solidity of the case and whether prosecution "will send amessage" alerting other violators to change their ways.Until 15 years ago, virtually all criminal cases brought by the FDAwere misdemeanor cases, in which the culprits often admitted theirguilt and helped prosecutors build cases against other offenders.Penalties typically were light, said John Fleder, a private-practiceattorney who formerly established policies for pressing FDAenforcement activities through the justice department.In 1980's, U.S. attorneys eager for grand jury and trial experience _and feeling pressure from Congress _ began bringing more felonycases against perpetrators of medical fraud.A sure sign of trouble, he said, is a surprise visit from an FDAinvestigator who seeks to enter a company and examine its records andpractices without first presenting a document, called a form 482, whichindicates that the company's manufacturing practices might be suspect.Fleder advises companies to "deal with the problem "before theinvestigation begins" by drawing up standard procedures for dealingwith such situations, detailing what information may be supplied andwhat questions should be referred to counsel.That way the company can demonstrate that the policy was set upbefore the FDA investigation and not as a result of it, he said.Employees should be informed that if they speak to investigatorsoutside the workplace they may be waiving their right to attorney-clientprivilege, with is conferred only through their employer. n

-- Steve Sternberg Special to BioWorld Today

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