[Federal Register Volume 64, Number 199 (Friday, October 15, 1999)]
[Notices]
[Pages 55944-55946]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 99-26938]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration
[Docket No. 99N-2674]


Jay Marcus; Proposal to Debar; Opportunity for a Hearing

AGENCY: Food and Drug Administration, HHS.
ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is proposing to issue 
an order under the Federal Food, Drug, and Cosmetic Act (the act) 
permanently debarring Mr. Jay Marcus from providing services in any 
capacity to a person that has an approved or pending drug product 
application. FDA bases this proposal on a finding that Mr. Marcus was 
convicted of a felony under Federal law for conspiracy to defraud the 
United States. This notice also offers Mr. Marcus an opportunity for a 
hearing on the proposal. The agency is issuing this notice in the 
Federal Register because all other appropriate means of service of the 
notice upon Mr. Marcus have proven ineffective.

DATES: Submit written requests for a hearing by November 15, 1999.
ADDRESSES: Submit written requests for a hearing and supporting 
information to the Dockets Management Branch (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, rm. 1061 Rockville, MD 20852.
FOR FURTHER INFORMATION CONTACT: Christine F. Rogers, Center for Drug 
Evaluation and Research (HFD-7), Food and Drug Administration, 5600 
Fishers Lane, Rockville, MD 20857, 301-594-2041.
SUPPLEMENTARY INFORMATION:

I. Conduct Related to Conviction

    On October 21, 1994, the United States District Court for the 
District of Maryland accepted Mr. Marcus' plea of guilty to one count 
of conspiracy to defraud the United States under 18 U.S.C. 371 and 
sentenced Mr. Marcus for the crime. The underlying facts supporting 
this felony conviction, and to which Mr. Marcus stipulated to in his 
plea agreement, are as follows:
    Mr. Marcus was the president and chief executive officer of Halsey 
Drug Co., Inc. (Halsey), a generic drug manufacturer with facilities 
located in Brooklyn, NY. Halsey had obtained approval to market certain 
generic drug products. Master formulas approved in the abbreviated new 
drug applications (ANDA's) for those products specified the ingredients 
and manufacturing processes to be used. FDA regulations required Halsey 
to maintain accurate and contemporaneous written batch records 
documenting the raw materials used and the manufacturing processes 
followed for each batch of such generic drug products.
    With Mr. Marcus' knowledge and sometimes at his direction or with 
his approval, Halsey employees responded to problems in the production 
of Halsey's products by reworking batches without approval from FDA, 
including on some occasions regrinding tablets and adding lubricants. 
To conceal these practices from FDA, Halsey employees did not document 
these reworks on the batch record. For some Halsey products, problems 
encountered in manufacturing large production batches led Halsey 
employees to develop alternate formulas and manufacturing processes 
that replaced the FDA-approved master formulas. These alternate 
formulas, kept on handwritten ``phony cards,'' sometimes substituted 
unapproved inactive ingredients. Although Halsey employees followed the 
phony card formulas, they created false batch records that made it 
appear as though Halsey had followed the FDA-approved master formulas, 
with the intent to conceal the phony card system from FDA.
    For the product quinidine gluconate 324-milligram (mg) tablets, 
Halsey employees created a phony card formula to solve a problem with 
the dissolution rate of large-scale production batches. Quinidine 
gluconate is a medication that treats irregular heartbeats. The phony 
card formula included additions of the unapproved inactive ingredients 
magnesium stearate and stearic acid. Mr. Marcus became aware of the 
unapproved deviations in the formula and manufacturing process for 
quinidine gluconate. With other members of Halsey's management, Mr. 
Marcus discussed filing the required preapproval supplement to get 
FDA's approval for those changes. However, Mr. Marcus and other members 
of Halsey's management realized that FDA would consider the changes 
significant and would probably require an expensive bioequivalence 
study to test the performance of Halsey's alternate formula. Because 
filing a preapproval supplement might require an additional 
bioequivalence study and delay Halsey's marketing of the product for 
years, Mr. Marcus and the others decided to continue using the phony 
card system without filing a supplement. Mr. Marcus and other Halsey 
employees caused batch number 2F24H of quinidine gluconate 324-mg 
tablets to be manufactured according to the unapproved, phony card 
formula, introduced into interstate commerce, and delivered to 
Baltimore, MD on August 27, 1992.
    Halsey employees used alternate formulas and created false batch 
records for other products, including acetaminophen and codeine 
phosphate tablets, propylthiouracil tablets, and metronidazole tablets. 
When an FDA inspection in 1989 revealed irregularities at the company, 
Mr. Marcus and others directed the creation of false batch records for 
acetaminophen and codeine phosphate tablets in an attempt to cover up 
the phony card system.
    During the course of manufacturing research and development 
batches, Halsey employees created false paperwork for submission to FDA 
to make it appear that they had made more or larger batches than they 
actually made. Mr. Marcus later became aware of that conduct and 
participated in conduct to cover up those falsifications.
    Between August 23, 1989, and October 11, 1989, FDA inspected 
Halsey's facilities to determine Halsey's compliance with the act. On 
or about August 29, 1989, Mr. Marcus directed a Halsey employee to 
create a falsified raw material inventory card for fenoprofen calcium. 
Mr. Marcus knew that the raw material card falsely stated that Halsey 
had received 50 kilograms of fenoprofen calcium on September 11, 1987. 
Mr. Marcus knew that in fact Halsey had received half that amount. The 
purpose of the falsification was to conceal from FDA that Halsey did 
not have enough raw material from that shipment to manufacture its 
pilot batches in the sizes represented in ANDA's for the generic drug 
products fenoprofen calcium 200-mg capsules, fenoprofen calcium 300-mg 
capsules,

[[Page 55945]]

and fenoprofen calcium 600-mg tablets. Mr. Marcus understood that the 
falsified raw material card would be provided to FDA inspectors that 
day, and in fact, the falsified card was produced to FDA inspectors 
that day.

II. FDA's Finding

    Section 306(b)(2)(B)(i) of the act (21 U.S.C. 335a(b)(2)(B)(i)) 
permits FDA to debar an individual if it finds that the individual has 
been convicted of a felony under Federal law for conspiracy to commit a 
criminal offense related to the development or approval, including the 
process for the development or approval, of any drug product, or 
otherwise related to the regulation of drug products, and that the 
offense undermined the process for the regulation of drugs. Mr. Marcus' 
felony conviction under 18 U.S.C. 371 for conspiracy to defraud the 
United States, specifically for conspiracy to submit false ANDA 
information to FDA, is a conviction related to the development or 
approval of drug products. Submission of false information to an ANDA 
undermines the process for the regulation of drugs. Accordingly, the 
agency finds that Mr. Marcus is eligible for permissive debarment under 
section 306(b)(2)(B)(i) of the act.
    Under section 306(l)(2) of the act, permissive debarment may be 
applied when an individual acted or was convicted within the 5 years 
preceding initiation of an agency action proposed to be taken under 
section 306(b)(2)(B) of the act. Under section 306(c)(2)(A)(iii) of the 
act, the agency may debar Mr. Marcus for up to 5 years for each 
offense. FDA finds that Mr. Marcus is eligible to be debarred for 5 
years under section 306(b)(2)(B)(i) of the act because he was convicted 
of one count of conspiracy to commit a crime relating to the 
development or approval of drug products.
    Section 306(c)(3) of the act provides several considerations for 
determining the appropriateness and the period of permissive debarment. 
The considerations applicable to a decision to debar an individual 
include: (1) Nature and seriousness of the offense involved, (2) nature 
and extent of management participation in any offense, (3) nature and 
extent of voluntary steps to mitigate the impact on the public, and (4) 
prior convictions involving matters within the jurisdiction of the FDA. 
These considerations are discussed below.

A. Nature and Seriousness of the Offense Involved

    Mr. Marcus was convicted of one count of conspiracy to defraud the 
United States for knowingly permitting, and sometimes directing, 
employees of Halsey to manufacture prescription drugs according to 
formulas that deviated from FDA-approved formulas. Mr. Marcus committed 
violations with regard to three drugs: Quinidine gluconate tablets, 
acetaminophen and codeine tablets, and fenoprofen calcium tablets. 
Quinidine gluconate is used to treat irregular heartbeats; 
acetaminophen and codeine are used to treat mild to moderately severe 
pain; fenoprofen calcium is used for the treatment of arthritis.
    The agency finds that Mr. Marcus' conduct: (1) Created a risk of 
injury to consumers; (2) potentially undermined the safety, 
effectiveness, and quality of several drugs; and (3) otherwise 
undermined the integrity of the drug approval and regulatory processes. 
Mr. Marcus' conduct created a risk of injury to consumers by marketing 
adulterated drugs. Mr. Marcus' conduct potentially undermined the 
safety, effectiveness, and quality of several drugs by changing master 
formulas and adding unapproved ingredients. Mr. Marcus' conduct 
undermined the integrity of the drug approval and regulatory process by 
leading FDA investigators to evaluate drugs different from those 
marketed by Halsey and by providing to consumers drugs that had not 
been approved by the FDA for distribution. Accordingly, the agency 
considers the conduct underlying Mr. Marcus' conviction an extremely 
unfavorable factor because Mr. Marcus' actions potentially undermined 
the safety and effectiveness of drugs used for life-threatening or 
serious conditions.

B. Nature and Extent of Management Participation in Any Offense

    Mr. Marcus was the president and chief executive officer of Halsey. 
Mr. Marcus directed Halsey employees to prepare false batch records. 
Among other acts, Mr. Marcus caused a batch of quinidine gluconate 324-
mg tablets to be manufactured according to an unapproved formula and to 
be introduced into interstate commerce. Therefore, the agency considers 
the nature and extent of Mr. Marcus' participation an unfavorable 
factor.

C. Nature and Extent of Voluntary Steps to Mitigate the Impact on the 
Public

    Mr. Marcus was willing to testify as a witness for the Government, 
although the government did not call him. Accordingly, the agency 
considers Mr. Marcus' cooperation a favorable factor.

D. Prior Convictions

    The agency is unaware of any additional convictions.

III. Proposed Action and Notice of Opportunity for a Hearing

    Mr. Marcus' willingness to cooperate is outweighed by his 
leadership position within Halsey and, moreover, by the seriousness of 
Mr. Marcus' conduct with respect to public safety and the integrity of 
the drug approval process. Thus, based on the findings discussed above, 
and in particular the seriousness of Mr. Marcus' conduct with respect 
to the public safety and the integrity of the drug approval process, 
FDA proposes to issue an order under section 306(b)(2)(B) of the act 
debarring Mr. Marcus for a period of 5 years from providing services in 
any capacity to a person that has an approved or pending drug product 
application.
    Under section 306(i) of the act and 21 CFR 10.50(c)(20), Mr. Marcus 
may request a hearing on disputed issues of material fact. Thus, in 
accordance with section 306 of the act and 21 CFR part 12, Mr. Marcus 
is hereby given notice of an opportunity for a hearing to show why he 
should not be debarred. If Mr. Marcus decides to seek a hearing, he 
must file a written notice of appearance and request for hearing on or 
before November 15, 1999. The procedures and requirements governing 
formal evidentiary hearings as applied to debarments are contained in 
21 CFR part 12 and section 306(i) of the act.
    Mr. Marcus' failure to file a timely written notice of appearance 
and request for hearing constitutes a waiver of his right to a hearing. 
If Mr. Marcus does not request a hearing in the manner prescribed by 
the regulations, the agency will not hold a hearing and will issue a 
final debarment order as proposed in this notice.
    A request for a hearing may not rest upon mere allegations or 
denials but must present specific facts showing that there is a genuine 
and substantial issue of fact that requires a hearing. A hearing will 
be denied if the data and information Mr. Marcus submits, even if 
accurate, are insufficient to justify the factual determination urged. 
If it conclusively appears from the face of the information and factual 
analyses in Mr. Marcus' request for a hearing that there is no genuine 
and substantial issue of fact that would preclude the order of 
debarment, the Commissioner of Food and Drugs will deny Mr. Marcus' 
request for a hearing and enter a final order of debarment. The facts 
underlying Mr. Marcus' conviction are not at issue in this proceeding.

[[Page 55946]]

    Mr. Marcus' request for a hearing, including any information or 
factual analyses relied on to justify a hearing, must be identified 
with Docket No. 99N-2674 and sent to the Dockets Management Branch 
(address above). Mr. Marcus must file four copies of all submissions 
pursuant to this notice of opportunity for hearing. 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.
    This notice is issued under section 306 of the act and under 
authority delegated to the Director of the Center for Drug Evaluation 
and Research (21 CFR 5.99).

    Dated: September 30, 1999.
Janet Woodcock,
Director, Center for Drug Evaluation and Research.
[FR Doc. 99-26938 Filed 10-14-99; 8:45 am]
BILLING CODE 4160-01-F