Three for 2018; New Year Off to a Fast Start

Those in the life science industries know better than to sleep on the courts and the FDA, and the first quarter of 2018 serves to nicely reinforce this lesson. Following are three stories of interest to drug and device makers, but while its clear that the outcomes of these developments are of tremendous importance, it is not at all clear where these three stories will land in the end.

Gilead Moves Closer to Cert 

One of the more notorious cases relating to the Federal Rules of Civil Procedure is Campie v. Gilead, but the Supreme Court will have at least two such cases to choose from thanks to a petition Medical Device Business Services, Inc. v. United States ex rel. Nargol. The problem for this latter case is that it seems to overlap with Gilead, and Gilead has been distributed for conference for April 13, suggesting that Nargol will for now stand as decided at the Court of Appeals for the First Circuit.

Gilead had petitioned for cert on Dec. 26, 2017, while Medical Device Business Services, once known as Nargol v. DePuy Orthopaedics Inc., completed its petition for cert Feb. 5 after requesting an extension in the first half of December 2017. MDBS v. Nargol takes up the issue of the Federal Rule of Civil Procedure 9(b), a dispute triggered by the fact that the two relators in this False Claims Act case never filed a billing claim for the purportedly violative device, and apparently do not even practice medicine in the U.S. The relators, who served as expert witnesses in a case against MDBS, built their claims largely around an extrapolation of one medical claim to all the billings for the company’s Pinnacle hip device, and the petitioner points to a split among the circuit courts as justification for a hearing at the Supreme Court.

Gilead Sciences Inc. petitioned for cert after the Ninth Circuit reversed a lower court’s dismissal of the case, which revolves around the use of an unapproved supplier of an active pharmaceutical ingredient. The company eventually cleared the new API source with the FDA, but not until two years after Gilead started doing business with the supplier. In this instance, the relators are former employers, and Gilead cites the Supreme Court decision Universal Health Services v. Escobar as a precedent, which MDBS does not. All in all, it seems likely that the Supreme Court will take Gilead if it takes either of these cases.

Intended Use Rule Back on Back Burner

The FDA’s intended use problem continues seemingly unabated with the announcement that the agency would suspend the intended use rule indefinitely pending a closer look at some of the underlying issues. The tobacco-related portions of the January 2017 final rule are unaffected, but the portions of the rule dealing with drugs and devices are once again in regulatory limbo. The agency said it has in the meantime reverted to the previous understanding of the question of intended use.

The Federal Register notice regarding this indefinite suspension states that some had criticized the inclusion of the totality-of-evidence standard seen in the January 2017 final rule, principally because that standard had not appeared in the 2015 draft and thus its introduction in the final rule violated the Administrative Procedures Act. While there are a number of other issues raised by stakeholders, the totality-of-evidence standards was perhaps the most contentious, and if anything can be said about the FDA’s current predicament, it’s that the agency cannot afford to sit on this issue indefinitely because some states are moving ahead with their own laws pertaining to commercial speech, federal preemption notwithstanding. Those in the life science industries will want to stay tuned.

Least Burdensome Draft Draws Fire

The docket for the latest draft guidance for the FDA’s least burdensome standard has closed, but a number of observers are quite skeptical as to whether the agency means what it says about the principle of least burdensome.

The FDA’s Center for Devices and Radiological Health released the latest draft guidance at the end of 2017, acknowledging at the outset that the standard was encoded in the statute in 1997 via the Food and Drug Administration Modernization Act. Two subsequent pieces of legislation, including the 21st Century Cures Act, also applied pressure on the agency to formalize the least burdensome standard. Nonetheless, Jeffrey Gibbs of Hyman, Phelps & McNamara said in comments to the docket that the agency has engaged in “boilerplate recitation” of the standard without actually following through.

Gibbs charged that experience has repeatedly shown that the agency has inconsistently, at best, applied the least burdensome standard in a range premarket filings, including 510(k) and PMA submissions. He argued that the agency’s reviewers have routinely failed to explain the need for data beyond that used to clear a predicate device in the case of 510(k) submissions, and similar devices in the context of PMA applications.

Gibbs urged the agency to offer applicants a conference call within five days of the issuance of a request for additional information for premarket filings, a proposal he said builds off a pilot program that offers applicants “a short teleconference” within 10 days of the request. He said this pilot offers only about 15 minutes of teleconference time with the application’s reviewers, an amount of time he suggested is inadequate.

The Medical Imaging & Technology Alliance said the draft invoked the question of medical necessity when the agency has to consider what sort of least burdensome enforcement action is needed to deal with violative devices. MITA’s executive director, Patrick Hope, countered that medical necessity is a standard for payers to determine, and that the association is “concerned about the potential for scope creep” should the medical necessity question play a role in the agency’s decisions.

Massachusetts Says Brand Name Drug Manufacturers Are Not Liable for Generic Drugs, Except . . .  

Jordan Lipp | Attorney, Managing Member | Childs McCune

On March 16, 2018, the Massachusetts Supreme Court weighed in on the issue of whether a brand name drug manufacturer is liable for a plaintiff’s use of the generic form of the drug, and it reached a surprising result.  As discussed in the previous blog post on December 22, 2017, Conte on Steroids, most states conclude that a brand name drug manufacturer cannot be liable for damages caused by the generic version of the drug.  In a detailed analysis, the Massachusetts Supreme Court followed the vast majority of its sister courts, concluding that a brand name drug manufacturer cannot be held liable in product liability or negligence for a plaintiff who ingested the generic version.

But then, borrowing from case law involving such disparate subjects as landowner duties to trespassers and liability releases for sporting activities, the Massachusetts Supreme Court explained that “public policy is not served if generic drug consumers have no remedy for the failure of a brand-name manufacturer to warn in cases where such failure exceeds ordinary negligence, and rises to the level of recklessness.”  Rafferty v. Merck & Co., No. SJC-12347, 2018 Mass. LEXIS 161, at *29 (Mar. 16, 2018).  As such, the Court found that a brand name drug manufacturer can be liable for the generic version of the drug “where, for instance, a brand-name manufacturer learns that its drug is repeatedly causing death or serious injury, or causes birth defects when used by pregnant mothers, and still fails to warn consumers of this danger.”  Id. at *29-30 (Mar. 16, 2018).

The ramifications of this novel approach are significant.  Setting aside the fact that this decision comes from a court in one of the hubs of innovation in the life sciences, it is important to note that the decision is the very first of its kind.  No other court has determined to bar negligence claims yet permit reckless claims with regards to brand name drug liability resulting from generic use.  The Massachusetts Supreme Court even admits that it is “the only court” to make this distinction.  Id. at *32.

While this is a new issue in the context of drug and device litigation, other types of litigation shed light on what the repercussions of this decision may be.  As referenced above, this distinction of not permitting negligence claims but permitting reckless claims exists in the context of both sporting participants who have signed a release and trespassers who claim injury.  On one hand, the higher standards in these types of cases has discouraged lawsuits and made summary judgment easier for defendants to obtain.  On the other hand, requiring a plaintiff to meet a reckless standard certainly does not eliminate litigation.  And, depending upon the situation and insurance policy, the reckless standard can have serious insurance ramifications as some insurance policies do not cover reckless conduct.  The other question, of course, is whether courts in other jurisdictions may start to follow Massachusetts’ novel approach on brand name drug liability.

Regardless, for brand name drug manufacturers, it is a brave new world in Massachusetts.

Two Tales of Preemption

FDA preemption for medical devices is never out of the spotlight for long, even if the story usually seems unchanged by the latest retelling. One recent case confirms that success is sometimes measured in large part by the adversary’s miscues, but the other seems to break new ground in this area by posing the question of how preemption works when a PMA and a 510(k) device are joined. Perhaps as important, however, is that this second case portends a growing split in the courts on a central point in the preemption debate.

Alphatec Prevails in Sixth Circuit

Some preemption cases are a trial in more ways than one, but Alphatec Spine, Inc. prevailed fairly handily in a hearing of Agee v. Alphatec Spine in the U.S. Court of Appeals for the Sixth Circuit. The district court had dismissed the charges with prejudice despite allowing the plaintiff to amend the complaint, describing the plaintiff’s arguments as “a rambling, disorganized mess,” which consisted primarily of conclusory arguments that came up short of pleading standards under the Federal Rules of Civil Procedure 8 and 9.

The plaintiff seems to have compounded the problem by failing to directly respond to Alphatec’s argument regarding implied preemption during district court proceedings, taking up the subject only from the standpoint of doctrine. The plaintiff attacked express preemption at the district court stage, but Alphatec never raised express preemption. Also apparently unchallenged by the plaintiff was Alphatec’s argument that state law in Ohio bars common-law negligence claims.

The Sixth Circuit allowed the plaintiff to return to the district court to revisit the issue of whether the complaint met federal pleading standards, a move attributed to what is said to have been an abuse of discretion on the part of the district court judge. Nonetheless, the Sixth Circuit made clear it was unimpressed with more or less the entirety of the plaintiff’s handling of the matter, stating that the plaintiff’s failure to challenge the district court’s conclusions regarding preemption “fully determines this appeal inasmuch as the forfeited arguments encompass all of the plaintiffs’ causes of action.”

Preemption, PMAs and Predicate Devices

Express preemption might seem a largely settled matter thanks to Reigel v. Medtronic, but the recently decided case of Shuker v. Smith & Nephew took up the relatively novel predicament of a combination of both PMA and 510(k) devices. The outcome in this case in the U.S. Court of Appeals for the Third Circuit affirmed preemption for PMA devices, but seems to have created a schism with respect to the presumption against express preemption.

Shuker addresses a combination of devices that were not approved by the FDA in the configuration used by the implanting physician, and the plaintiff alleged the company’s literature had violated the law when it discussed the use of Smith & Nephew’s R3 acetabular cup in this configuration. The court received an amicus brief from the Department of Justice, which affirmed preemption for PMA devices even when attached to one or more 510(k) devices, but the Third Circuit seems to have sustained the possibility that Smith & Nephew’s printed material regarding the R3 could support a claim of misrepresentation. The Third Circuit sent that discussion back to the district court, which had dismissed that claim with prejudice.

While Shuker is a win for preemption, this appears to be the first instance in which an appeals court has undertaken the question of a device system bearing both 510(k) and PMA components. There is a novel source of tension in the decision, however, in that the court declared that the presumption against express preemption is still alive. The U.S. Court of Appeals for the Eight Circuit arrived at a different conclusion last year in Accord Watson v. Air Methods Corp., but the outcome in Shuker is based in part on the notion that what some believe is pertinent a Supreme Court precedent – that of Puerto Rico v. Franklin California Tax-Free Trust – is not applicable to the areas of the economy regulated by the FDA because Puerto Rico v. Franklin was directed toward bankruptcy law.

Consequently, the Third Circuit argued that the presumption against federal preemption is still a functioning legal theory, but attorneys for Medtronic might differ. The company won a case in the Arizona Supreme Court in October 2017, Conklin v. Medtronic, in which Judge Lori Bustamante declared that even though federal laws are not typically presumed to preempt state laws, the courts “do not invoke that presumption when the federal statute contains an express preemption clause.” Bustamante cited Puerto Rico v. Franklin in support of that conclusion.

It is predictably difficult to forecast how the presumption dilemma will unfold if only because a device maker will have to suffer an adverse outcome in a circuit court before the question is brought to the Supreme Court. On the other hand, there is clearly a growing trend toward differential outcomes on this point, which at the very least suggests the Supreme Court may find this a compelling problem should a device maker apply for cert.

ECJ Rules in Favor of EMA Transparency

The European Medicines Agency published a draft guidance for clinical trial transparency in 2013, and the agency scored a win recently at the European Court of Justice in what appears to be the first legal challenge of transparency to reach the ECJ. The decision in the case of Pari Pharma v. EMA affirms the legal standing of this practice, but the decision also makes clear that broad assertions of confidentiality and unsupported claims of damaged commercial interests will not sway the European Union’s high court.

Novartis, Pari in Nebulizer Standoff

EMA announced early in February that the court had declared that three companies, including Pari Pharma of Starnberg, Germany, had no legitimate claim that the disclosures of their data constituted a compromise of intellectual property. The court’s decision makes clear that Pari’s cause was thwarted by Novartis, which along with the French government pushed the court to side with EMA in the dispute.

Novartis’ interest in the market for tobramycin nebulizers was driven by its Tobi Podhaler, which like Pari’s Vantobra aerosol is indicated for pediatric cystic fibrosis. According to an earlier court document, Novartis had acquired a marketing authorization for the Tobi via an orphan product designation in 1999, but subsequently received an extension of marketing exclusivity through 2023.

Pari had claimed its product offered superior safety, and won that debate in 2015, when EMA granted the product a CE mark. The EMA’s decision summary makes clear that the European Commission had misgivings about how EMA had interpreted orphan product legislation on the point of product similarity, but in any event, Novartis lost its exclusivity for this treatment and indication.

No General Presumption of Confidentiality

Pari’s argument before the ECJ seems to revolved in part around the notion that the information found in its filings enjoyed “a general presumption of confidentiality,” an argument the court found unpersuasive. Pari also argued that both publicly available and confidential information together would disclose the company’s proprietary strategy for obtaining marketing authorization. The Court replied that this purported strategy was enabled in part by an exchange with the EMA as “part of a specific regulatory process” and consequently not entitled to discretion.

Pari further asserted that its strategy constituted intellectual property as defined by the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), but the Court would have none of it, in large part due to the fact that much of the information in question was already in the public domain. The Court said also that knowledge of the effect of the use of a nebulizer on intolerance to dry powder “could be obtained without difficulty and without any particular inventiveness.”

Pari fared no better on the confidentiality of its patient survey data, either, largely because the data set included information drawn from a patient registry set up by the European Cystic Fibrosis Society. According to the court, much of Pari’s survey data was little or nothing more than a “refinement” of the ECFS registry data. Much of Pari’s problem with the ECJ was due to what the court said on several occasions was as a failure to demonstrate any damage to the company’s commercial interests stemming from the disclosure.

There were two other cases in this clutch of losses on the transparency question – PTC Therapeutics fared no better over disclosure of data related to its treatment for Duchenne muscular dystrophy, Translarna (ataluren) – but only time will tell whether drug and device makers will eventually score a win at ECJ over the EMA transparency paradigm. In any event, Pari’s experience makes clear that nebulous arguments and better nebulizers won’t win the day at the European Union’s high court.

The Difference Between Faster and Earlier

To some, the term “regulatory harmonization” might suggest more or less simultaneous approvals across jurisdictions, but a recent study of drug approvals by three regulatory agencies hints that this dream is still just a dream. There are confounders in the latest study of drug approvals, however, including that the approved indications are anything but identical.

The Feb. 22 issue of the European Journal of Clinical Pharmacology states that the FDA, Swissmedic and the European Medicines Agency approved a total of 134 new drugs between 2007 and 2016. The FDA is credited with being the first to approve 66.4 percent of these, while the EMA was the first to approve nearly 31 percent, leaving Swissmedic with a paltry three percent first-to-approve rate.

While this report has gained some traction in the trade press, non-subscribers to the journal have only the abstract to rely on, which states that the approved indications were similar in only 23 percent of the drugs across all three agencies. The differences between the Swissmedic and EMA approvals were few, while the differences in labeled indications between the FDA and EMA were “significant.”

Obviously it is difficult to know what to make of this information without knowing how those labeled indications varied, but another absent piece of this puzzle is the total premarket review time for each drug at each agency. It’s one thing to say that agency A approved a product sooner than agency B, but it’s quite another to say the total review time was shorter. Without that context, this abstract has little to offer.

As might be expected, the total review time question has its own moving parts as this study in the New England Journal of Medicine suggests. The authors of this write-up from April 2017 indicate that cancer therapies and orphan drug applications moved more swiftly through the FDA premarket process than was seen in the EMA process, but that does not apply to all drug types or drug application types. The take-away from all this is that comparisons remain nettlesome and often are not particularly informative.

DoJ Revisits Standard for Qui Tam Dismissal

The Department of Justice has released a new memo addressing the standard for dismissal of relator lawsuits under the False Claims Act, and both the content and the tone of the memo are starkly different from what might have been expected under previous administrations. Precisely how this memo will change routine practice is “difficult to predict,” as the saying goes, but the memo is at the very least a suggestion that some of the less credible qui tam suits will have a very short shelf life, indeed.

Resources an Issue for DoJ                                                             

The DoJ memo says the annual total of qui tam actions has neared or exceeded 600 new matters in each of the past several years, a disclosure that might surprise no one, given the related provisions of the Affordable Care Act. However, the rate of federal interventions “has remained relatively static,” the memo stated, although the department must nonetheless expend resources to monitor cases in which the government ultimately does not intervene.

One might impute a number of motives for the memo overall, but one thing is clear: DoJ is seeking to economize when it comes to dealing with relator lawsuits, as demonstrated by the passage directing the reader’s attention to “the government’s limited resources.”

The memo points out that the department can dismiss an action over the relator’s objections, although that relator may be entitled to an appeal of that decision. DoJ lists seven factors that seem to have driven dismissals since 1986, including the curbing of meritless cases and prevention of relators who seek to piggyback onto an ongoing government investigation. Another factor would be whether the federal agency affected by the action expects the case to interfere with the policies and programs of that agency.

Standard for Dismissal Clarified

In addition to the factors cited above, the memo states that dismissal is an option to address a case pockmarked with “egregious procedural errors,” citing the case of Surdovel v. Digirad Imaging as an instance. This case was dismissed in 2013 after government attorneys determined that the relator had “failed to serve the United States with the complaint and disclosure of all material facts.” However, the memo indicated that federal attorneys should feel free to leverage both the unfettered discretion and the rational basis standards for dismissal.

As might be expected, the D.C. District Court is one jurisdiction where the unfettered discretion standard is at work, although the Ninth and Tenth Circuits have made use of the rational basis test. The memo argues that even the rational basis standard “was intended to be a highly deferential” standard, and the memo advises a federal attorney to notify the court as to the basis for a motion to dismiss in jurisdictions where a standard has not been identified.

The memo offers some tactical advice, suggesting for instance that prosecutors separately assert any alternative grounds for seeking dismissal, citing the bars on public disclosure and pro se relators as examples. This approach provides independent legal bases for dismissal, but partial dismissal is another tactic available to federal attorneys.

Interestingly, the memo concludes with language suggestive of a view that the rate of meritless qui tam actions is on the rise, stating that relators have dismissed more than 700 actions since the beginning of 2012 when the department declined to participate. This more routine withdrawal of a qui tam, the memo states, “has significantly reduced the number of cases where the government might otherwise have considered seeking dismissal.”

FDA’s Intended Use Rule Back in Play

A number of regulatory and enforcement items have been up for grabs at the FDA over the past year, but few carry the weight of the agency’s review of the intended use rule. The FDA announced recently that it is suspending the implementation date for the rule, and is separating the tobacco-related portions of the rule from those governing drugs and devices. It’s a welcome step and one that is long overdue, but it is not clear yet where the agency will land on this matter.

Dexcom Warning Letter Pulled

To recap, this problem dates back to at least 2011, when Par Pharmaceutical Inc. sued the agency over the latter’s attempts to suppress Par’s on-label discussion of the company’s appetite stimulant, Megace ES, in a setting in which the drug was likely to be used off-label. Par agreed to pay a $45 million fine two years later, and the five-year corporate integrity agreement is finally set to expire later this year.

Glucose monitor maker Dexcom subsequently received an FDA warning letter alleging the device maker was aware that its devices had been sold for uses that fell outside the labeled indication, but the agency has since deleted that document from the warning letter database. The agency took an explicit approach to the issue in a Federal Register announcement in September 2015, a peculiar attempt to devise a rule that would cover tobacco products along with drugs, devices and biologics. The FDA said its intent was to clarify some of the related issues, but the 10-page draft included the curious observation that a lack of clarity might lead consumers to use tobacco products “in place of FDA-approved medical products.”

The final rule appeared in early 2017 and retained the plus-tobacco features of the proposed rule, but the document grew to 25 pages and included a more or less lengthy discussion of the Central Hudson test and other issues that came up in comments to the docket. However, the agency then delayed implementation of the final rule to March 21, 2017, and then to March 19, 2018, and FDA commissioner Scott Gottlieb said in the agency’s Jan. 12 statement that the final rule will be suspended yet again “until further notice.”

A Procession of Concessions Fails

The 2015 proposed rule rattled observers by stating that the agency’s determination of a product’s intended use “is not bound by” explicit claims made by the manufacturer, but can instead be inferred by “objective evidence,” including the circumstances “surrounding the distribution of the product or the context in which it is sold.” The FDA tried to assuage industry’s concerns by vowing that it would not act on distribution of a product “based solely on a firm’s knowledge” of off-label use, but this concession did little to mollify industry.

The agency took a somewhat different approach in the final rule, stating that “a totality of the evidence” would be employed to determine an intent to knowingly distribute a drug or device for off-label uses. However, the Advanced Medical Technology Association argued that an approach based on the totality of the evidence is “more outcome determinative than prescriptive,” and thus manufacturers would have little choice but to “curb important product-related communications.”

The intended use rule does not entirely capture the regulated speech problem, but it is a significant hazard, particularly since whistleblowers and the Department of Justice can readily avail themselves of fodder for prosecution. It is pertinent to note that the Par Pharma case involved multiple relators, who had netted more than $4 million when all was said and done.

States Moving Ahead

There are several questions looming for the FDA, but whether the agency is in a position to stand pat is not one of those questions. The State of Arizona passed a law last year that takes up the off-label communication issue, and there are indications that other states may soon follow suit. Gottlieb has already noted that the FDA must come to grips with recent jurisprudence on the off-label issue, and the agency can scarcely afford to be swamped by a pixelated map of state policymaking where commercial speech is concerned.

The easy answer to all this is that Gottlieb will scuttle the totality-of-evidence standard, but little beyond that is especially obvious. The FDA said it will take comment through Feb. 5 on this latest iteration of the intended use scrum, so there is still time to weigh in. Given that the docket for this issue already features nearly 2,000 comments, it’s clear that significant change is in the works.

Auld Acquaintance; 2017 Guidances and 2018 Enforcement

2017 is now a part of the past, and everyone has their own idea as to which were the most crucial developments of the year. Following is a nomination for two FDA guidances that are at least strong candidates for the title of the most important guidances of 2017, along with developments in two ongoing dramas that could prove pivotal in this new year.

What’s Old is New (yet) Again

The FDA’s Center for Devices and Radiological Health had little to offer in the way of guidances in the first half of 2017, but the center made up for that in a big way in the latter part of the year. CDRH issued 19 draft and final guidances in the last three months of the year, but the month of September was a busy one, too.

Still, the most important guidances might not have been the most widely discussed. The October final guidance for 510(k) changes and the companion software 510(k) changes final guidance might not have the splash value of the agency’s moves in the digital health realm, but it’s easy to forget how long the 510(k) changes controversy has strained relations between the FDA and industry.

Thinking back to the legacy K97 guidance of 1997, this discussion has been the subject of formal regulatory interest for only 20 years despite that the Medical Device Amendments were added to the statute more than 40 years ago. The agency took a stab at rewriting K97 in 2011, but that attempt proved futile thanks to the opposition it triggered.

Traditionally, the estimates of the number of 510(k) clearances each year is somewhere between 3,500 and 4,000, a much greater number than the volume of original PMAs, which hasn’t hit 100 in recent memory, if ever. Are digital health guidances “hotter” in terms of novelty and hence media coverage?

Apparently, but make no mistake: The 510(k) program and the agency’s overarching administration thereof is easily the most important regulatory development in calendar year 2017, particularly given that the new med tech regulations in Europe could drive a lot of traffic back to American shores.

2018: Commercial Speech Comes of Age?

2017 was a regulatory banner year for med tech, thanks to the 21st Century Cures Act and the provisions of the fourth device user fee agreement, so it’s difficult to see how 2018 can measure up. Still, this new year has at least one blockbuster story in store if recent remarks by FDA commissioner Scott Gottlieb are any indication.

Gottlieb said the agency needs “a legally enforceable set of rules” where commercial speech is concerned, a nod to recent court losses, such as Caronia. Hence, Gottlieb’s said the FDA “can’t be operating from a platform where our regulations might be perpetually in conflict with the courts.”

The agency’s January 2017 draft guidance for payer communications is still in draft form, but that’s to be expected with the change in the commissioner’s office, particularly a commissioner with Gottlieb’s views on the commercial speech question. Another consideration is that a payer communication framework might be the lowest hanging of the several commercial speech questions, and there was little indication at the time that the FDA had adopted a less restrictive approach to off-label communications to physicians.

Gottlieb’s comments from September 2017 suggest he wants the agency to provide industry with some rules of the road for the entirety of the commercial speech problem, but the agency’s chief counsel, Rebecca Wood, avoided the subject in her prepared remarks to a gathering of the Food and Drug Law Institute in early December 2017. The net effect is something of a black box inside which the regulatory version of Schrödinger’s cat awaits our collective scrutiny, but Gottlieb seems determined to settle this matter by one means or another, even if there is some understandable skepticism as to the durability of any resolution. This is a matter worth watching as we move into 2018.

Yates Memo; Up for Grabs?

On the other hand, those who are concerned about a hangover from the Yates memo might be encouraged by the fact that FDA’s Woods conceded that it is time for the FDA to revisit the question of vicarious criminal liability in Park doctrine cases. The question here is whether the agency and the Department of Justice are on the same page, given that these two parties have not necessarily agreed on these issues in the past.

The corporate liability question seems ripe for review if only because Sally Quillian Yates is no longer at the Department of Justice, but deputy attorney general Rod Rosenstein acknowledged that the Yates memo is under review in a speech to the Heritage Foundation in September 2017. Although he offered no details other than to affirm that prosecution of individuals is still seen as important as a deterrent, he stated, “I do anticipate that we may in the near future make an announcement about what changes we are going to make to corporate fraud principles.”

Rosenstein confirmed in an October 2017 speech to New York University that the memo is still in play, explaining that any changes “will reflect our resolve to hold individuals accountable for corporate wrongdoing.” However, Rosenstein also said federal attorneys will not be permitted to “use criminal authority unfairly to extract civil payments.”

While there are few tea leaves to work with, the statement about the use of criminal authority to extract civil payments is at the very least some indicator as to where DoJ may be headed. On the other hand, there are those who worry that the prison sentences handed down in the case of Jack De Coster and Peter De Coster could be part of an emerging pattern despite that the De Costers’ egg businesses routinely and egregiously ran afoul of the law over a period of decades. The corporate prosecution story is clearly another story worth tracking as we work through this new year.