For the first time in recent history, the Food and Drug Administration has debarred a foreign firm from importing food into the United States. The agency previously has included individuals on its food importation debarment list, so this recent action, when combined with agency’s enhanced ability to access more information on import shipments, potentially signals that FDA is considering amplifying the scope of importation enforcement action targets beyond individuals to the company level.
In a Federal Register notice on March 1, 2018, FDA announced that it is debarring Meunerie Sawyerville, a feed and feed additive company based in Quebec, Canada, for five years, based on a conviction of felony offenses relating to deliberately exporting cattle feed with overly high levels of the drug monensin. The company also was charged with making a false statement to officials with the US Customs and Border Protection.
Although the company pleaded guilty to these charges in 2015, FDA informed Meunerie Sawyerville in July 2017 that, while it was considering the debarring, the company could request a hearing on the matter. FDA denied Meunerie Sawyerville’s request for a hearing, asserting in the Federal Register notice that the company failed to file “information and analyses sufficient to create a basis for a hearing concerning this action.” The Director of the Office of Scientific Integrity further explained that hearings are granted only if there is a genuine and substantial issue of fact for resolution at a hearing.
FDA possesses the ability under section 306(b)(3) of the Federal Food, Drug and Cosmetic Act to debar a person or firm from importing food, or offering it for import, if there is a felony conviction related to importing food. In this case specifically, FDA (OSI) declared that the nature and seriousness of the offenses and the nature and extent of Meunerie Sawyerville management’s participation in the offenses were significant factors in favor of debarment. OSI also concluded that the operational changes undertaken by the company were insufficient to demonstrate correction of the offenses, and to provide reasonable assurances that the offenses will not reoccur.
FDA maintains similar authority under sections 306(a), (b)(1), and (b)(2) of the FD&C Act to debar both individuals and firms from participating in the development and approval of drug applications. The agency historically has exercised this authority only with respect to individuals. However, the approach trailblazed by FDA regarding foods imported by Meunerie Sawyerville may indicate FDA could pursue a parallel enforcement perspective by examining players in the drug field more holistically and considering the debarment of drug companies or research facilities when warranted.
With the new importation data requirements linked to the implementation of the Automated Commercial Environment/International Trade Data System (ACE/ITDS), FDA now has a significantly clearer sense of the import/export picture relating to shippers and transactions. Further enhancing this picture is the increased information about shipments and shippers that CBP also obtains through ACE, along with the enhanced data analytic capabilities of both agencies. This ability to process information on imported products more quickly and effectively had led not just to an increase in monitoring in general, but to better targeting on suspect transactions, and thus also may lead to an increase in enforcement actions by FDA.
Also, as Arent Fox wrote last year about FDA’s program alignment, the greater specialization by FDA personnel that would result from the reorganization will mean agency investigators will have greater proficiency with the products and processes they inspect. This specialization, combined with the ability to process information from CBP about imports more efficiently, likely will result in the identification and investigation into potential problems that might have been overlooked in previous years.
It is likely that the debarment of companies will remain a rare action taken by FDA and saved for situations similar to the Meunerie Sawyerville case where misconduct by company executives was involved. However, it still behooves companies to ensure that its internal compliance program can help mitigate the types of risks and actions that could result in increased agency scrutiny or enforcement actions.
This is particularly relevant in light of recent statements made by FDA Chief Counsel, Rebecca Wood, regarding the FDA’s interpretation of the Park Doctrine, also known as the “Responsible Corporate Officer Doctrine.” The Park Doctrine was established by Supreme Court case law and provides that a responsible corporate officer can be held liable for a first time misdemeanor (and possible subsequent felony) under the FD&C Act without proof that the corporate officer acted with intent or even negligence, and even if such corporate officer did not have any actual knowledge of, or participation in, the specific offense.
At a conference in December 2017, the Chief Counsel stated that FDA intends to bring clarity to the circumstances in which criminal charges would be pursued against an individual in a supervisory role. Extending this initiative to the present case, it is quite possible senior management within firms could be held liable for the conduct or omissions of subordinates or third-party partners and, if particularly egregious, the conduct or omissions may ultimately lead to the debarment of the entire organization.