Enforcement Litigation and Compliance

Washington, DC

December 9-10, 2015

Responding to FDA Investigation Requests

John Manthei, Partner, Latham & Watkins LLP

Gary Messplay, Partner, Hunton & Williams LLP

Mark Levy, Member, Eckert Seamans Cherin & Mellott, LLC

Moderated by Kay Holcombe, Science Vice President, Science Policy, Biotechnology Industry Organization

Agenda• Introductions

• Overview of FDA Requests for Information

• Case Study

• Initial Steps in Responding

• Collection of Documents and Conducting Interviews

• FDA’s Authority to Request Information

• Company’s Obligation to Produce Information

• Other Considerations

• Privilege and Attorney Work Product Doctrine

• Who Should Lead Investigation

• FDA Actions Following Company Response

• Q&A

• Wrap Up

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Responding to FDA Investigation Requests

Gary Messplay, Hunton & Williams LLP

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Overview of FDA Requests for Information

• FDA letters to sponsors requesting information seem to be on the rise

• Many of these letters are being sent by CDER’s Office of Prescription Drug Promotion (OPDP)

• Letters typically identify facts of which FDA has become aware and then ask numerous detailed questions seeking information

• Responses are generally requested within 14 days

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Case Study“The Office of Prescription Drug Promotion (OPDP) of the U.S. Food and Drug Administration has become aware that Madrigal Pharmaceuticals, Inc. (Madrigal) may be promoting their drug Ortega in violation of the Federal Food, Drug, and Cosmetic Act and its implementing regulations. Specifically, we refer to the following:•Dr. Jesse Pinkman – A New Cerebral Palsy Solution” website available at www.anewcerebralpalsysolution.com/. •Pinkman, J. (2014). A New Cerebral Palsy Solution. New York, NY; Los Pollos Hermanos Press.•“The Clinical Implications of Cerebral Palsy.” Symposium presented at the 2015 American Academy of Neurology (AAN). Albuquerque, NM (the “symposium”).•“Cerebral Palsy Treatment Breakthrough,” television segment on KKOB, Albuquerque, NM. June 6, 2015, 6:45 AM PDT.

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Case Study (cont’d)In order to aid in our determination of Madrigal’s possible involvement with the above communications, we request that Madrigal provide the information below.1.A complete description of the relationship between Madrigal and Dr. Jesse Pinkman. This includes any corporate, financial, employment, consultancy, research, or marketing relationships, and all current and past agreements, contracts, compensations, gifts, or gratuities. Please indicate whether Dr. Pinkman disclosed his relationship with Madrigal to AAN and, if so, the timing and content of the disclosure. Also, please disclose any relationship between Dr. Pinkman and Madrigal during the development and publication of the book A New Cerebral Palsy Solution.

2.A complete description of Madrigal’s involvement with, or influence on, the initiation, preparation, development, and publication of each of the above communications. This includes background materials, talking points, slides, speaker’s notes, questions or answers, instructions, drafts, outlines, etc.

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Case Study (cont’d)3. A complete description of any off-label uses for Ortega that were discussed during the

above communications and whether any disclosures were provided regarding these off-label uses.

4. A complete description of any contact that Madrigal had with other parties involved in the creating, producing or disseminating the above communications, the nature of the contact and the substance of the discussions.

5. Please identify each use or dissemination of the above communications and of other similar communications, including dates, locations, recipients, circumstances, and the parties responsible for the distribution, including employees and vendors of Madrigal.

6. For each communication in question 5, provide a complete description of Madrigal’s involvement with, influence on, or knowledge of the recipients and parties responsible for distribution of information about the communications.

7. A complete description of Madrigal’s involvement over and support of other CME programs that have discussed Ortega.

8. A complete description of Madrigal’s involvement with the promotion of Ortega in a similar manner.

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Case Study (cont’d)We request that you submit a written response to OPDP within 14 days. We remind you that only written communications are considered official.

Sincerely,

{See appended electronic signature page}

Sklyer White, Pharm.D.

Regulatory Review Officer

Office of Prescription Drug Product

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What Initial Steps Should Company Take?

• Determine who will be responsible for investigating, collecting relevant information, and preparing response

– A team likely will be needed

• What resources will be required

• Is 14 days realistic or should extension of time be requested

• Contacts with third parties, including Dr. Pinkman

• Collection of documents

• Interviews

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FDLI: Enforcement, Litigation, and Compliance

Responding to FDA Investigation Requests

John Manthei

Latham & Watkins LLP

December 10, 2015 

FDA Authority to Request Information

• FDA does not have administrative subpoena power.

• However, under 21 U.S.C. §374(a), FDA’s inspection of:

– “any factory, warehouse, establishment, or consulting laboratory”;

– in which prescription drugs or non-prescription drugs are “manufactured, processed, packed, or held”;

– may extend to all things therein “including records, files, [and] papers” which bear on whether adulterated or misbranded products (or products which otherwise may not be manufactured, introduced into interstate commerce, or sold or offered for sale) have been or are being “manufactured, processed, packed, transported, or held in any such place, or otherwise bearing on violation of this chapter”

FDA Authority to Request Information

• Moreover, any records or other information that FDA may inspect from a person who owns or operates an establishment engaged in the manufacture, preparation, propagation, compounding or processing of a drug shall, upon FDA’s request, be provided to FDA:

– “in advance of or in lieu of an inspection,– within a reasonable timeframe, – within reasonable limits, – and in a reasonable manner, – and in either electronic or physical form, – at the expense of such person.”

FDA Authority to Request Information

• This authority excludes:

– financial data and pricing data;– sales data (other than shipment data);– personnel data (other than data regarding the qualification of certain technical and

professional personnel); and– research data (other than data relating to new drugs and antibiotic drugs subject to

reporting and inspection under FDA’s regulations).

• Regarding inspections generally, FDA has long maintained that it needs no warrant or consent to inspect a regulated company; courts have supported this principle, holding that FDA-regulated industries are “closely regulated” and therefore no warrant is needed.

Obligation to Comply

• The FDCA identifies “the refusal to permit access to or copying of any record as required by [21 USC §374(a)]” as a prohibited act.

• Any person who commits such an act “shall be imprisoned for not more than one year or fined not more than $1,000, or both,” or if the person previously committed a prohibited act, or has acted with an intent to defraud or mislead, “such person shall be imprisoned for not more than three years or fined not more than $10,000, or both” (21 USC §333).

• Title 18 of the U.S. Code raises these values to $100,000 for most misdemeanors and $250,000 for most felonies (for individuals), or $200,000 and $500,000 (for organizations).

• FDA may seek enforcement through the federal courts and/or in conjunction with the Department of Justice.

Other Considerations

• It is critical to ensure that the correct team is in place to assess and respond to FDA’s request.

– At minimum: management, internal/external counsel, Regulatory Affairs and QA teams.

– Be mindful of the specific matter implicated, as this will influence who to include in the team.

• Information turned over to FDA may subsequently be discoverable in a civil suit, such as a class action or securities matters (a common plaintiff’s tactic is to request all possible materials under the sun).

Other Considerations

• Companies should proactively establish a process to protect materials under the attorney-client privilege.

– Attorney-Client Privilege:  A legal privilege to refuse to disclose confidential communications between a client and his/her attorney.

– Attorney Work Product:  Written or oral materials prepared by or for an attorney in the course of legal representation, which an opposing party generally may not discover or compel to be disclosed.

• FDA cannot access materials protected by the privilege.

– However, privileged materials might demonstrate that companies are in compliance with FDA requirements.  In this case, companies should carefully weigh whether or not to turn such materials over to FDA.

When Such Considerations May Arise

• Contexts in which FDA might request information include (among others):

– In follow up to an adverse event;

– After the release of new information in a journal or published study;

– In connection with other investigational observations.

• Tricky scenarios may arise.

– Example: FDA may request scientific data where not strictly required, such as regarding an OTC product marketed under a monograph. The company may be willing to provide the data to FDA, however a separate and ongoing class action suit complicates the decision to turn the data over.

FDLI ENFORCEMENT, LITIGATION AND COMPLIANCE CONFERENCE

Responding to FDA Investigation Requests

DECEMBER 10, 2015Presented by: Mark C. Levy, Esquire

Eckert Seamans Cherin & Mellott, LLC

Board Oversight Role—Reporting Obligations

• High-Stakes, High-Profile: Board plays active role. Separate committee assigned to oversight and review.

• Serious: Board actively monitors internal investigation and may become more involved if facts dictate.

• Routine: Board monitors on quarterly basis and any significant investigations.

• Protect attorney-client privilege and maintain confidentiality in appropriate cases, and attorney work product considerations.

Investigation Risks

Attorney-Client Privilege

In order to establish the attorney-client communication privilege, there must be a:

• Communication

• between a Lawyer

• and Client

• that was Confidential

• and remained Confidential

• for the purpose of seeking or giving Legal Advice, not business advice.

Attorney Work Product

• Material prepared or mental impressions developed in anticipation of litigation or for trial by a party or a party’s representatives, including the party’s attorneys, employees, or agents; or

• a communication made in anticipation of litigation or for trial between a party and the party’s representatives or among a party’s representatives, including the party’s attorneys, consultants, employees or agents.

Protecting the Privilege

• Serious investigations often require preservation of privilege.

• Routine investigations often do not require preservation of privilege.

• Dangers for waivers or failure to protect

– Risk from non-legal related communications: Public relations participation

• Discussion and disclosure for purposes other than providing legal advice and counsel

Documents

• Issue broad HOLD LETTER in Serious– Instruct parties to suspend document retention

policy and collect all relevant documents.– INVOLVE Information Technology quickly.

• Proceed Carefully:– PRESERVE PRIVILEGE: Protect by noting as

such.

• Purpose of Upjohn Warnings: Preserves Ability to Use Statement Against Witness (e.g. hand over to government or use against witness in civil litigation).

• Nature and purpose of interview

• Attorney does not represent the employee.

– What if employee asks if he or she needs a lawyer? Or lose his or her job?

• Company holds and decides on attorney-client privilege and decides when and if to disclose.

Upjohn Warnings to Witness

Upjohn Warnings to Witness

• The so-called Upjohn warning takes its name from the seminal Supreme Court case Upjohn Co. v. United States, in which the court held that communications between company counsel and employees of the company are privileged, but the privilege is owned by the company and not the individual employee. Upjohn Co. v. United States, 449 U.S. 383 (1981).

Lauren Stevens case.

• Letter inquiry from FDA about marketing and off-label promotion related to Wellbutrin.

– Voluntary response to informal inquiry.

• In-house counsel works with outside counsel to respond, but executes letter on behalf of company.

– States that will be able to “obtain and provide to [FDA] materials and documents presented at GSK-sponsored promotional programs….”

Lauren Stevens case.

• Eight years after letter inquiry, Steven charged with obstruction of justice in responding to FDA letter.

– Government asserts that she lied to FDA.

– Judge allows review of attorney-client privileged documents under crime-fraud exception.

• Judge Titus dismisses case saying that it should never have been prosecuted.

– Acted upon advise of counsel.

– Attorney-client privilege should never have been vitiated.

Challenges to privilege—other cases

• In re Kellogg Brown & Root, Inc., 756 F. 3d 754 (D.C. Cir. 2014), cert. denied, 135 S. Ct. 1163 (2015).

– Federal district concludes that government contractor must disclose documents related to internal investigation conducted by in-house legal department. 37 F. Supp. 3d 1 (D. D.C. 2014). Court concludes that investigation conducted as part of its compliance obligations as a government contractor, so not protected by privilege or work product doctrine. Court applies “but for” test to determine primary purpose is to obtain legal advice.

Challenges to privilege– other cases

– D.C. Circuit reverses on mandamus petition. The attorney client privilege applies so long as “one of the significant purposes…was to obtain or provide legal advice.” Court also held that, the fact company used in-house counsel and their “agents” (investigators), was not material to privilege issue.

KBR, Wal-Mart and Penn State

• District court, on remand, circumscribed the ruling refusing to give it blanket application: this includes waiver, inapplicability to specific documents under federal discovery rules.

• D.C. Circuit again concludes that the district court was not correct in its application of the law. In re KBR, No. 14-5319, *2 (D.C. Cir. Aug. 11, 2015).

KBR, Wal-Mart and Penn State• Delaware Supreme Court grants shareholder access to

privileged documents from a related internal investigation. Wal-Mart Stores, Inc. v. Ind. Elec. Workers Pension Trust IBEW, 95 A. 3d 1264 (Del. 2014).

– Shareholder derivative action.

– Court compels disclosure under “good cause” exception to corporation’s assertion of attorney-client privilege to preliminary investigation conducted by general counsel. The general counsel was a target of the investigation and the investigation protocol was “modified”—and, he cleared himself and other executives of wrongdoing.

KBR, Wal-Mart and Penn State

• In the wake of the Jerry Sandusky scandal, Penn State retained a law firm to conduct an internal investigation relating to Sandusky’s conduct as well as that of the university in responding.

– State court rules that law firm not retained to provide “legal services” and thus communications between law firm and Penn State not subject to attorney-client privilege. Paterno v. NCAA, No. 2013-2082 (Pa. Ct. Com. Pl. Jan. 7, 2014).

KBR, Wal-Mart and Penn State

• Firm hired by Board of Directors and firm retained related consulting group to provide “legal services” to the firm.

• Firm provides updates to NCAA during investigation.

• Estate of Joe Paterno seeks investigative documents related to creation of “Freeh Report” in subsequent civil litigation.

KBR, Wal-Mart and Penn State

– Court finds that engagement letter not satisfactory to conclude that retained to secure a legal opinion and also, a selective waiver by disclosure to public (in report) and by providing documents to NCAA.

– Various issues still being litigated. See, e.g., In Re: Application by Nonprofit Corporation Trustees to Compel Inspection of Corporate Information, No. 1593 for 2015 (Ct. Comm. Pl. Centre Cty. Nov. 19, 2015) (ordering production of, but limited use of, allegedly privileged materials (“source material”) after appropriate designation).

Lessons Learned• Exercise caution in how internal investigations are

conducted. • Distinguish between routine and high risk, high profile

investigations.• Think carefully about who performs the investigation and

to whom they report. • Better understand the applicable attorney-client privilege

and work product doctrines. – For legal purposes—threat of litigation.– Attorney oversight.– Upjohn warnings.– Mark documents accordingly.

Questions?

Mark C. Levy, EsquireEckert Seamans Cherin & Mellott, LLC

Two Liberty Place, 50 S. 16th Street, 22nd FloorPhiladelphia, PA 19102

(215) 851-8404 | mlevy@eckertseamans.com