[Federal Register Volume 59, Number 232 (Monday, December 5, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29768]


[[Page Unknown]]

[Federal Register: December 5, 1994]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. 93N-0252]

 

Atul Shah; Denial of Hearing; Final Debarment Order

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) denying Dr. Atul Shah's 
request for a hearing and is issuing a final order under the Federal 
Food, Drug, and Cosmetic Act (the act) permanently debarring Dr. Atul 
Shah, 20 Hampton Hollow Dr., Millstone Township, NJ 08535, from 
providing services in any capacity to a person that has an approved or 
pending drug product application. FDA bases this order on a finding 
that Dr. Shah was convicted of a felony under Federal law for conduct 
relating to the development or approval, including the process for 
development or approval, of a drug product, and relating to the 
regulation of a drug product under the act.

EFFECTIVE DATE: December 5, 1994.

ADDRESSES: Application for termination of debarment to the Dockets 
Management Branch (HFA-305), Food and Drug Administration, 12420 
Parklawn Dr., rm. 1-23, Rockville, MD 20857.

FOR FURTHER INFORMATION CONTACT: Megan L. Foster, Center for Drug 
Evaluation and Research (HFD-366), Food and Drug Administration, 7500 
Standish Pl., Rockville, MD 20855, 301-594-2041.

SUPPLEMENTARY INFORMATION:

I. Background

    Dr. Atul Shah, the former Director of Analytical Research and 
Development at Par Pharmaceutical, Inc. (Par), pled guilty and was 
sentenced on March 5, 1993, for making a false declaration to a grand 
jury, a felony offense under 18 U.S.C. 1623. The basis for this 
conviction was Dr. Shah's false claim during his testimony before the 
Special Grand Jury for the United States District Court for the 
District of Maryland that he could not remember that the pilot batch 
for one of Par's generic drug products had been taken off accelerated 
stability testing and then put back on stability testing. In fact, Dr. 
Shah did remember during this testimony that the initial pilot batch 
had failed accelerated stability testing, and that a new formulation of 
that product had been put back on accelerated stability testing. This 
testimony was material to the grand jury's investigation because Par 
had filed a false abbreviated new drug application that failed to 
disclose that the pilot batch had failed stability testing.
    In a certified letter received by Dr. Shah on August 11, 1993, the 
Deputy Commissioner for Operations offered Dr. Shah an opportunity for 
a hearing on the agency's proposal to issue an order under section 
306(a) of the act debarring Dr. Shah from providing services in any 
capacity to a person that has an approved or pending drug product 
application. FDA based the proposal to debar Dr. Shah on its finding 
that he had been convicted of a felony under Federal law for conduct 
relating to the development, approval, and regulation of Par's drug 
products.
    The certified letter also informed Dr. Shah that his request for a 
hearing could not rest upon mere allegations or denials but must 
present specific facts showing that there was a genuine and substantial 
issue of fact requiring a hearing. The letter also notified Dr. Shah 
that if it conclusively appeared from the face of the information and 
factual analyses in his request for a hearing that there was no genuine 
and substantial issue of fact which precluded the order of debarment, 
FDA would enter summary judgment against him and deny his request for a 
hearing.
    In a letter dated August 25, 1993, Dr. Shah requested a hearing, 
and in a letter dated October 8, 1993, Dr. Shah submitted arguments and 
information in support of his hearing request. In his request for a 
hearing, Dr. Shah acknowledges that he was convicted of a felony under 
Federal law as alleged by FDA. However, Dr. Shah argues that FDA's 
findings based on that conviction are incorrect and that the agency's 
proposal to debar him is unconstitutional.
    The Interim Deputy Commissioner for Operations has considered Dr. 
Shah's arguments and concludes that they are unpersuasive and fail to 
raise a genuine and substantial issue of fact requiring a hearing. 
Moreover, the legal arguments that Dr. Shah offers do not create a 
basis for a hearing (see 21 CFR 12.24(b)(1)). Dr. Shah's arguments are 
discussed below.

II. Dr. Shah's Arguments in Support of a Hearing

A. Mandatory Versus Permissive Debarment

    Dr. Shah first argues that mandatory debarment is inapplicable to 
his case. He states that his false testimony subjects him to permissive 
rather than mandatory debarment because his conduct underlying his 
conviction does not relate to the development, approval, or regulation 
of a drug product. Dr. Shah claims that his testimony ``pertained'' to 
stability testing, but did not ``relate'' to stability testing.
    This argument is unconvincing and fails to raise a genuine and 
substantial issue of fact. Section 306(a)(2)(A) of the act (21 U.S.C. 
335a(a)(2)(A)) requires debarment of an individual if FDA finds that 
the individual has been convicted of a felony under Federal law for 
conduct relating to the development or approval, including the process 
for development or approval, of any drug product. The statutory 
language, ``relating to the development or approval * * *,'' by 
definition, encompasses all things that are logically connected with 
the development or approval of a drug product (see Webster's Collegiate 
Dictionary, Merriam-Webster Inc., Springfield, MA, 1990, ``relate'').
    Dr. Shah's act of falsely testifying before the grand jury 
concerning his knowledge about the stability testing used to support 
approval of a Par drug product is clearly connected to the development 
or approval of a drug product. Stability testing is an essential step 
in the development and approval of a generic drug product.
    Dr. Shah argues that he left Par long before his grand jury 
testimony and, thus, this testimony could not have interfered with the 
drug development and approval process. Whether or not Dr. Shah was 
employed by Par at the time of his testimony is irrelevant. Dr. Shah's 
testimony concerned, or was related to, FDA's approval of a Par drug 
product, because it pertained to stability testing used to support 
approval of that drug product.
    Section 306(a)(2)(B) of the act requires debarment of an individual 
if FDA finds that the individual has been convicted of a felony under 
Federal law for conduct relating to the regulation of any drug product 
under the act. Dr. Shah's conviction is related to the regulation of a 
drug product in that it concerns matters that affect FDA's regulatory 
decisions about drug products. Dr. Shaw's testimony concerns 
information related to the stability of a drug product. FDA uses such 
information to determine, among other things, whether to approve a 
drug, whether to remove a drug from the market, whether labeling 
changes are necessary, and whether approved marketing conditions need 
to be altered. The act does not require that Dr. Shah's testimony 
regarding stability testing directly affect FDA's regulatory decisions. 
Rather, it need only relate to FDA's regulation of a drug product.
    Dr. Shah contends that grand jury investigations have nothing to do 
with the development and approval of a drug product. He additionally 
states that the grand jury process is not a means by which FDA 
regulates a company's drug products. To the contrary, FDA often 
requests grand jury investigations to explore criminal activity 
involving matters under the jurisdiction of FDA. Dr. Shah's crime of 
lying before a grand jury relates to FDA's regulatory powers because it 
interferes with the inquiry into criminal activity concerning drug 
applications. Because his false declarations concerned matters relating 
to the development, approval, and regulation of a drug product, Dr. 
Shah's mandatory debarment is appropriate.
    Dr. Shah also argues that the legislative history of the act 
indicates that mandatory debarment is inapplicable in this case because 
his crime did not ``corrupt'' or ``directly involve'' the approval 
process. As mentioned above, Dr. Shah's crime is one that does corrupt 
or perpetuate corruption of the FDA approval process because it 
interfered with an investigation into criminal activity concerning 
information used by FDA in deciding drug approval and other drug 
regulatory issues. Whether the crime ``directly involves'' the approval 
process is not the standard set forth in the statute for mandatory 
debarment; ``directly involves'' does not have the same meaning as 
``relates to.''

B. The Ex Post Facto Clause

    Dr. Shah also argues that the ex post facto clause of the U.S. 
Constitution prohibits application of section 306(a)(2) of the act to 
him because this section was not in effect at the time of Dr. Shah's 
criminal conduct. With the enactment of the Generic Drug Enforcement 
Act (GDEA) on May 13, 1992, Congress amended the Federal Food, Drug, 
and Cosmetic Act to include section 306(a)(2).
    An ex post facto law is one that reaches back to punish acts that 
occurred before enactment of the law or that adds a new punishment to 
one that was in effect when the crime was committed. (Ex Parte Garland, 
4 Wall. 333, 377, 18 L. Ed. 366 (1866); Collins v. Youngblood, 110 
S.Ct. 2715 (1990).)
    Dr. Shah's claim that application of the mandatory debarment 
provisions of the act is prohibited by the ex post facto clause is 
unpersuasive. Because the intent behind debarment under section 
306(a)(2) of the act is remedial rather than punitive, this section 
does not violate the ex post facto clause.
    The congressional intent with respect to actions under section 
306(a)(2) of the act is clearly remedial. Congress created the GDEA in 
response to findings of fraud and corruption in the generic drug 
industry. Both the language of the GDEA itself and its legislative 
history reveal that the purpose of the debarment provisions set forth 
in the GDEA is ``to restore and ensure the integrity of the ANDA 
approval process and to protect the public health.'' (See section 1, 
Pub. L. 102-282, The Generic Drug Enforcement Act of 1992.) This is a 
remedial rather than punitive goal. (See Manocchio v. Kusserow, 961 
F.2d 1539, 1542 (11th Cir. 1992) (exclusion of physician from 
participation in medicare programs because of criminal conviction is 
remedial, not punitive).) Supporting the remedial character of 
debarment is a statement by Senator Hatch in the Congressional Record 
of April 10, 1992, at S 5616, ``* * * [t]he legislation * * * provides 
a much-needed remedy for the blatant fraud and corruption uncovered in 
the generic drug industry * * * during the last 3 years.''
    The Supreme Court has long held that statutes that deny future 
privileges to convicted offenders because of their previous criminal 
activities in order to insure against corruption in specified areas do 
not impose penalties for past conduct and, therefore, do not violate 
the ex post facto prohibitions. (See, e.g., Hawker v. New York, 170 
U.S. 189, 190 (1898) (physician barred from practicing medicine for a 
prior felony conviction); DeVeau v. Braisted, 373 U.S. 154 (1960) 
(convicted felon's exclusion from employment as officer of waterfront 
union is not a violation of the ex post facto clause).)
    In DeVeau, the court upheld a law that prohibited a convicted felon 
from employment as an officer in a waterfront union. The purpose of the 
law was to remedy the past corruption and to insure against future 
corruption in the waterfront unions. The court in DeVeau, 363 U.S. at 
160, stated:

    The question in each case where unpleasant consequences are 
brought to bear upon an individual for prior conduct, is whether the 
legislative aim was to punish that individual for past activity, or 
whether the restriction of the individual comes about as a relevant 
incident to a regulation of a present situation, such as the proper 
qualifications for a profession * * * .

    As in DeVeau, the legislative purpose of the relevant statute is to 
ensure that fraud and corruption are eliminated from the drug industry. 
The restrictions placed on individuals convicted of a felony under 
Federal law are not intended as punishment but are ``incident to a 
regulation of a present situation'' (DeVeau, 363 U.S. at 160) and 
necessary in order to remedy the past fraud and corruption in the 
industry.

C. The Double Jeopardy Clause

    In another argument, Dr. Shah claims that the proposal to debar him 
under section 306(a)(2) of the act violates the double jeopardy clause 
of the Fifth Amendment to the U.S. Constitution. The double jeopardy 
clause states that no person shall ``be subject for the same offense to 
be twice put in jeopardy of life or limb.'' Dr. Shah relies on U.S. v. 
Halper, 490 U.S. 435 (1989), to argue that the Fifth Amendment double 
jeopardy clause should prevent his debarment because ``jeopardy'' can 
attach even in a purely civil proceeding, so long as the civil sanction 
is punitive, not remedial. He further argues that his proposed 
permanent debarment is punitive because (1) it is permanent and without 
regard to whether Dr. Shah represents a continuing threat to the 
integrity of the drug testing, approval, or regulatory processes; (2) 
it precludes his providing services in any capacity to a company whose 
products are subject to FDA approval, regardless of whether or not the 
service relates to drug testing, approval, or regulation; (3) it can be 
terminated only for substantial assistance to prosecutors and not when 
the threat to public safety is eliminated; and (4) it arises out of the 
mere fact of conviction and precludes factfinding into whether a risk 
to the public exists.
    Dr. Shah's arguments are unpersuasive. First, ``jeopardy'' cannot 
attach because the effect of section 306(a)(2) of the act is remedial, 
not punitive. As discussed above, the legislative goal of this section 
is to restore and ensure the integrity of the drug approval process and 
to protect the public health by eradicating fraud and corruption from 
the drug industry. This is plainly a remedial rather than punitive 
goal. (Manocchio v. Kusserow, 961 F.2d at 1542.)
    The fact that Dr. Shah's debarment is permanent rather than 
temporary does not signify that the legislation is nonremedial or 
punitive. The Supreme Court has upheld laws which, for remedial 
purposes, permanently bar a class or group of individuals from certain 
occupations due to a prior criminal conviction. (See Hawker v. New 
York, 170 U.S. 189, 190 (1898); DeVeau v. Braisted, 373 U.S. 154 
(1960).) Additionally, these cases support the fact that Dr. Shah's 
debarment can arise only because of his conviction, which Dr. Shah 
argues is punitive.
    Dr. Shah's conduct, which has been shown to relate to the 
development, approval, and regulation of a drug product, establishes 
the potential for future violations by Dr. Shah that undermine the 
integrity of the drug approval and regulatory process. The act 
precludes Dr. Shah's providing any type of service to holders of drug 
product applications because of this possibility of future violations. 
Congress proscribed all services in order to avoid the serious 
administrative difficulties involved in distinguishing between those 
positions clearly related to drug regulation from those not clearly 
related. Such a proscription for this reason is permissible. Siegel v. 
Lyng, 851 F.2d 412, 416 (D.C. Cir. 1988.)
    Dr. Shah's assertion that the special termination provision is 
punitive is unpersuasive. In fact, the provision advances the remedial 
objective of ensuring the safety and efficacy of the country's drug 
supply. The cooperation fostered by this special termination provision 
enables FDA to eliminate from the drug industry many actors who are 
corrupting the industry, endangering the public health, and destroying 
consumers' confidence in the Nation's drug supply. Convictions based on 
debarred persons' assistance can form the basis for other debarments if 
the terms of the act are satisfied, which further serves the act's 
remedial objectives.
    An individual's debarment will not be terminated if FDA finds that 
the remedial intent of the act will be undermined by such termination. 
The act does not guarantee termination of debarment to those who are 
debarred. The power to terminate debarment is discretionary with FDA, 
and the agency is bound by the provision's terms to exercise this 
authority in a manner consistent with the interest of justice and 
protection of the integrity of the drug approval process (21 U.S.C. 
335a(d)(4)(D)).
    Due to the potentially serious consequences to the public health of 
fraud and corruption in the drug industry, the permanent debarment of 
convicted felons like Dr. Shah is not an excessive means to eliminate 
fraud from the industry. The legislative history of the GDEA is replete 
with statements, some cited above, that the act provides a reasonable 
means of ridding the drug industry of widespread corruption and to 
restore consumer confidence in generic drugs.

D. Due Process

    In his final argument, Dr. Shah claims that his debarment violates 
the due process clause of the U.S. Constitution because it bears no 
rational relationship to any legitimate purpose. He asserts that his 
conduct does not automatically demonstrate a likelihood of future 
violations under the act. He also contends that debarment precludes 
providing services regardless of whether such service bears any 
relationship to the development, approval, or regulation of a drug 
product.
    Dr. Shah's claims are unpersuasive. Dr. Shah fails to demonstrate 
that this debarment is unrelated to any legitimate purpose. Although 
his conduct does not automatically establish a likelihood of future 
violations, it does reveal the possibility of future violations. 
Debarment guards against future violations by prohibiting individuals 
``from providing services in any capacity to a person that has an 
approved or pending drug product application'' in order to meet the 
legitimate regulatory purpose of restoring the integrity of the drug 
approval and regulatory process and protecting the public health. Dr. 
Shah acknowledges that protecting the public health is a legitimate 
purpose. As mentioned above, Congress can appropriately achieve this 
purpose by proscribing ``all services'' due to the serious 
administrative difficulties involved in distinguishing between those 
positions clearly related to drug regulation from those not clearly 
related. These difficulties would include the problem of ascertaining 
the exact nature of the employee's relationship with the employer as 
well as defining what constitutes a sufficient nexus with the 
regulatory scheme under all circumstances.
    Dr. Shah's claim that FDA's refusal to grant a hearing in his case 
would violate procedural due process is inaccurate. Dr. Shah 
acknowledges that he was convicted as alleged by FDA and has raised no 
genuine and substantial issue of fact regarding his conviction. The 
facts underlying Dr. Shah's conviction have been established by his 
conviction, and, therefore, are not at issue. While Dr. Shah's legal 
arguments do not create a basis for a hearing, FDA has considered these 
arguments before taking final action and has found them unpersuasive. 
Accordingly, the Interim Deputy Commissioner for Operations denies Dr. 
Shah's request for a hearing.

III. Findings and Order

    Therefore, the Interim Deputy Commissioner for Operations, under 
section 306(a) of the act, and under authority delegated to her (21 CFR 
5.20) finds that Dr. Atul Shah has been convicted of a felony under 
Federal law for conduct: (1) relating to the development or approval, 
including the process for development or approval, of a drug product 
(21 U.S.C. 335a(a)(2)(A)); and (2) relating to the regulation of a drug 
product (21 U.S.C. 335a(a)(2)(B)).
    As a result of the foregoing findings, Dr. Atul Shah is permanently 
debarred from providing services in any capacity to a person with an 
approved or pending drug product application under section 505, 507, 
512, or 802 of the act (21 U.S.C. 355, 357, 360b, or 382), or under 
section 351 of the Public Health Service Act (42 U.S.C. 262), effective 
December 5, 1994. (21 U.S.C. 335a(c)(1)(B) and (c)(2)(A)(ii) and 21 
U.S.C. 321(ee)).
    Any person with an approved or pending drug product application who 
knowingly uses the services of Dr. Shah in any capacity, during his 
period of debarment, will be subject to civil money penalties (21 
U.S.C. 335b(a)(6)). If Dr. Shah, during his period of debarment, 
provides services in any capacity to a person with an approved or 
pending drug product application, he will be subject to civil money 
penalties (21 U.S.C. 335b(a)(7)). In addition, FDA will not accept or 
review any abbreviated new drug application or abbreviated antibiotic 
drug application submitted by or with Dr. Shah's assistance during his 
period of debarment.
    Dr. Shah may file an application to attempt to terminate his 
debarment pursuant to section 306(d)(4)(A) of the act. Any such 
application would be reviewed under the criteria and processes set 
forth in section 306(d)(4)(C) and (d)(4)(D) of the act. Such an 
application should be identified with Docket No. 93N-0252 and sent to 
the Dockets Management Branch (address above). All such submissions are 
to be filed in four copies. The public availability of information in 
these submissions is governed by 21 CFR 10.20(j). Publicly available 
submissions may be seen in the Dockets Management Branch between 9 a.m. 
and 4 p.m., Monday through Friday.

    Dated: November 21, 1994.
Linda A. Suydam,
Interim Deputy Commissioner for Operations.
[FR Doc. 94-29768 Filed 12-2-94; 8:45 am]
BILLING CODE 4160-01-F