With John Dingell’s Departure from Congress, Maybe it is Time to Reflect on the Generic Drugs Scandal

Some 4+ years after the most successful piece of legislation, the Drug Price Competition and Patent Term Restoration Act (more commonly known as the Hatch-Waxman Act), there was trouble in paradise.  The-then Division of Generic Drugs responded well to the influx of new ANDAs and acted rapidly to get these new high quality, low cost generic products into the hands of consumers.  We know the Hatch-Waxman has saved the American people $1.2 trillion dollars in the last 10 years and $217 million last year alone.  But in late 1987, some firms noticed that certain applicants began receiving reviews and approvals of their ANDAs faster than they did.

These firms complained of unfair treatment and an uneven playing field.  But without proof, FDA was not willing to investigate.  After repeated attempts to gain traction on this issue, one company finally hired a private investigator to look into the matter.  Lovingly referred to as the “Garbage Can Caper”, the investigator would wait until the target placed his garbage out on the designated collection night, took it, went through it looking for evidence, and then placed it back before collection time.  The evidence gathered in this manner was taken to FDA and this simple investigation lead to evidence of wrongdoing by an FDA employee and lead to a widespread and expanded investigation into the industry, and uncovered wholesale fraud at a number of companies and exposed other FDA employees guilty of wrongful acts.

This was the beginning of the Generic Drug scandal.  Soon after these revelations, Congressman John Dingell and his two top congressional investigators, David Nelson and Reid Stuntz, examined the generics program from head to toe.   Having lived through the investigations as the OGD contact for the sub-committee, I can tell you that I would rather visit a proctologist than go through that again!

So what was found?  Confidential formulation information was revealed and sold to other firms by an FDA employee.  There was manipulation of the review queue to give preferential treatment to firms that paid bribes to some FDA employees.  There was acceptance of cash, cars, gifts and illegal gratuities by several FDA employees and some went to jail.

Fraud and misrepresentation in applications was found to be rampant among the wrong doers and, despite this, there was no apparent threat to public health.  This resulted in the ultimate withdrawal of hundreds of ANDA applications.  Ultimately, there were 22 drug companies that received criminal convictions, 70 criminal convictions of individuals (drug company and FDA personnel) and over $50 million in fines (which pales in comparison to the hundreds of millions in fines we see today for FDA violations).

Firms were found to have:

  • Over-coated brand tablets and used them in comparative dissolution tests,
  • Manufactured what were claimed to be exhibit size batches of sterile injectable products in beakers
  • Two sets of manufacturing instructions, one for how they actually made the product and another set for submission to FDA
  • Records of multiple products being made on the same piece of equipment at the same time.
  • Graphite stability data (when at OGD, we never could figure out how data always came on the fax machine within hours of us asking for it.  I guess you can’t see the ink drying on a fax!)
  • Switched bioequivalence samples – in the greatest affront to the approval process, Bolar performed bioequivalence testing on Dyazide Capsules( a difficult to manufacture product) and it was found that the firm emptied brand capsules into Bolar capsule shells, and thus, tested the brand against the brand in bioequivalence tests.
  • False walls found in manufacturing facilities, which hid secret manufacturing rooms.

And the list goes on.  Congress passed the Generic Drug Enforcement Act, the FDA issued a policy guide entitled, Fraud, Untrue Statements of Material Facts Bribery and Illegal Gratuities (CPG 7150.09) and then issued the Application Integrity Policy that outlined how the Agency would treat applications found to be impacted by illegal activities identified.

This was a dark period for the Generic Drugs Program, but made it stronger in the end.  One would think that history would not repeat itself in this instance, but time has shown us that, where there is greed and money to be made, anything is possible.  The problem is that no one teaches the history of the generic drug scandal to current management.  The past is easy to forget and as vigilance and complacency wane on the part of employees, managers, staff, presidents and CEOs alike, the message needs to be reiterated and the story of the generic drug scandal needs to be retold to all this generation of employees, senior managers, and board members.  Unfortunately, time must have a way to make us forget of some of the transgressions of the past because there are still incidents of rampant fraud, data manipulation, misrepresentation and misstatements of material facts that have and continue to occur even today.

Keep vigilant, people, and don’t let the sins of the past repeat themselves.  As Crosby, Stills and Nash say “teach your children well” so they do not repeat the same mistakes.  If you are interested in learning more about the insidious nature of the Generic Drug Scandal and would like your employees made more aware of the issues, please contact Joan Janulis of Lachman Consultants (j.janulis@lachamnconsultants.com) and she can arrange for a training program that will make your hair stand up on the back of your necks and give you goosebumps learning about what happened in the late 80’s to hopefully make all employees more aware and to prevent a reoccurrence of the scandal that rocked the generic industry.