FDA reads your press releases, and it reviews your promotional materials and websites. It doesn’t just give them a cursory glance either, it scrutinizes them. As a result, biotech/biopharma companies are advised to fight the urge to dwell on or embellish the positives, especially in press releases where negative news actually predominates. This clouding of the truth is viewed by FDA as misleading and violative.
In fact, the former CEO of InterMune, which has an approved biologic license, was convicted of wire fraud for issuing a press release in 2002 that positively spun the results of failed clinical trial. The company characterized the Phase III data as “demonstrating survival benefit” and reducing “mortality by 70% in patients with mild to moderate disease.”
According to the Department of Justice, this conviction demonstrated a commitment to hold accountable those corporate executives who provide false and fraudulent information about pharmaceutical trials.
“Pharmaceutical executives who promote drugs using false and misleading information should not be allowed to hide behind a corporate shield,” said Kim Rice, special agent in charge of FDA’s Office of Criminal Investigations. “Pharmaceutical companies do not run themselves, and those who engage in criminal conduct will be held personally accountable.”
What is important here is that the FDA and the Department of Justice are clearly establishing a standard for information disclosure about clinical trials data. Companies issuing a clinical trial result press release should be extremely wary of embellishing where there are obvious negatives, and they should seek legal input on the appropriate wording of press releases.
That said, firms should not attempt to hide behind the sign-off of outside legal FDA counsel. In another legal skirmish, the SEC brought action against a company and its management for a press release that sounded too positive after rejection of a Biological License Application, even though outside FDA counsel had signed off on the wording.
FDA is also cracking down on hype in promotional materials. It has sent warning letters to companies about the omission of risk information or the broadening of the indication of an approved drug on a company website. FDA’s position is that promotional materials are misleading if they fail to reveal material facts when recommending the use of a drug.
One company was recently reprimanded by the FDA when its website presented an “unbalanced picture of the benefits and uses [of an approved drug]”. After FDA alleged that the website was violative because of the omission, it then alleged that the company had failed to submit Form FDA-2253 for transmittal of Advertisements and Promotional Labeling for Drugs and Biologics for Human Use.
The Federal Court recently reaffirmed that the “responsible corporate officer,” regardless of whether they have knowledge of FDA noncompliance in the corporation, will be held to strict criminal misdemeanor liability. The relevant case centered around liability and civil penalties for the failure of a company to submit product failure reports to FDA. These failures were first identified during a cGMP inspection.
The FDA expects CEOs/presidents to adequately supervise their company’s compliance efforts in quality control, quality assurance, regulatory, and clinical studies. The initial judgment for civil penalties was assessed by a Department of Health and Human Services (HHS) administrative law judge against the company and its president, was subsequently affirmed by the HHS Appeals Board, and then affirmed by the 10th Circuit Court of Appeals.
The level of liability exposure to senior and middle management was further demonstrated on October 29, when the former president of Stryker Biotech and three of its current sales managers were indicted for illegal promotion, misbranding, making false statements to FDA, and wire fraud. These defendants allegedly promoted OP-1 products mixed with an unapproved excipient, Calstrux, for implantation, resulting in patient deaths and serious medical problems. Additionally, Stryker has a number of outstanding warning letters that have not been closed, which could mean more FDA compliance issues for Stryker corporate.