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Insight Report Vol. 6 No.3

Finding the Right Consultant for dealing with an FDA Injunction

The When a company gets into a situation with the FDA concerning GMP compliance, that company has to understand that they are at the mercy of the FDA. It is the FDA’s job to assure that the company is in compliance and it is the company’s job to supply the FDA with a specific level of comfort showing that they are, in fact, in compliance.

It appears that the American Red Cross (ARC) just can’t figure out how to provide the FDA that level of comfort for the FDA to ascertain that the ARC is in compliance and will stay there. Unfortunately, it appears that the ARC does not understand what is required to assure the FDA.

On April 11th, the Food and Drug Administration (FDA) announced that the American Red Cross (ARC) has agreed to substantial revisions in its consent decree with the FDA. The revised consent decree includes financial penalties if, in the future, ARC fails to comply with FDA laws and regulations that are aimed at ensuring the safety of the nation's blood supply.

In the original 1993 consent decree, ARC agreed to establish clear lines of managerial control over a newly established comprehensive quality assurance system in all regions; to enhance training programs; and to improve computer systems, records management, and policies for investigating and reporting problems, including adverse reactions.

The revised consent decree includes many of the same substantive provisions, updated to provide a series of clear deadlines for completing specific requirements of the decree and addressing additional types of violations observed since the original consent decree was signed in 1993. It also includes a comprehensive penalty scheme to address potential future violations.

If ARC fails to comply with blood safety rules and revised decree requirements, the FDA can assess penalties up to the following maximum amounts:

$10,000 per event (and $10,000 per day) for any violation of an ARC standard operating procedure (SOP), the law, or consent decree requirement and timeline. SOPs are written procedures that are designed to help ensure product quality;
$50,000 for the preventable release of each unit of blood for which FDA determines that there is a reasonable probability that the product may cause serious adverse health consequences or death, as well as $5,000 for the release of each unit that may cause temporary problems, up to a maximum of $500,000 per event;
$50,000 for the improper re-release of each unsuitable blood unit that was returned to ARC inventory;
$10,000 for each donor inappropriately omitted from the National Donor Deferral Registry, a list of all unsuitable donors.

During the first year of the decree, penalties will be capped at one percent of the gross annual revenues generated by ARC's Biomedical Products and Services (ARC's blood operation). These gross annual revenues are currently $1.924 billion. The cap increases to two percent in the second year, three percent in the third year, and reaches the maximum of four percent in the following years.

As in the original 1993 consent decree, ARC has agreed to retain the services of outside consultants to assure quality control. In addition, ARC must reimburse FDA for the costs of all FDA inspections that FDA considers necessary to evaluate ARC's compliance with the decree.

"The new financial penalties in the consent decree create an important new incentive for ARC to improve the processes and controls necessary for making safer blood products," said FDA Commissioner Mark B. McClellan, M.D., Ph.D. "I am hopeful that the acceptance of this agreement by ARC's new leadership reflects a new willingness to implement a management culture that expects and achieves good blood safety practices."

ARC is responsible for approximately 45% of the nation's blood supply; other independent community-based blood centers together provide another 45%, and hospitals collect most of the remaining 10%. Since entering into a consent decree with ARC in 1993, FDA has also reached similar agreements in 1996 with other major blood manufacturers such as the New York Blood Center and United Blood Systems. Those organizations have been able to avoid the chronic recurrence of problems that has characterized the ARC's performance under its 1993 agreement with FDA. In addition, FDA inspections of many other independent blood centers result in fewer significant findings of safety problems, consistent with management practices that consistently support safe blood practices.

This agreement between FDA and ARC today stems from FDA concerns arising from inspections over the past 17 years revealing persistent and serious violations of blood safety rules. One such inspection that raised substantial concerns occurred at ARC headquarters in the spring of 2000.

FDA and ARC began negotiations to amend the consent decree in August 2000. In December 2001, when it appeared that a settlement could not be reached, the government filed a motion to hold ARC in civil contempt for violating the 1993 decree and to amend the 1993 decree.

The court has not ruled on the motion the government filed in 2001. The court strongly encouraged both parties to continue negotiations and to reach a settlement if possible. To that end, both FDA and ARC agreed suspend court proceedings and continue talking. Today's agreement resolves the dispute.

FDA has reviewed the results of the most recent inspection of ARC headquarters, which ended in December 2002. The inspection revealed numerous and troubling problems in producing blood products - including systemic problems such as a lack of management control and quality assurance oversight that could lead to a patient receiving potentially unsafe blood.

For example, ARC failed to correct deviations from the previous inspection; ARC's lack of quality assurance oversight led to the release of unsuitable products; and the lack of ARC's inventory control led to the unknown disposition of blood products. FDA is detailing these concerns in a formal letter it will send to ARC under the terms of the 1993 consent decree on Monday, April 14. The letter highlights the need for management changes to promote a culture of safety at ARC.

With the legal issues now resolved and when the revised decree has been entered by the court, FDA expects that ARC will be able to concentrate fully on responding to the agency's concerns about blood safety. FDA, for its part, will have enhanced tools to encourage ARC to promptly correct problems when they are discovered and, more importantly, to take action proactively to prevent further violations from occurring.

It is hard to believe that a company of the magnitude and importance of ARC, that since 1993, for almost 10 years they cannot figure out how to bring their operations into FDA GMP compliance. What is a more sobering fact is that ARC management was to hire outside consultants to assist in this project and the consultants they used could not meet the task of getting them into compliance.

Assisting companies out of injunctions is a major undertaking that not all consultants are capable of doing. Another recent situation is the Abbott one, and the correct consultant to use requires more than just an ok by the FDA on their experience. Unfortunately, not all consultants understand the FDA, what they are looking for and what is required to bring a company in compliance at the level that the FDA can accept. But, there are many situations where the consultant is not only up against the FDA’s injunction but also a management team that does not want to give up control. When these two forces meet head on, a company is in for a long and expensive ride to assure full compliance.

Next Insight Report - to be announced.

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