Round-up on FDA compliance

This is the fourth in a series of seven posts about regulatory compliance priorities and enforcement trends.  The first post was about the Commodity Futures Trading Commission (CFTC).  The second post was about the Federal Trade Commission (FTC).  Last week’s post was about the Securities & Exchange Commission (SEC).  Today’s post will be about the Food & Drug Administration (FDA).  Next week, on Thursday January 18, the post will be about the U.S. Department of Agriculture (USDA).  On Thursday January 25, the post will be about the Environmental Protection Agency (EPA).  Finally, on Thursday February 1, the post will be about the Federal Communications Commission (FCC).

The Food & Drug Administration (FDA) is the US regulator charged with supervising and enforcing federal  laws concerning food, tobacco, dietary supplements, medications and medical treatments and devices, cosmetics, and animal and veterinary products, among other related products and devices related to public health and food safety concerns.  The FDA was created in 1938 by the Federal Food, Drug and Cosmetic Act, which gave the FDA oversight on food, drugs, and cosmetics and now constitutes of the major bodies of federal securities law it is responsible for enforcing.  Other significant statutes within the purview of the FDA – either wholly or partially, in collaboration with other federal supervisory and regulatory entities – include the Public Health Service Act (from 1944, concerning the prevention of foreign communicable diseases within the US) and the Controlled Substances Act (from 1971, creating federal US drug policy).

The food, medical, and veterinary products that fall under the regulatory purview of the FDA represent a significant proportion of the consumer goods imported into, purchased within and used in the United States, meaning that the FDA has broad reach into people’s everyday lives and therefore wide oversight duties to ensure adequate protections.  Food, drugs, cosmetics, and vitamin supplements are the largest categories of consumer products regulated by the FDA.  The FDA’s regulatory powers are broad in scope, including a huge array of business practices, from development, testing, and manufacturing to advertising, labeling, marketing, sales, and supply chain safety.  Enforcement of standards, oversight and monitoring of practices, approval of products, and handling of violations gives the FDA a heavy footprint in its covered industries.

  • Homeopathic drugs: The mandate of the FDA to regulate a variety of medicines and related treatments extends to addressing homeopathic drugs.  These products are widely available to consumers but previously have been lightly regulated.  Given burgeoning consumer protection concerns due to public harm from products that do not have any value as medical treatment and can in fact injure people or make them sick, the FDA is planning to take a more active role in the homeopathic drugs market.  Since the 1980s, the FDA has had a policy of not using the full weight of its enforcement authority with homeopathic drugs because their impacts were thought to be so minor that they could not be dangerous.  However, as more people have started using these homeopathic remedies, the risks and need for protection, especially for infants, children, and elderly people, have grown.  Last year children were sickened and even died from using homeopathic teething remedies sold at CVS due to poisoning from belladonna, which the medicines contained in dangerous proportions.  Testing, approval, oversight practices, or some combination of the above are apparently necessary for ensuring that these products do not hurt people, contain the ingredients they are supposed to in the amounts they should, and can provide medical benefit to support the health-related claims made by the manufacturers to consumers:  FDA to target ‘potentially harmful, unproven’ homeopathic drugs under new proposal
  • Cryotherapy: On a similar note, cryotherapy – immersion in a chamber cooled to as low as -132 degrees Celsius to treat inflammation and all kinds of other ailments and discomforts – has been spreading in popularity and caught the attention of the FDA.  Cryotherapy is often billed as a kind of spa treatment and has won the endorsement of athletes and celebrities for its health benefits.  However, the FDA has reacted skeptically to these claims, especially as people have been injured by unprofessional service providers or attempts to administer cryotherapy “treatments” to themselves.  If people continue to view cryotherapy and other popular science type activities and procedures as giving them some medical or curative benefit, which seems likely, then the need for the FDA to intervene by setting standards and providing oversight will grow alongside the popularity:  The spread of cryotherapy
  • Opioid epidemic: The FDA is well-positioned to contribute to efforts in containing the public health emergency of opioid drug abuse.  The FDA is responsible for overseeing both the number of prescriptions issued and the introduction of drugs to curb and treat addiction.  Overhaul of the system in which opioids are prescribed, and the rationale behind the length of prescriptions, is in the reform jurisdiction of the FDA.  This system would likely be funded by the pharmaceutical companies that make opioids, similar to what is already done to pay for other similar programs covered by the FDA’s enforcement authority.  Prescription intervention as well as the expedition of new versions of drugs to treat addiction will be priorities of the FDA on its upcoming regulatory agenda:  FDA plans to curb prescriptions to fight opioid epidemic
  • Gene therapy: Apart from approval of drugs, the FDA is also tasked with approving medical treatments.  Gene therapy has been a hot topic in bioethics for years, with questions about the use of stem or other cells from humans having dogged the technology’s development for years, but having promising treatments for genetic diseases now finally in its pipeline.  The FDA recently approved the first genetic therapy for an inherited disease, a rare form of childhood blindness.  The price of the approved treatment is currently astronomical, at almost $1 million, but the hope is that the FDA approval will open the door for further development that could lead to lower prices and improved benefits over a lifetime.  FDA openness and speed in considering and approving these technologies will certainly have an encouraging impact on the innovation within the field and the introduction of further treatments using gene therapy and improving upon knowledge and practices around it:  FDA approves first gene therapy for an inherited disease  
  • Food safety and recalls: Finally, the FDA’s food safety and recall programs may be an active area for reform and extended consumer protections going forward.  The FDA’s broad authority for food safety inspections has been critiqued in the past for culminating in uneven enforcement efforts.  Most recently, the Office of the Inspector General at the Department of Health and Human Services and the Government Accountability Office have both exposed shortcomings in the FDA’s enforcement of food safety policies.  Inspections, follow-up on food safety violations, and supervision of and collaboration with state-level regulatory personnel have all been found lacking:  Watchdog audits fire warning shots at the FDA’s food safety program

Addressing these deficiencies in the oversight process, and following with substantive improvement in the food recall process, has major implications for consumer safety.  The recall process in particular is crucial for ensuring that any gaps from the production and distribution processes oversight that are not filled, are caught before contaminated and dangerous food and supplements are sold to consumers.  However, audits have found that the recall process is not up to muster, indicating that they take way too long to kick off and that the FDA does not do enough to compel companies to cooperate with their warning letters and issue recalls:  The FDA Is Still Scary Slow at Food Recalls

Be sure to check back next week for a round-up on USDA regulatory compliance.

Round-up on FTC compliance

This is the second in a series of seven posts about regulatory compliance priorities and enforcement trends.  Last week’s post was about the Commodity Futures Trading Commission (CFTC).  Today’s post will be about the Federal Trade Commission (FTC).  On Thursday January 4, the post will be about the Securities & Exchange Commission (SEC).  On Thursday January 11, the post will be about the Food & Drug Administration (FDA).  On Thursday January 18, the post will be about the U.S. Department of Agriculture (USDA).  On Thursday January 25, the post will be about the Environmental Protection Agency (EPA).  Finally, on Thursday February 1, the post will be about the Federal Communications Commission (FCC).

The Federal Trade Commission (FTC) is the US regulator charged with supervisory authority to protect consumers as well as enforce antitrust laws to avoid monopolies and ensure competitive business practices. Created in 1914 by the Federal Trade Commission Act, the FTC is an independent regulatory agency with the purpose to monitor the markets for anticompetitive developments and investigate and eliminate those where they emerge. Avoiding monopolies, known as trust, was a major political focus at the time the FTC was created and eliminating these large, anti-competitive business entities, known as “trust busting,” was an important priority for President Woodrow Wilson. The creation of the FTC was intended to bring an administrative efficiency to regulating interstate trade so that these trust and antitrust matters could be determined more expediently by the regulatory agency instead of working their way slowly through the courts.

In its current state, the FTC has broad supervisory authority over business practices where consumer protection or competitive processes are involved. The mandates of its various bureaus include protecting consumers against unfair or fraudulent acts or practices, enforcing existing antitrust laws, and reviewing pending mergers. These issues come from consumer and business reports, pre-merger notice filings, press reports, and congressional inquiries.

The FTC’s enforcement actions extend to individual companies, groups of companies, or industries with the main objective of addressing series consumer fraud or harm and preventing anti-competition business developments. With such a far-reaching set of interests, the issues and focuses that characterize the FTC’s regulatory agenda and enforcement priorities are equally diverse.

  • Consumer DNA testing services and privacy: Companies offering DNA testing services for everything from ancestry to genetic diseases to potential allergies to nutritional needs have become very popular in recent years. Most of these services involve consumers using a kit at home to collect samples of hair, skin, or saliva, which they then send to the company. The company then tests the samples itself or sends them to a third-party lab service for testing and then compiles results and analytical data into a slick, branded presentation that is sent back to the customer to study. If these services were performed in the traditional setting of a doctor’s office, the customer would be treated as a patient and would therefore be afforded commensurate protections and have expectations of privacy and informed consent for the collection, use, and storage of their genetic material. In the retail DNA testing service business, however, the duty owed to consumers is more dubious and the practices of companies less closely supervised or disclosed. As the popularity and prevalence of these tests continues, the FTC will likely look to standardize and investigate business practices of these companies:  Senator Calls on FTC to Investigate DNA Ancestry Companies
  • Use of consent decrees: The public and courts are taking a closer look at the often widespread use of settlement agreements by regulatory entities. The FTC typically uses these in enforcement actions in the data-privacy arena when companies experience breaches that puts consumer information security at risk. Consumers having their data stolen in cybersecurity compromises of payment systems or other retail financial data records. Settlement agreements and consent decrees are meant to apply to individual companies in federal-level, case-specific circumstances only, but the legal precedent has evolved for this common law practice to be potentially applied to establish liability under state law as well. In the continued use of consent decrees, the FTC needs to elucidate clearly what standards apply to constitute a violation and when and where liability may exist:  Federal Court’s Embrace Of FTC Data-Breach Settlements As ‘Common Law’ Treads On Due Process
  • Venue shopping for overlapping antitrust review: As noted in this post, major merger and acquisition activity is at a high pitch in the markets right now. Many large companies are seeking to merge with or acquire another and in lots of cases, regulatory review is exhaustive and detailed. Regulators seek concessions, order sales or exclusions to assets, delay transactions, and influence deals in both the press and Congress. In this intense environment, companies looking to merge with or acquire another approach these transactions hoping for the lightest regulatory touch possible. As there are overlapping supervisory schemes, companies can attempt to shop for the friendliest regulator who might green-light the planned transaction. The FTC and the Department of Justice (DOJ) both conduct antitrust reviews. The perception in the marketplace is that the FTC review may be easier to pass or less burdensome in terms of settlement requirements than that of the DOJ. Therefore some large companies – such as CVS in its planned deal with Aetna – would prefer to be subject to the FTC to improve their odds of passing muster:  CVS likely wants FTC antitrust review, not Justice Department, of Aetna deal
  • Occupational licensing reform: Portability of occupational licenses – such as those required for nurses and accountants – has long-been a challenging political and business issue. States have wildly varying educational and experiential standards for achieving and maintaining these licenses, often making it very hard for professionals who need them to work to move between states that have differing licensure requirements. Military spouses in particular often find themselves shut out of work due to family relocations. On the other end, consumers could be potentially harmed due to unmet expectations for professional service standards in states where the licensing schemes are more lax or supervisory enforcement is inadequate compared to others. Short of a concerted effort by multiple individual states, there is an authority vacuum in the task of making a coherent and coordinated system out of this patchwork of rules, tests, and qualifications. The FTC could be the appropriate regulator to intercede in these circumstances and create a reformed federal unifying system that would function to provide access to work as well as protect consumers’ interests:  The Onerous, Arbitrary, Unaccountable World of Occupational Licensing
  • Net neutrality: Finally, nearly any discussion of US federal regulatory compliance hot topics at the end of 2017 is incomplete without mention of one of the biggest themes of the time, net neutrality. As the Federal Communications Commission (FCC) is pulling back from rule enforcement on net neutrality, both the FCC and the public expect the FTC to take up a more prominent role. The obvious areas where the FTC would have jurisdiction would be those concerning information security, principally data privacy, as well as competitive practices of service providers as well as other digital companies. Time will tell what approach the FTC intends to take in filling this enforcement void:  After Net Neutrality: The FTC Is The Sheriff Of Tech Again. Is It Up To The Task?

Be sure to check back next week for a round-up on SEC regulatory compliance.