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Executive Summary

Two additional FDA employees are being investigated by the U.S. Attorney's Office in Baltimore, House Energy & Commerce Committee Chairman Dingell (D-Mich.) said at a July 11 hearing on FDA's generic drug review process before his oversight subcommittee. To date, three reviewers in FDA's Generic Drug Division have either entered guilty pleas or been charged with accepting bribes from industry. "We believe two more [FDA employees] are under criminal investigation," Dingell stated. To date, Dingell pointed out, seven employees out of a total of 30 chemists and consumer information officers in FDA's Division of Generic Drugs have been implicated by either receiving or accepting offers of illegal gratuities from generic drug companies. Two FDAers, Charles Chang and David Brancato, have resigned after pleading guilty to such charges ("The Pink Sheet" May 15, p. 10). "At least two others were offered substantial cash payments and, to their great credit, declined," Dingell said. The subcommittee chairman noted that on July 10 "a third FDA employee was charged with accepting illegal gratuities." A criminal information was filed in a Baltimore federal court against Walter Kletch, a review chemist in the generic drug division. Kletch is charged with accepting "a $ 500 gift certificate for Lord & Taylor department store and a $ 500 gift certificate for Raleighs clothing store" from former Quad President and CEO Dilip Shah, the information says. * Kletch resigned from the agency on the same day the charges were filed. He had been on administrative leave with pay following his appearance at a May 3 hearing before Dingell's subcommittee. Invoking the Fifth Amendment of the Constitution, Kletch refused to answer any questions at that hearing. Criminal informations were also filed on July 10 against Shah, as well as against Ashok Patel, former senior VP for Par Pharmaceuticals, Quad's parent firm, for providing illegal gratuities to Chang, former chief of ANDA Review Branch III. Shah is charged with giving $ 1,000 to Chang on Sept. 15, 1987, "for and because of official acts that the said Charles Chang had performed and was to perform." Patel is charged with providing Chang with $ 500 on the same day that Shah offered cash to the FDA reviewer. Par and Quad pleaded guilty to the charges on July 14. U.S. Attorney Breckinridge Willcox said that the criminal information on Kletch alleges that the chemist "had reviewed and recommended approval of drug applications submitted by Quad, and at the time that the gift certificates were given to him by Shah, Kletch was in the process of reviewing other drug applications submitted by Quad." Willcox said that Kletch, Shah and Patel face a maximum penalty of two years incarceration and a $ 250,000 fine. The U.S. attorney added that "additional charges are expected to result from the investigation." In April, Shah and Patel were named in criminal informations charging Brancato, another ANDA review chemist, with three counts of receiving a total of $ 4,300 in cash gratuities. Brancato, who worked for Chang for four years, resigned on April 26. Chang resigned on April 28. A second set of allegations was announced on April 27, charging former Pharmaceutical Basics VP Raj Matkari with paying a cash gratuity of $ 2,000 to Chang. Both pleaded guilty to the charges. On May 25, Chang pleaded guilty to two counts of racketeering in connection with a free trip to Hong Kong and receipt of furniture given to him by a generic drug firm. * At the July 11 hearing, former Generics Division Director Marvin Seife, MD, currently assigned to FDA's Office of Drug Evaluation I, said he received an anonymous phone tip in December 1985 that Chang was involved with a female executive from American Therapeutics. Seife testified that he immediately notified FDA's Division of Ethics and Integrity. "Having heard nothing more about it," Seife said, in January 1986, he ordered Review Support Branch Chief David Rosen not to assign American Therapeutics' ANDAs to Chang. Over the next six months, Seife said he diverted applications from Quantum, Par, Quad and My-K Labs away from Chang. He said he later added Pharmaceutical Basics and Watson Labs to the list of company submissions to be routed away from Chang. However, Seife continued, "I had no suspicion that Mr. Chang was helping American Therapeutics to submit their applications. At that time, it just appeared that perhaps he might favor the speed of their review." Asked by Rep. Boucher (D-Va.) whether he tried to "identify companies competing with American Therapeutics that might be hindered because of Mr. Chang's favoritism" toward the company, Seife replied: "No, I did not." Dingell disclosed that Chang told the court in Baltimore that he provided to American Therapeutics information "from other company files before [American Therapeutics] even submitted a competing ANDA." Rep. Wyden (D-Ore.) pointed out at the hearing that torn copies of documents from American Therapeutics' application for trazodone (Mead Johnson's Desyrel) were recovered by a private detective from a trash can outside Chang's Potomac, Md. home. At one point, Center for Drug Evaluation & Research Deputy Director Gerald Meyer testified that American Therapeutics' ANDAs were quality submissions and reviewed quicker than most not only by Chang and Brancato but also by "the most virtuous, picky reviewers." Young commented: "If you have got Chang as a consultant and his garbage pail as a receptacle, and the application is coming in through some sort of a bizarre courier, I would expect a lot faster approval." * Young made an impassioned plea to Rep. Dingell for greater resources. "As we look at our appropriations, we need to look at" what the agency is facing "from a management standpoint." As an academic dean, Young said he has handled "large management" challenges, but he "was able to, in some way, match the resources to do the job." On the other hand, in his five years as commissioner, Young said he has "seen responsibility after responsibility" added to FDA's charge "and the inability to match the resources." Noting that last year's animal ANDA act further adds to FDA's burden, Young declared: "I can tell you we'll be here four years from now. We estimate that at a minimum" the responsibilities will require an additional "36 people; the law has been implemented, but we don't have any new people. And when we get the [staff], it takes one to two years to get the [office] space from the GSA [Government Services Administration.]" The hearing also addressed information suggesting that the agency has serious internal communications problems. FDAer Seife acknowledged that generic division reviewers have filed FoI requests to obtain inspection reports on ANDA sponsors, and the reports received were heavily edited as if for public consumption. Young testified that he is preparing recommendations for improving FDA's internal communications after having "reviewed in the last six months every part of the agency." His examination included "day reviews on each of the centers and two days review in the field," Young noted. "One of the things that I will be recommending to the agency as I, if you will, administratively recharge the agency in the fall, is that we deal with much better communications. I think we're flawed in this way and flawed significantly."

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