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McNeil Consent Decree Reflects Previous Big Pharma Injunctions Minus Disgorgement

Mar 14th, 2011

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The consent decree signed between McNeil and the U.S. Department of Justice on March 10 covering its Fort Washington, Lancaster and Las Piedras facilities contains the standard CGMP injunction provisions for independent expert consultant oversight and monetary penalties if the specified remediation timetables are not met.  However, it does not include the large “disgorgement” fines characteristic of similar big pharma injunctions over the past decade.

In other of the high-profile injunctions, corporations have had to “disgorge” profits made from products manufactured while they were under notification by FDA that they were not operating in GMP compliance and thus distributing “adulterated” product.  Schering Plough paid a $500 million injunction fine in 2002 and Genzyme $175 million in 2010 (IPQ “In the News” May 28, 2010).

The lack of a disgorgement penalty for McNeil apparently reflected its increasing responsiveness in general to FDA’s concerns and specifically in recalling products implicated in the agency’s findings and in volunteering to halt production at Fort Washington.

In addition to the usual $15,000 per day fine for non-compliance with the injunction deadlines, the McNeil decree does provide for payment of two times the retail value of drugs it sells from the three facilities going forward if CGMP or decree requirements are not met, with a cap of $10 million per year.

Other provisions in the injunction allow for additional penalties.  The decree “resolves only those claims set forth in the Complaint,” it states, and “does not preclude:  criminal charges; claims arising under the False Claims Act; common law claims and, if applicable, breach of contract; debarment; and/or exclusion in connection with any activity.”

The decree also calls for McNeil to destroy all the products it has recalled from its Fort Washington, Pennsylvania, Lancaster, PA, and Las Piedras, Puerto Rico facilities since December 2009 within 30 days.

The injunction action by the federal court followed in the wake of a series of adverse inspections and a warning letter regarding the Fort Washington facility issued in January 2010, and Congressional inquiry into McNeil’s compliance and recall problems across its Las Piedras and Fort Washington facilities which began in May.  The problems led McNeil to cease production at Fort Washington in April.

[Editor’s Note: IPQ has closely followed the unfolding compliance problems at McNeil during 2010 and 2011.  Click this link for easy reference to our related stories.]

The consent decree is divided into sections describing the: ● legal basis for the decree ● actions required at Fort Washington ● actions required at Lancaster and Las Piedras ● periodic inspections by an outside auditor, and ● general provisions.

[Further analysis of the terms and significance of the McNeil consent decree, and the decree itself, are provided for subscribers beginning on page 2. Non-subscribers can purchase the story for $95 by contacting Wayne Rhodes ([email protected]). For subscription/license information click here.]

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