Warning Letters are more than a slap on the wrist. They are the first step in what can be a costly remediation and legal battle.
How do we prevent them? What is within the power of the FDA and government when they spot quality issues? To help us with these questions and more, we are joined by Amanda Johnston of Gardner Law. Amanda has over a decade of experience in FDA Regulatory Law and experience with all sizes of companies.
To learn more about Gardener Law, check out their website: https://gardner.law/
Warning Letters are more than a slap on the wrist. They are the first step in what can be a costly remediation and legal battle.
How do we prevent them? What is within the power of the FDA and government when they spot quality issues? To help us with these questions and more, we are joined by Amanda Johnston of Gardner Law. Amanda has over a decade of experience in FDA Regulatory Law and experience with all sizes of companies.
To learn more about Gardener Law, check out their website: https://gardner.law/
Hi, I'm Aaron Harman and this is inside out quality, a podcast about real life events and experiences shared by our guests of when things have gone wrong, and how we can learn from them to build better products, companies and improve lives through an effective quality system. FDA warning letters, quality nerds love to read these. It's like the obituary section of the newspaper for quality assurance. And why do we care so much? I have two reasons. First, we can see the mistakes others make, and hopefully not make those as well. And second, it's a way to understand the FDA interpretation of the regulations. Here's a quick overview of the FDA audit process. First, they arrive at your FDA registered business and provide you with a 482 form, which is a notice of inspection. Next, they perform their inspection if they see anything objectionable, they issue a 483 form at the end, which lists their findings. Next, they perform their inspection if they see anything objectionable. They issue a 483 form at the end which lists our findings. The firm then takes corrective and preventive actions to correct the findings and life goes on. If the corrections that are proposed are not adequate, or the issues are too problematic. The FDA issues a warning letter. In 2015, Dr. Reddys laboratories received a warning letter based on FDA audits of three sites in India. The issue stemmed from quality control and quality assurance problems. The FDA closed that letter was finalized in 2020. In quality we think a lot about warning letters, but this episode focuses on what happens after the firm receives the warning letter productor ready when the warning letter was announced their share prices fell almost 15%. They received two separate lawsuits against them one resulting in a $9 million settlement. And it took five years to fix our quality system and close out the warning letter. To discuss the fallout of warning letters from the FDA. We are joined by managing attorney Amanda Johnson from Gartner law. The man has over 10 years experience in the space of FDA compliance and joins us today. Welcome to Inside Out quality, Amanda.
Amanda Johnston:Thank you. Thanks for having me.
Aaron Harmon:So first of all, how did you end up practicing law and working in regulatory affairs?
Amanda Johnston:Yeah, so I actually went to undergrad and had a got a bachelor's in criminology and realize that I could really only be about a probation officer or a police officer. So I decided to go to law school not really knowing what I wanted to do. But I have two younger sisters that have chronic lifelong health condition. So I kind of grew up in the healthcare space and in hospitals and with health care, being kind of a primary topic. And so in law school, I decided to take an FDA law course. And I actually loved it. And I became very interested in administrative law and specifically FDA regulations. And then also health law. So I ended up concentrating in health law and bioethics at the University of Minnesota law school, and they have a really good program with the School of Public Health. And they have a like a medical device Innovation Consortium that they you know, we have such a high number of medical device companies here in Minnesota. So it they really tried to develop that talent. I was also a research assistant for a renowned FDA attorney and did some amazing research on like the recall process and 510 K process. And so that's kind of how I got into the FDA space. After I graduated law school, I got a job in compliance, and then ended up at Medtronic where I was in regulatory affairs. I loved Regulatory Affairs, I still do. But I really wanted to gain some more legal and compliance experience. And so I took a position at a medical device company in the compliance function, worked there for a few years, but still always knew that I wanted to practice FDA law. So I joined Gartner law, and in June 2019, and you know, bend their sense love what I do, we, you know, are a small, sophisticated boutique firm that caters to companies that are regulated by the FDA. So we have a such a wide variety of clients from, you know, single person startups to multi billion dollar companies, and just so many different clients, so many different questions that come up, really in the area of FDA, you know, regulatory submissions, quality privacy, and anti fraud, compliance. That's kind of how I ended up in the space.
Aaron Harmon:So you're one of the few people that says, I really find FDA regulations. Interesting.
Amanda Johnston:Yes, I am a total regulatory nerd. I love it. That is me. Self proclaimed.
Aaron Harmon:There's not that many of us. It's kind of
Amanda Johnston:like a rare honor. It is it really is.
Aaron Harmon:So and in terms of these FDA warning letters, they themselves sound a bit scary, but what are all the possible consequences that can can fall out from a warning letter?
Amanda Johnston:Yeah, that's a good that's a good question. So you know, a lot of times companies view warning letters as kind of a slap on the wrist or they have in the past, at least. And now I don't think companies really grasp kind of all the consequences that come after. I mean, obviously, there's going to be some remediation activities. I've lived through warning letters several. So I know kind of a all hands on deck. What do we need to do to get this resolved by you know, X date, there's all that remediation activities that need to take place to appease the FDA and get it resolved. But there's also some additional consequences that can severely disrupt business, FDA suspends issuing certificate of foreign governments or CFGs. So if you have a warning letter that could interfere with your ability to actually ship it outside and sell outside the US. So I know that can be a big disruption, FDA also typically will suspend product submissions. So if you have something under review, they will suspend that. So those are to kind of just not always as a parent, but also just thinking about, you know, if the concerns in the in the warning letter are not addressed, or resolved to FDA satisfaction, essentially, within the timeline that they want you to complete it by, it will escalate. And there's kind of a number of things that FDA has a whole host of enforcement tools in their tool belt, so to speak, that they can choose to use, if they if it's warranted, they could force a recall, that's not common, but they could ask you to do a recall if they believe the concerns are, are such that it would impact patient safety, or there's quality issues, they can force, you know, they can forfeit products or does require you to destroy them, they could even withdrawal product approvals or clearances, or continuous suspension of new products, FDA can also issue bad press releases against you or, you know, bad, bad publicity. And, you know, obviously, a warning letter in itself brings some some bad publicity to accompany. But just thinking, you know, FDA does have the option to issue their own safety alert or press on a topic. And then depending on the facts, I mean, FDA could ask the Department of Justice or the DOJ to get involved. So FDA is not, you know, a law enforcement agency, they their their mission really is to protect the public health. So if it becomes a matter or if you know, they have some facts that they believe that could rise to the level of a criminal or civil investigation or a DOJ action, they could get them involved. Consent Decree is one of the more common I guess, tools that you would see in this area, which I've also lived through. So that's basically an agreement with the Department of Justice that you are to do certain things. So it's kind of a step above a warning letter. And it's only if you know, if you think a warning letter is disruptive to a business, that consent decree is even more disruptive. You know, they could issue disgorgement of profits, restitution damages, they could seize products. So just thinking about, you know, get a warning letter, it's not just a slap on the wrist anymore, there's kind of a whole host of of consequences that can that can come up that a lot of companies don't think about.
Aaron Harmon:When you mentioned, the Department of Justice. One of the earlier episodes we covered was a case of moldy HEPA filters. And part of that resulted in a $10 million fine from the Department of Justice, but it was preceded by the warning letter and the FDA audit revealed everything. Yep.
Amanda Johnston:Yeah, we do see that if the facts are such that they want to make it a message to the industry that those actions are taken, we do see that there were three recent settlements, I believe in July, they were all with the DOJ. But one of them was a criminal fraud case. And they were all related to quality issues that were settled. The DOJ based on quality issues, so like failure to issue a recall when FDA thought they should have that those kinds of things. So we are seeing more and more of that the government is using actually the False Claims Act to prosecute that on the on the DOJ side.
Aaron Harmon:Yeah. And it's just out of curiosity. I typically think about the Food, Drug and Cosmetic Act. But is that something out of the Federal Trade Act?
Amanda Johnston:So this is actually a fact the Federal False Claims Act is broader than just the healthcare industry. And what it essentially prohibits is submitting a false claim for payment to the government. So I think it originally was enacted back, I can't remember which war it was. Don't quote me on these, but to prevent the government from being basically defrauded for military supplies. So the kind of legal theory there is that in this example, I think St. Jude was one of the companies that settled in July, or they announced it in July. They were selling a product that had a faulty battery, allegedly, and the government would not have paid for it. So St. Jude sold these implantable medical devices to a doctor, a doctor then billed Medicare for it. And the government was saying we would not have paid for those products through Medicare had we known it was defective. And so it's just an interesting legal theory that we're we've been seeing. But yeah, so that is a federal law that applies, you know, broader than just the medical device, healthcare industry.
Aaron Harmon:But also exemplifies that you have to think outside of Yeah, directly healthcare regulations and law.
Amanda Johnston:Exactly, exactly.
Aaron Harmon:You mentioned radiation kind of right away from my understanding of remediation, the FDA will do their audit, they will find these things that if they don't agree with the record them in the 483, or warning letter, and then you got a time window of some sort, or have to have action plan in place for how you're going to correct all of those things to get the warning letter lifted. Is that correct?
Amanda Johnston:That's correct. Yeah, depending I think it's actually like 15 days that you have to provide a plan for warning letters may have different I don't know if that's like codified in a regulation, but they will give you kind of a deadline or a timeline to at least respond with plans. And then they will, there will be set expectations in terms of how quickly they want you to get stuff, remediated.
Aaron Harmon:And then those will trigger a follow up audit, I'm assuming, after the end to make sure that they're all Yeah, it's been closed out.
Amanda Johnston:Yep. Typically, there will be a closeout audit, and then that would hopefully trigger the resolution of the warning letter. So it'd be lifted. And to your point, I think Dr. Reddy is it was five years. I mean, it can be at Medtronic, I think it was we were there, I think it was seven years, like some of them are just very long, depending on what the issues are, and how many times FDA is coming into audit, and if they're finding more things. So it can be a multi million dollar multi year project, or disruption, I guess for the company.
Aaron Harmon:Is this like a house metaphor? I've remodeled my home several times. And every time I feel like it would have been so much easier if it had been like a build from scratch, and build it right from the beginning versus trying to fix it later.
Amanda Johnston:That's yeah, that's so true. And it's easy to think about that, you know, like you and I talking about that. But when you're starting out, really getting the labeling correct, and making sure you have kind of quality assurance and quality and thinking through all the different, you know, risks and foreseeable, you know, misuse that's just exemplifies the importance of that for thought.
Aaron Harmon:So, in the case of Dr. Reddy, they ended up getting sued by two separate parties after the warning letter was issued. Is that something you've seen typically? Or is that more of an abnormality with Dr. Reddys lab,
Amanda Johnston:we actually see this a lot. So we do see lawsuits coming after a company receives a warning letter. So in the case of Dr. Reddys, I think they settled for $9 million in one of them. But it was a shell shareholder class action lawsuit. And this is kind of a trend we see. Oftentimes, when a company gets a warning letter, there will be a shareholder class action suit following. And so in this case, the shareholders alleged that Dr. Reddys had made false and misleading statements about the company's Compliance Status observations that they had during inspections. And then also with regards to the remediation efforts that were being done for the 483s, and delays in production. So we are seeing this, I think, I'm not gonna say it happens every time but we do see it a lot. If you think about it, warning letters are publicly available. And FDA lists out in a nice, neat package all their concerns and all the bad things that they found about your company and your products and your quality system. So plaintiffs attorneys are often eager to pounce on those and use them as the basis for lawsuits. We see shareholder class actions, we see consumer class actions, maybe bringing actions under consumer protection lawsuits. So if FDA has an issue with the labeling or claims made, will see consumer like FTC and state law state consumer protection lawsuits saying that, hey, this is false and misleading product liability. If there's a design issue or a design flaw that FDA believes exists, we'll see product liability cases and class actions from that. And then again, if any of the facts draw the attention of the Department of Justice, we may see follow on DOJ investigations. And with those, again, we're talking about Federal False Claims Act, potentially the federal anti Kickback Statute, which have a whole host of other penalties that could be imposed if you know it rises to that level, and you can actually be excluded from parties Putting in federal health care programs through some of those settlements, which really is a business Ender for most companies. We've also seen that, you know, in addition to getting sued a company getting sued after receiving a warning letter, we've also seen some kind of piggybacking of suing competitors that may be doing something similar. So it's a very, yeah, it's very interesting. But I, I'd say this is becoming common that we'll see lawsuits following warning letters, and I think it's the plaintiffs bar is, it's an easy way to kind of piggyback on what the government has already found, because once you get to the point of a warning letter, presumably, there's been some discussions 483, potentially. And they're there to the point where these are probably solid bases for non compliance or alleging non compliance with FDA regulations. So yeah, I mean, the lawsuits, and the settlements can end up being much more expensive to accompany in terms of disrupting business and time, and resources and effort than just, you know, responding to a warning letter and executing any remediation activities that are required for that activity.
Aaron Harmon:So in terms of like, preventing a warning letter, one thing I've seen is I'll read through a warning letter, and they'll be a statement like, in response to our 43, you stated this in business, we do not agree, etc. So if you get that 43 Notice, are you able to maybe mitigate getting a warning letter by this? How you respond to that? 43?
Amanda Johnston:Yeah, I mean, it definitely is kind of an art in responding to 40 threes, or even if you get questions back from a reviewer with a submission or questions about an MDR, that was reported, you want to have somebody writing that knows the audience they're writing for, you know, not being defensive, owning up to kind of issues that FDA may have found, and really being kind of proactive, start fixing things right away. So yeah, I would say, in most cases, there's, there's definite steps that you can take to mitigate the chance that you'll get a warning letter. But sometimes, in my experience, if FDA, you know, has an issue, they're going to keep escalating it. And even if you, you know, all hands on deck, and make progress quickly, there are some like design changes, for example, you can't, you can't push those through, maybe as fast as FDA would like you to. But yeah, so getting everybody on board, as soon as possible kind of all hands on deck who needs to be involved, parsing out the warning letter, getting somebody who knows who's been there before, to help you would be really helpful, whether it's an outside firm or somebody within, you know, regulatory affairs or quality. And just being being careful about how it's written, being objective, being reasonable, not over committing, writing, really just the facts, and trying not to be defensive. And the tone is important. So I think a lot of people, or a lot of companies, I should say, maybe they get defensive when they get a 483 or if they have a question. And that's, I would say that's probably not the best approach just because you want to show that you're collaborating. FDA, again, is a Public Protection Agency, you want to show that you're worried about, you know, patient safety is number one, you want to be collaborative, you want to show that you're willing to work with FDA, but at the same time, you don't need to tell them everything. So it truly isn't, it's an art, which is is difficult to learn, if you haven't been through it before. And of course, you know, you're going to be different working with different people at FDA, regardless of whether you've been through it before. So it is kind of one of those things where it's a study and kind of human behavior. How can I convey this fact without introducing additional questions into the into the mix? So yeah, I, I guess in summary, I think it's a good idea to think carefully about your response, whether it's to a 43 in writing, or it's usually in writing for any of the FDA engagements, but just being very cautious and cognizant of the tone that you're using and kind of what you're signing yourself up for.
Aaron Harmon:And you mentioned the FDA and in there protecting the public health. I think sometimes people lose track that it kind of goes both directions where they want good products on the market for patients because they help patients and they do help public health. And so Absolutely, it's not to the FTEs advantage to shut down a business or remove products from the market if they're effective and good.
Amanda Johnston:Absolutely. 100%. I mean, they they don't and that's why we are And we rarely see a forced recall because FDA doesn't want to take away products that are benefiting patients like that is not, that's not their goal. Their goal is to protect patient safety, protect the public health, make sure that companies are putting products on the shelves that are safe and effective.
Aaron Harmon:So you work for a law firm. If people need support, how do they reach out to you?
Amanda Johnston:Yeah, absolutely. So and I think I mentioned earlier, but I work for Gardner law. And we are a kind of a small boutique sophisticated firm that caters only to FDA regulated industries. So if you have questions, whether it's regulatory, whether it's strategy, engaging with the FDA, we're all former in house legal slash compliance slash regulatory experts. So we've all been there. And we've all kind of been in the trenches. If anyone needs help, you know, questions. We have a website, it's www dot Gartner dot law. And you can kind of take a look through there, see our practice areas, we actually have regulatory alerts that we put out every month that has, they have a ton of good information on various topics that are of interest and are of help to the industry. So I'd encourage you guys to look on the website and see if there's, you know, anything that may be helpful for you. If you have any questions, feel free to reach out. My name is Amanda Johnston again, and my email and phone number on the website. And Mark Gardner is the directing attorney. And we are growing and it's just been very exciting. I've been at Gartner law for about two and a half years. And just great group of people super smart, super sharp. We understand kind of the the dynamics of being in a business, which I believe sets us apart from some of the bigger law firms that that do what we
Aaron Harmon:do. And that's why I want you on the episode.
Amanda Johnston:Yes.
Aaron Harmon:So is it fair to say that in law and regulatory preventative medicine is the best medicine? So as a lawyer don't come to you when it's too late?
Amanda Johnston:Earlier, the better? Yeah, absolutely. I mean, this is one of those things where yeah, you kind of it's an insurance policy. And you're you know, you want to set up your policies and your procedures and your quality system and your compliance program, so that you mitigate the chances or you mitigate risks associated with having to deal with a warning letter or even a 483. And, again, 483s are pretty common. I mean, a lot of companies get them. But it's really how you handle them and how you react to them and kind of how you're engaging with the agency that can determine whether it could escalate or it could go away. And I think that's really important to think proactively about about compliance, and FDA, FDA compliance in particular in this space.
Aaron Harmon:Well, thank you for being on the show. Yeah,
Amanda Johnston:thank you. It was great. Chatting with fellow regulatory nerd. I love it.
Aaron Harmon:Thank you for tuning in. And stay tuned for the next episode of Inside Out quality. We hope you enjoyed this episode. This was brought to you thanks for South Dakota biotech Association. If you have a story you'd like us to explore and share, let us know by visiting www. SD bio.org. Also, if you live in the Sioux Falls area, check out QUIBIT a local Quality Assurance Professionals Network. You can find out more about QUIBIT by clicking on the link on our website too. Thanks for listening