A recent investigation and lawsuit show that the Consumer Protection Safety Commission (CPSC) is taking seriously violations of Poison Prevention Packaging Act (PPPA) standards – even without an injury.
This year, the US District Court for the District of New Jersey entered a consent decree imposing a $5 million civil penalty against a multinational pharmaceutical company for knowingly violating the PPPA and the Consumer Product Safety Act (CPSA). This is the first time a civil penalty has been imposed against a company for failing to comply with PPPA standards and mandatory reporting requirements.
Also this year, a separate lawsuit involving the same company – brought by whistleblowers alleging PPPA violations under the False Claims Act – came to an end.
In addition to potential civil penalties, PPPA violations could also lead to costly recalls for manufacturers of pharmaceutical and household products.
The Poison Prevention Packaging Act
It is estimated that, by the late 1960s, 500 children under age five in the US died each year from accidentally ingesting medication and common household products. This prompted Congress to enact the Poison Prevention Packaging Act in 1970. The PPPA authorizes the CPSC to establish child-resistant packaging standards for "household substances." The PPPA's special packaging standards cover a wide variety of products, ranging from over-the-counter and prescription medications to soaps and detergents.
While these child-resistant packaging standards have existed for almost 50 years, Congress only gave teeth to those standards within the last decade with the passage of the Consumer Product Safety Improvement Act (CPSIA) in 2008. The CPSIA's amendments to the CPSA made PPPA violations subject to civil penalties and mandatory reporting. In addition, manufacturers now must certify that products covered by the PPPA comply with all child-resistant packaging standards. The CPSC did not enforce the certification requirements until February 10, 2010, after which it required testing and certificates of general conformity.
The enforcement action
In 2012, the CPSC began investigating a multinational pharmaceutical company for alleged PPPA and CPSA violations. Then, in December 2017, the Department of Justice sued the company on the CPSC's behalf. The complaint alleged that the company knowingly violated the PPPA and CPSA when it distributed five household oral prescription drugs in blister packs that were not child resistant. In early 2011, the company's packaging engineers allegedly identified that certain blister packs had not been tested for PPPA compliance and would not pass the PPPA's testing protocol. The company developed replacement packaging, but continued until 2012 to distribute the prescription drugs in the existing, non-compliant packaging. The DOJ also alleged that the company waited over 14 months before disclosing to the CPSC that certain blister packs likely were non-compliant.
The lawsuit did not last long. One month after filing, the parties settled, with a consent decree imposing a $5 million civil penalty against the company and requiring that it implement a PPPA compliance program.
The False Claims Act
The company's troubles extended beyond the CPSC's enforcement action. Two private individuals asserted False Claims Act (FCA) claims against the company and several retailers alleging that they sold prescription drugs in violation of the PPPA. Unlike the PPPA, the FCA authorizes private individuals – "relators" – to sue on behalf of the United States. The FCA prohibits making a "false or fraudulent" claim for government reimbursement. The relators alleged that the company falsely represented compliance with federal child-resistant packaging standards, and retailers sold the company's non-compliant prescription drugs to federal health care recipients. As a result, retailers allegedly submitted claims for government reimbursement for non-compliant prescription drugs.
The company and the retailers ultimately prevailed in the seven-year FCA battle. On March 9, 2018, the Eastern District of Pennsylvania dismissed the relators' third amended FCA complaint (as it had the second amended complaint), in part, because the relators failed to allege that the PPPA violations would influence the government's reimbursement decisions.
The court said, "It is not lost upon this Court the danger of distributing prescription medications that are not packaged in accordance with the Poison Prevention Packaging Act. But based on the pleadings presently before us, the False Claims Act is not the appropriate mechanism to sanction defendants for their violations."
The first of many?
The DOJ's case against the company is unique. Before this lawsuit, on June 1, 2016, CPSC Chairman, Elliot F. Kaye, made an unprecedented public statement disclosing the CPSC's referral to the DOJ. His statement sent a powerful message: "We at CPSC take seriously the consumer safety laws we enforce, and I am confident that the U.S. Department of Justice is examining the record in a thorough manner and, if warranted, will take all appropriate actions." Then, in a June 16, 2016 blog post titled "Silence is Golden," CPSC Acting Chairman Ann Marie Buekle criticized the chairman's "unhealthy break" with CPSC tradition of not publicly disclosing referrals: "When a company has the fortitude to stand up to the government, it should be allowed to have its day in court, not be punished by having its case tried in the media."
Since then, the CPSC has been silent about enforcing the PPPA, and it is uncertain whether more enforcement actions are in the pipeline. Still, Chairman Kaye's break from CPSC tradition, and the resulting lawsuit, indicate that regulators may be moving toward aggressive enforcement of child-resistant packaging standards.
Prudent manufacturers of pharmaceutical and household products, that is, may decide to review their packaging compliance programs and reporting policies, and pay attention to any further CPSC statements regarding the PPPA.
Learn more about the implications of PPPA enforcement by contacting either of the authors.