On February 6, 2009, the U.S. Court of Appeals for the Fifth Circuit ruled in United States v. Palazzo1 that a clinical investigator can be held criminally liable for failing to comply with regulations of the U.S. Food and Drug Administration (FDA) that impose record-keeping and reporting requirements for clinical studies. This case is striking for two reasons.
- First, it establishes the firm precedent that non-compliance with the Good Clinical Practice (GCP) record-keeping requirements contained in FDA regulations can result in criminal penalties.
- Second, this case clearly illustrates that the FDA and the U.S. Department of Justice (DOJ) are actively expanding the types of criminal charges that they can bring when they identify non-compliance during the conduct of clinical trials.
Over the past few years, clinical investigators have been subject to increasing government scrutiny. The Palazzo decision is another example of the continuation of this trend and it underscores the need for strict compliance with the FDA’s GCP regulations during clinical studies.
Recent GCP Enforcement Trends Before the Palazzo Decision
Before the Palazzo case, the previous high-profile prosecution of a clinical investigator was of Anne Kirkman Campbell, who achieved notoriety by fabricating records of non-existent patients in a Phase 3 study of the antibacterial drug Ketek. On March 24, 2004, Dr. Kirkman Campbell was convicted of mail fraud under 18 U.S.C. § 1341 and was sentenced to 57 months in prison and fined more than half a million dollars.2
In the wake of the conviction of Dr. Kirkman Campbell, both Congress and the media severely criticized the FDA for approving Ketek while knowing at the time of approval that some of the data in the Ketek New Drug Application (NDA) had been falsified. In response to these criticisms, the FDA has stepped up its clinical trial enforcement and is now taking a much closer look at GCP compliance at clinical sites. As an example of this, four out of the five Warning Letters that the FDA has issued during the past month have been to clinical investigators.
With this context in mind, the Palazzo ruling assumes even greater significance. Not only is the FDA focusing increased attention on GCP enforcement and data integrity, but it now has another criminal charge in its arsenal that it can pursue when it identifies serious misconduct in clinical trials.
The Palazzo District Court Ruling
Dr. Maria Carmen Palazzo was a licensed psychiatrist with offices in New Orleans who worked as a clinical investigator in studies on the drug Paxil. In August 2005, a grand jury indicted Dr. Palazzo with two counts of health care fraud and fifteen counts of failure to maintain records of the clinical studies in violation of FDCA § 505(i).3 Specifically, the government alleged that Dr. Palazzo’s psychiatric evaluations of the study subjects indicated that they suffered from psychiatric disorders when the subjects had not, in fact, been diagnosed with those disorders.4
After a superseding indictment was issued, Dr. Palazzo filed a motion to dismiss the counts related to record-keeping violations. The District Court granted the motion, finding that FDCA § 505(i) did not permit the FDA “to promulgate regulations making clinical investigators criminally liable for failure to properly keep records and report accurate information.”5 In reaching this conclusion, the court determined that Congress did not specifically authorize regulations giving rise to criminal liability under § 505(i).
The Palazzo Court of Appeals Opinion
On appeal by the United States, the Fifth Circuit reversed the lower court’s decision. In reaching this conclusion, the court first held that FDCA § 505(i) provides the FDA “with unambiguous authority to promulgate regulations requiring clinical investigators to adhere to specific recordkeeping and reporting requirements.”6 The court then recognized that FDCA § 301(e)7 makes it a prohibited act to fail to establish or maintain any record or report required under FDCA § 505(i), and that FDCA § 303(a)8 establishes criminal penalties for violations of FDCA § 301(e). The Fifth Circuit found that, when the FDA’s clinical trial record-keeping regulations are read in conjunction with FDCA §§ 505(i), 301(e), and 303(a)(1), it becomes “apparent that the scope of the statute allows clinical investigators to be subjected to criminal liability.” 9
Significance of Palazzo
In the past, federal criminal proceedings against clinical investigators for violating GCP recordkeeping requirements were primarily limited to egregious situations involving blatant falsification of data. In those cases, the government could prosecute the investigator for making false statements to the government in violation of 18 U.S.C. § 1001, or — as in the case of Dr. Kirkman Campbell — for mail fraud under 18 U.S.C. § 1341.
In Palazzo, by contrast, the DOJ did not claim that falsified data were submitted to the FDA. Instead, the government alleged only that there had been a failure to comply with the requirements of the FDA’s clinical trial record-keeping regulations.
Moreover, the theory of criminal liability endorsed by the Fifth Circuit in Palazzo may not be limited in application to clinical investigators, but could also be used to support criminal prosecutions against other parties who generate and maintain clinical trial records. As such, this case is significant to drug companies, academic medical centers, Institutional Review Boards, and contract research organizations.
In summary, in the wake of Palazzo, GCP compliance has never been more important for all parties who participate in and support clinical research.