DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. 92N0416]

David J. Brancato; Denial of Hearing and Final Debarment Order

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

SUMMARY: The Deputy Commissioner for Operations of the Food and Drug
Administration (FDA) is denying a request for a hearing and issuing a final
order under section 306(a) of the Federal Food, Drug, and Cosmetic Act (the
act) (21 U.S.C. 335a(a)) permanently debarring Mr. David J. Brancato, 13010
Atlantic Ave., Rockville, MD 20851, from providing services in any capacity to
a person that has an approved or pending drug product application. FDA bases
this order on a finding that Mr. Brancato was convicted of a felony under
Federal law for conduct relating to the development or approval, including the
process for development or approval of a drug product; and relating to the
regulation of a drug product under the act.

EFFECTIVE DATE: January 6, 1994.

ADDRESSES: Application for termination of debarment to the Dockets Management
Branch (HFA305), Food and Drug Administration, 12420 Parklawn Dr., rm. 123,
Rockville, MD 20857.

FOR FURTHER INFORMATION CONTACT: Diane M. Sullivan, Center for Drug Evaluation
and Research (HFD366), Food and Drug Administration, 7500 Standish Pl.,
Rockville, MD 20855, 3015942041.

SUPPLEMENTARY INFORMATION:

I. Background

David J. Brancato, a former review chemist with FDA's Division of Generic
Drugs, pled guilty and was sentenced on January 5, 1990, for receiving
unlawful gratuities, a felony offense under 18 U.S.C. 201(c)(1)(B). This
conviction was based on Mr. Brancato's acceptance of payment of approximately
$4,300 from senior officials of generic drug manufacturers, Par
Pharmaceutical, Inc. (Par), and its subsidiary, Quad Pharmaceuticals, Inc.
(Quad), while Mr. Brancato was involved in the regulation of Par's and Quad's
drug products and while he was specifically responsible for reviewing Par's
and Quad's applications to determine whether those applications met certain
statutory standards for approval.

On December 12, 1992, Mr. Brancato received a certified letter from the Deputy
Commissioner for Operations offering Mr. Brancato an opportunity for a hearing
on the agency's proposal to issue an order under section 306(a) of the act
debarring him from providing services in any capacity to a person that has an
approved or pending drug product application. FDA based the proposal to debar
Mr. Brancato on its finding that he was convicted of a felony under Federal
law for conduct relating to the development, approval, and regulation of Par's
and Quad's drug products.

The certified letter further informed Mr. Brancato that his request for a
hearing could not rest upon mere allegations or denials but must present
specific facts showing that there was a genuine and substantial issue of fact
requiring a hearing. The letter also notified Mr. Brancato that if it
conclusively appeared from the face of the information and factual analyses in
his request for a hearing that there was no genuine and substantial issue of
fact which precluded the order of debarment, FDA would enter summary judgment
against him and deny his request for a hearing.

In a letter dated December 21, 1992, Mr. Brancato requested a hearing and
submitted arguments and information in support of his hearing request. In his
request for a hearing, Mr. Brancato acknowledges that he was convicted of a
felony under Federal law as alleged by FDA; however, he argues that FDA's
findings are incorrect and that the agency's proposal to debar him is
unconstitutional.

      The Deputy Commissioner for Operations has considered Mr. Brancato's
arguments and concludes that they are unpersuasive and fail to raise a genuine
and substantial issue of fact requiring a hearing. The legal arguments that
Mr. Brancato offers do not create a basis for a hearing because hearings are
not granted on matters of policy or law, but only on genuine and substantial
issues of fact (see 21 CFR 12.24(b)(1)). Additionally, the material submitted
in support of Mr. Brancato's hearing request does not justify a hearing
because hearings will not be granted on the basis of mere allegations,
denials, or general descriptions of positions and contentions (see 21 CFR
12.24(b)(2)). Moreover, all of Mr. Brancato's arguments are unconvincing for
the reasons discussed below.

II. Conclusions of the Deputy Commissioner Concerning Mr. Brancato's Arguments
in Support of a Hearing

A. Mandatory Debarment of Individuals Applies Retroactively to Convictions
Occurring Within the Past 5 Years

Mr. Brancato first alleges that the debarment provisions do not apply to
conduct which occurred prior to the effective date of the act. Mr. Brancato
does not support this claim with further argument.

The provision of the act applicable to Mr. Brancato is section 306(a)(2) of
the act. Initiation of debarment proceedings under that section is not limited
by when the conduct underlying the conviction occurred, but rather, by when
the conviction occurred. Under section 306(a)(2) of the act, debarment
proceedings must be initiated within 5 years of the conviction (see section
306(l)(2) of the act). Debarment of Mr. Brancato is appropriately based upon
his January 5, 1990, conviction, occurring less than 4 years ago. Because the
5-year statute of limitations has not expired, Mr. Brancato's argument fails
to raise a genuine and substantial issue of fact.

It is unclear from Mr. Brancato's first argument whether he intended to
further allege that the debarment provisions do not apply retroactively to
convictions occurring prior to the effective date of the act. Nevertheless,
this issue is addressed below.

Congress intended section 306(a)(2) of the act to be retroactive as evidenced
by comparing section 306(a)(2) of the act, applicable to mandatory debarment
of individuals, to section 306(a)(1) of the act, applicable to mandatory
debarment of corporations. The act treats corporations differently from
individuals with respect to retroactivity. Mandatory debarment of corporations
under section 306(a)(1) of the act is not retroactive because debarment of
corporations is explicitly limited to convictions occurring "after the date of
enactment.'' Conversely, section 306(a)(2) of the act, pertaining to mandatory
debarment of individuals, does not contain any such limiting language. The
exclusion of language barring retroactivity for section 306(a)(2) implies that
section 306(a)(2) of the act was intended by Congress to be implemented
retroactively.

In addition, section 306(l)(2) of the act shows that section 306(a)(2),
pertaining to mandatory debarment of individuals, was intended to be
retroactive. Section 306(l)(2) of the act sets out the effective dates for
each provision of the act. As noted above, the effective dates pertaining to
section 306(a)(2) of the act state that any relevant conviction may be used as
the basis for mandatory debarment of individuals, so long as the conviction
occurred no more than 5 years prior to the initiation of debarment
proceedings. Section 306(l) of the act states that certain other debarment
provisions shall not be retroactive by limiting application of those
provisions to actions occurring on or after June 1, 1992. Thus, where Congress
intended a section not to be retroactive, it provided an effective date in
section 306(l) of the act. The omission of an effective date for section
306(a) of the act and the inclusion of an effective date for other sections
reveals Congress' intent that this section be retroactive.

Thus, as intended by Congress, and as supported by the explicit language of
the act, mandatory debarment applies retrospectively and, thus, mandatory
debarment applies to Mr. Brancato's conviction, which occurred within 5 years
prior to the effective date of the act. Accordingly, Mr. Brancato's claim
fails to raise a genuine and substantial issue of fact.

B. The Decision To Debar Mr. Brancato Was Based Upon the Relevant
Considerations and Was Made by an Authorized Designee of the Secretary

Mr. Brancato next argues that notice to him of his proposed debarment does not
reflect consideration by the Secretary of Health and Human Services or his
designee. Mr. Brancato does not support this claim with facts or further
argument.

      Sections 201 through 903 of the act (21 U.S.C. 321 through 394) contain
numerous grants of authority to the Secretary of the Department of Health and
Human Services (the Secretary). The Secretary has, in general, delegated this
authority to the Commissioner of Food and Drugs with authority to redelegate
to the Deputy Commissioner for Operations and other officers of FDA (see 21
CFR 5.10 and 5.20). The authority conferred in section 306 of the act is
delegated to the Commissioner, even though the legislation formally names the
Secretary. The Commissioner has redelegated that authority to the Deputy
Commissioner for Operations (21 CFR 5.20(b) and 5.20(g)(1)).

The notice of proposed debarment and opportunity for a hearing letter received
by Mr. Brancato on December 12, 1992, was issued legally under authority
delegated to FDA's Deputy Commissioner for Operations.

The decision to propose debarment of Mr. Brancato was appropriately based upon
the following relevant considerations: (1) The nature of the conviction (a
felony under Federal law) and (2) the conduct underlying the conviction
(conduct relating to the development, approval, and regulation of Par's and
Quad's drug products) (see section I. of this document). Because the Deputy
Commissioner for Operations, an authorized designee of the Secretary,
considered the relevant factors in making the determination to propose
debarment, Mr. Brancato's claim that the notice of his proposed debarment does
not reflect consideration by the Secretary or his designee fails to raise any
issue as to the validity of this proceeding and fails to raise a genuine and
substantial issue of fact.

C. Mr. Brancato's Conviction Subjects Him to the Mandatory Debarment
Provisions Not to the Permissive Debarment Provisions

Mr. Brancato further contends that the conduct for which he was convicted is
more appropriately conduct subject to permissive debarment under 21 U.S.C.
306(b)(2)(B) of the act rather than to mandatory debarment. Mr. Brancato fails
to support this statement with an explanation or further argument.

Section 306(a)(2)(A) and (a)(2)(B) of the act mandates that FDA debar an
individual if the Secretary finds that the individual has been convicted of a
felony under Federal law for conduct: (1) Relating to the development or
approval, including the process for development or approval, of any drug
product; and (2) otherwise relating to the regulation of any drug product
under the act.

As discussed above, Mr. Brancato's conviction for receiving unlawful
gratuities triggers the section 306 (a)(2) (A) and (a)(2)(B) of the act
mandatory debarment provisions. An individual convicted of this crime will not
be considered a candidate for permissive debarment unless FDA finds that the
conduct underlying the conviction did not relate to the development or
approval, or the regulation of any drug product (see section 306(b)(2)(B)(ii)
of the act). Absent such a finding, mandatory debarment based upon such a
conviction must follow. Because FDA finds that the conduct which served the
basis for Mr. Brancato's conviction did relate to the development and approval
and the regulation of Par's and Quad's drug products, the mandatory
provisions, rather than the permissive provisions, are applicable in this
case. Mr. Brancato acknowledges that he was convicted of a felony under
Federal law. Furthermore, he does not dispute FDA's finding that the conduct
underlying his conviction relates to the development and approval and the
regulation of Par's and Quad's drug products. Therefore, Mr. Brancato's claim
fails to raise a genuine and substantial issue of fact.

D. The Statutory Criteria Pertaining to Permissive Debarment Are Not Relevant
to Mr. Brancato's Mandatory Debarment Action

Mr. Brancato states the following: (1) There is no evidence that the Secretary
considered the statutory criteria for determining appropriateness and period
of debarment for nonmandatory (permissive) debarment, (2) Mr. Brancato took
voluntary steps to mitigate the impact of his offense on the public, and (3)
Mr. Brancato has no prior convictions. Mr. Brancato fails to support these
three statements with further argument.

As discussed, the mandatory debarment provisions, not the permissive debarment
provisions, apply in this case. The criteria pertaining to permissive
debarment, which include evidence of mitigation and prior convictions, may not
be considered in making the decision to initiate mandatory debarment
proceedings. Because Mr. Brancato argues for the consideration of irrelevant
permissive debarment criteria, not applicable to Mr. Brancato's mandatory
debarment action, his claim fails to raise a genuine and substantial issue of
fact.

E. Mr. Brancato's Plea Agreement With the Government Does Not Preclude His
Debarment

In his next argument, Mr. Brancato states that his guilty plea and cooperation
with the government were predicated on the assumption that no civil penalties
would flow from his cooperation and that debarment would render his guilty
plea subject to collateral attack and jeopardizes the integrity of the
judicial process. He does not support this claim with evidence or citations.

      Mr. Brancato's claim is completely unsubstantiated. The April 13, 1989,
plea agreement represents the complete and final embodiment of Mr. Brancato's
and the government's intention; the agreement explicitly states that "[t]here
are no other agreements, promises, undertakings or understandings between Mr.
Brancato and this Office.'' Contrary to Mr. Brancato's "assumption,'' the
terms of the plea agreement do not preclude subsequent civil or administrative
actions, including debarment. The terms bar only subsequent criminal action.
Because the plea agreement is the complete and final expression of the
compromise between Mr. Brancato and the government, and because the agreement
does not preclude debarment, Mr. Brancato's claim fails to raise a genuine and
substantial issue of fact.

F. Debarment of Mr. Brancato Is Not Prohibited by the Ex Post Facto Clause

In his final argument, Mr. Brancato states, "individuals who cooperate with
the government should not be subject to sanctions of this kind ex post
facto.'' Mr. Brancato fails to support this statement with an explanation or
case citation.

Although it is unclear from this statement what point Mr. Brancato is
attempting to make, two separate arguments may be implied: That his
cooperation exempts him from the debarment provisions, and that his debarment
violates the ex post facto clause of the United States Constitution. Both
arguments are discussed individually below.

As discussed above, the mandatory debarment provisions, not the permissive
debarment provisions, apply in this case. Cooperation with the government may
not be considered in the decision to initiate mandatory debarment proceedings.
(Cooperation may, however, be considered in determining whether to grant
special early termination of debarment, under section 306(d)(4)(C) of the act,
to individuals and as evidence of mitigation, in determining appropriateness
and period of permissive debarment.) Because Mr. Brancato's cooperation is
immaterial here, his claim fails to raise a genuine and substantial issue of
fact.

Mr. Brancato further suggests that the ex post facto clause of the U.S.
Constitution prohibits application of section 306(a)(2) of the act to him
because this section was not in effect at the time of Mr. Brancato's criminal
conduct. Section 306(a)(2) of the act was enacted on May 13, 1992. The conduct
underlying Mr. Brancato's conviction occurred in 1987, and his conviction
occurred in 1990.

An ex post facto law is one which punishes acts occurring prior to enactment
of the law, or which adds a new punishment to one that was in effect when the
crime was committed. (Ex Parte Garland, 4 Wall. 333, 377, 18 L. Ed. 366
(1866). Collins v. Youngblood, 110 S.Ct. 2715 (1990).) Retroactive application
of a law to serve a remedial purpose does not violate the ex post facto
clause.

Because debarment is intended as a remedy, rather than a punishment,
retroactive application of the mandatory debarment provisions of the act is
not prohibited by the ex post facto clause.

Debarment was clearly intended to be remedial. Congress created the Generic
Drug Enforcement Act of 1992 (GDEA) in response to findings of fraud and
corruption in the generic drug industry. Both the language of the GDEA itself
and its legislative history reveal that the purpose of the debarment
provisions is remedial: "to restore and ensure the integrity of the ANDA
approval process and to protect the public health'' (see section 1, Pub. L.
102282, (GDEA)). A statement by Senator Hatch supports the remedial character
of debarment as follows: "* * * [t]he legislation * * * provides a much-needed
remedy for the blatant fraud and corruption uncovered in the generic drug
industry * * * during the last 3 years.'' (Emphasis added.) (See Congressional
Record, April 10, 1992, at S 5616.)

It is well established by the Supreme Court that statutes which deny future
privileges to convicted offenders because of their previous criminal
activities in order to ensure against corruption in specified areas do not
impose penalties for past conduct and, therefore, do not violate the ex post
facto prohibitions (see, e.g., Hawker v. New York, 170 U.S. 189, 190 (1898)
(physician barred from practicing medicine for a prior felony conviction);
DeVeau v. Braisted, 373 U.S. 154 (1960)).

In DeVeau, the Court upheld a law that prohibited a convicted felon from
employment as an officer in a waterfront union. The purpose of the law was to
remedy the past corruption and to ensure against future corruption in the
waterfront unions. The Court in DeVeau, 363 U.S. at 160, stated:

The question in each case where unpleasant consequences are brought to bear
upon an individual for prior conduct, is whether the legislative aim was to
punish that individual for past activity, or whether the restriction of the
individual comes about as a relevant incident to a regulation of a present
situation, such as the proper qualifications for a profession * * *.

As in DeVeau, the legislative purpose of the relevant statute is to ensure
that fraud and corruption are eliminated from the generic drug industry. The
restrictions placed on individuals convicted of a felony under Federal law are
not intended as punishment but are "incident to a regulation of a present
situation'' (DeVeau, 363 U.S. at 160) and are necessary in order to remedy the
past fraud and corruption in the industry.

The legislative history is replete with statements that the GDEA provides the
reasonable means needed to eliminate the widespread corruption in the generic
drug industry and to restore consumer confidence in generic drugs. Because
debarment is a remedial action, rather than one intended to punish, debarment
does not violate the ex post facto clause and Mr. Brancato's claim fails to
raise a genuine and substantial issue of fact.

In conclusion, Mr. Brancato has raised no genuine and substantial issue of
fact regarding his conviction. He acknowledges his conviction as alleged by
FDA in the agency proposal to debar him. In addition, Mr. Brancato's legal
arguments do not create a basis for a hearing and, in any event, are
unpersuasive. Accordingly, the Deputy Commissioner for Operations denies Mr.
Brancato's request for a hearing.

III. Findings and Order

Therefore, the Deputy Commissioner for Operations, under section 306(a) of the
act, and under authority delegated to her (21 CFR 5.20), finds that Mr.
Brancato has been convicted of a felony under Federal law for conduct: (1)
Relating to the development or approval, including the process for development
or approval, of a drug product (21 U.S.C. 335a(a)(2)(A)); and (2) relating to
the regulation of a drug product (21 U.S.C. 335a(a)(2)(B)).

As a result of the foregoing findings, Mr. Brancato is permanently debarred
from providing services in any capacity to a person with an approved or
pending drug product application under sections 505, 507, 512, or 802 of the
act (21 U.S.C. 355, 357, 360b, or 382), or under section 351 of the Public
Health Service Act (42 U.S.C. 262), effective on January 6, 1994 (21 U.S.C.
335a(c)(1)(B) and (c)(2)(A)(ii) and 21 U.S.C. 321(ee)).

Any person with an approved or pending drug product application who knowingly
uses the services of Mr. Brancato in any capacity, during his period of
debarment, will be subject to civil money penalties (21 U.S.C. 335b(a)(6)). If
Mr. Brancato, during his period of debarment, provides services in any
capacity to a person with an approved or pending drug product application, he
will be subject to civil money penalties (21 U.S.C. 335b(a)(7)). In addition,
FDA will not accept or review any abbreviated new drug application or
abbreviated antibiotic drug application submitted by or with Mr. Brancato's
assistance during his period of debarment.

Mr. Brancato may file an application to attempt to terminate his debarment,
pursuant to section 306(d)(4)(A) of the act. Any such application would be
reviewed under the criteria and processes set forth in section 306(d)(4)(C)
and (d)(4)(D) of the act. Such an application should be identified with Docket
No. 92N0416 and sent to the Dockets Management Branch (address above). All
such submissions are to be filed in four copies. The public availability of
information in these submissions is governed by 21 CFR 10.20(j). Publicly
available submissions may be seen in the Dockets Management Branch between 9
a.m. and 4 p.m., Monday through Friday.

Dated: December 5, 1993.

Jane E. Henney,

Deputy Commissioner for Operations.

[FR Doc. 94210 Filed 1594; 8:45 am]

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