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58 Food & Drug L.J. 129 (2003)
Can FDA Seek Restitution or Disgorgement

handle is hein.journals/foodlj58 and id is 159 raw text is: Can FDA Seek Restitution or Disgorgement? JEFFREY N. GBBS* JOHN R. FLEDER* * I. INTRODUCTION In the last few years, the Food and Drug Administration (FDA) has collected for the U.S. Treasury hundreds of millions of dollars-including $500 million from one com- pany alone' -using a theory of liability that cannot be found in FDA's governing statute, the Federal Food, Drug, and Cosmetic Act (FDCA).2 FDA, through the Depart- ment of Justice (DoJ), has collected these funds under the theories of restitution and disgorgement of ill-gotten profits. Only one court has clearly granted FDA restitution or disgorgement of profits in a contested proceeding. This decision, however, is inconsistent with the terms of the FDCA, prior court decisions, FDA's assertions in a subsequent filing with the U.S. Supreme Court,3 and applicable principles of statutory construction. While companies have sur- rendered what the agency refers to as ill-gotten profits, FDA's legal justification for compelling any company to make restitution or to disgorge profits is highly suspect. Congress has explicitly conferred certain enumerated enforcement powers on FDA. The FDCA authorizes FDA to recommend to DoJ initiating an action for seizure of products,4 recommend injunctions against companies and individuals alleged to violate the FDCA,5 recommend criminal charges,6 and (in some situations) actually assess civil money penalties.7 For medical devices, FDA's administrative powers are even broader. FDA can pur- sue: product detention;' administrative civil penalties;9 mandatory recall;10 notifica- tion; and device repair, replacement, or refund.' Two powers that the FDCA does not expressly grant are the ability of FDA to seek disgorgement of profits or restitution in court actions. Yet, without a change in the law or public discussion, in the past few years, these remedies have become among the most potent weapons in FDA's enforcement arsenal. * Mr. Gibbs is a Member in the law firm of Hyman, Phelps & McNamara, P.C., in Washington, D.C. Mr. Fleder is a Member in the law firm of Hyman, Phelps & McNamara, PC., in Washington, D.C. Jeffrey N. Wasserstein, an Associate in the firm, and John Mclnnes, a former summer Associate in the firm, assisted in writing this article. Hyman, Phelps & McNamara, P.C. has represented parties tangentially mentioned in this article, but not as to the issue addressed in the article. l See Schering-Plough Signs Consent Decree, Agrees to Make $500 Million Payment, FDA ENFORCEMENT MANUAL, July 2002, at 1. 2 Pub. L. No. 75-717, 52 Stat. 1040 (1938), as amended 21 U.S.C. §§ 301-397 (2000). 3 Brief for the United States at 23, Buckman Company v. Plaintiffs' Legal Comm., 531 U.S. 341 (2001) (No. 98-1768), available at 2000 WL 1364441. 4 21 U.S.C. § 334 (FDCA § 304). ' Id. § 332(a) (FDCA § 302(a)). (The district courts of the United States and the United States courts of the Territories shall have jurisdiction, for cause shown to restrain violations of section 301, except paragraphs (h), (i), and (j).). 6 Id. § 333(a) (FDCA § 303(a)). Id. §§ 333(f), 333(b), 360pp, 335a (FDCA §§ 303(f), 303(b), 539, 306). Id. § 334(g) (FDCA § 304(g)). 9 Id. § 333(f) (FDCA § 303(f)). 'o Id. § 360h(e) (FDCA § 518(e)). Id. § 360h(a) (FDCA § 518(a)). 12 Id. § 360h(b) (FDCA § 518(b)). 129

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