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The Changing Face of FDA Consent Decrees

By Joseph Savage and Adam Ziegler
February 27, 2007

Historically, when a health care company had a compliance failure, counsel could help it remain in business by negotiating with the relevant agency. If the problem involved sales, marketing or pricing, the company could seek a Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) at Health and Human Services (HHS). If the problems related to manufacturing, counsel could obtain a consent decree of permanent injunction ('consent decree') with the Food and Drug Administration (FDA) under the Food Drug and Cosmetic Act (FDCA). Consent decrees and CIAs each had their particular burdens and benefits, which health care practitioners had learned to navigate. Now this tidy distinction has become blurred as the FDA has borrowed features from HHS's CIAs.

HHS has imposed CIAs since 1994. Typically, they require a company (but not its executives) to address marketing deficiencies by adopting a compliance infrastructure, reporting compliance activity, and submitting to external review of business practices under the threat of stipulated money penalties or, ultimately, exclusion from federal reimbursement. By contrast, the traditional FDA consent decree addresses manufacturing problems through an agreed injunction (without financial penalty) against the company and its senior officers requiring corrective action, monitoring, and reporting. Traditions aside, FDA consent decrees are now evolving into CIA-type agreements, addressing issues well beyond manufacturing, and imposing financial penalties.

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