FDA Fines and Penalties: An Overview

Companies Targeted in FDA Inspections and Investigations Face Several Significant Risks

The U.S. Food and Drug Administration (FDA) is responsible for ensuring the public health safety and efficacy of human and veterinary drugs, medical devices, and various other types of regulated products manufactured and sold in the United States. While the FDA focuses much of its effort on encouraging voluntary compliance through its pre-market submission processes, the FDA also pursues enforcement actions for violating FDA regulations when warranted.

These enforcement actions can present substantial risks for manufacturers and other companies. FDA inspections and investigations can lead to various adverse consequences, with the specific risks involved depending on the circumstances at hand. In all cases, companies targeted in FDA inspections and investigations must take a proactive approach to their defense, and they must work with experienced counsel to ensure that any consequences they face are no greater than necessary.

Common Reasons for Imposition of FDA Fines and Penalties

Several issues uncovered during FDA inspections and investigations can expose companies (and potentially their owners, executives, and other individuals) to fines and other penalties. For example, some of the most common reasons for FDA enforcement actions include:

• Failure to comply with applicable general or special controls
• Failure to comply with other requirements for FDA authorization or approval 
• Failure to conduct an appropriate recall or market withdrawal
• Selling regulated products without FDA authorization or approval
• Selling misbranded or adulterated products
• Submitting false or misleading data to the FDA 
• Making false or misleading statements to FDA staff during the pre-market submission process, during an inspection or investigation, or in response to an FDA inquiry 

Again, these are just examples. From failing to comply with the Current Good Manufacturing Practices (CGMP) for medical devices to failing to comply with the FDA’s import/export controls, numerous other issues can trigger FDA scrutiny (and penalties) as well. When facing FDA scrutiny, engaging an experienced defense team promptly is a key first step toward achieving a favorable resolution that avoids unnecessary consequences.

10 Risks for Companies Facing FDA Scrutiny

Let’s say your company is facing scrutiny from the FDA. What are the potential outcomes of the FDA’s inspection or investigation? Depending on the circumstances involved, the risks may include:

1. Civil Monetary Penalties (CMP)

The FDA can impose a civil monetary penalties (CMP) in various circumstances. For example, the FDA states, “[f]ailure to address potential violations after receiving the Pre-Notice may result in further FDA regulatory action, including a Notice of Noncompliance and/or civil money penalties.” Manufacturers and other companies can face a civil money penalty for other forms of non-compliance as well. These penalties can be substantial—often in the range of $10,000 to $20,000 per violation, with the FDA routinely pursuing enforcement for multiple violations simultaneously.

2. Untitled Letters

As the FDA explains, “[u]ntitled letters are used for violations that may not meet the threshold of regulatory significance for a warning letter and request correction of the violations.” However, once a company receives an untitled letter, it is on the FDA’s enforcement radar, and failure to comply with an untitled letter can lead to additional action. As the FDA also makes clear, it “generally is under no legal obligation to warn individuals or firms about violations before taking enforcement action.”

3. Warning Letters

Warning letters from the FDA identify specific violations and notify recipients that they must take appropriate responsive action in order to avoid further enforcement action by the FDA. Warning letter recipients have a deadline to respond; and, once the deadline passes, the FDA will, “check[] to ensure that the company’s corrections are adequate.” If the FDA determines that a company’s response to a warning letter is inadequate, it can take additional measures, including instituting proceedings to impose CMP and/or the other penalties discussed below.

4. Withdrawal of Approval

Failure to maintain compliance with the requirements for obtaining FDA approval can lead to withdrawal of the FDA’s approval in some cases. While the FDA often gives companies the opportunity to come into compliance before taking this step, it will not hesitate to withdraw approval for a regulated product if a company’s manufacturing, testing, or quality control processes are inadequate to protect consumer safety.

5. Recall Notices

The FDA uses voluntary and mandatory recall notices to get adulterated, misbranded, and otherwise dangerous products off of distributors’ and retailers’ shelves. While it is ultimately up to manufacturers to initiate and execute recalls, the FDA plays a major role in the recall process, and manufacturers that receive recall notices must work quickly to determine their next steps.

6. No-Sale Orders

The FDA issues no-sale orders to retailers of certain types of products (including tobacco products) that fail to comply with the laws, rules, and regulations for keeping these products on the market. Similar to untitled letters, warning letters, and recall notices, selling unauthorized tobacco products can lead to additional scrutiny and additional consequences.

7. Injunctions

When a manufacturer, retailer, or other company fails to take appropriate remedial action (as determined by the FDA) in response to a letter, notice, or order, the FDA can seek an injunction that prevents the manufacture, distribution, or sale of a violative product. In many cases, the FDA’s efforts to secure an injunction will be accompanied by efforts to impose other penalties (including CMP).

8. Seizures

The FDA works with the U.S. Marshals Service and other federal authorities to seize misbranded, adulterated, illegally imported, and other violative products when necessary to prevent their distribution or sale. Here, too, the FDA’s seizure efforts will often be accompanied by other enforcement efforts as well.

9. Consent Decrees

A consent decree is a judicially enforceable agreement between the FDA and a manufacturer or other company. Consent decrees may involve the payment of CMP, injunctions, or other penalties as agreed between the parties. Consent decrees will typically require the completion of various remedial measures as well; and, if a company fails to fully comply with its consent decree, the FDA can reinitiate its enforcement proceedings.

10. Referral for Criminal Investigation and Prosecution

In the most serious cases, the FDA can refer matters to the U.S. Department of Justice (DOJ) and other federal law enforcement agencies for criminal investigation and prosecution. The Food, Drug, and Cosmetic Act (FDCA) includes criminal enforcement provisions, and FDA inspections and investigations can lead to charges under other federal criminal statutes as well. When targeted in criminal enforcement proceedings, companies can face substantial fines, while individuals can face both fines and prison time.

Put our highly experienced team on your side

Dr. Nick Oberheiden

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Former DOJ Trial Attorney

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Former U.S. Attorney

Hon. Kevin McCarthy

55th Speaker, U.S. House of Representatives (ret.)

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Mike Pompeo

Of Counsel

Former U.S. Secretary of State

John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara

Federal Appeals Attorney

Nicholas B. Johnson

Former Prosecutor

Roger Bach

Former Special Agent (DOJ)

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen

Former Supervisory Special Agent (FBI)

FAQs: Avoiding Fines and Penalties During an FDA Inspection or Investigation

Contact the FDA Compliance Lawyers and Consultants at Oberheiden P.C.

At Oberheiden P.C., we have extensive experience defending companies and individuals during FDA inspections, investigations, and enforcement proceedings. If you need help dealing with the FDA, we encourage you to contact us promptly for more information. To speak with one of our senior FDA lawyers or consultants in confidence as soon as possible, please call 888-680-1745 or request a complimentary consultation online today.