[Federal Register: January 6, 1994]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration
[Docket No. 92N-0416]

 
David J. Brancato; Denial of Hearing and Final Debarment Order

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Deputy Commissioner for Operations of the Food and Drug 
Administration (FDA) is denying a request for a hearing and issuing a 
final order under section 306(a) of the Federal Food, Drug, and 
Cosmetic Act (the act) (21 U.S.C. 335a(a)) permanently debarring Mr. 
David J. Brancato, 13010 Atlantic Ave., Rockville, MD 20851, from 
providing services in any capacity to a person that has an approved or 
pending drug product application. FDA bases this order on a finding 
that Mr. Brancato was convicted of a felony under Federal law for 
conduct relating to the development or approval, including the process 
for development or approval of a drug product; and relating to the 
regulation of a drug product under the act.

EFFECTIVE DATE: January 6, 1994.

ADDRESSES: Application for termination of debarment to the Dockets 
Management Branch (HFA-305), Food and Drug Administration, 12420 
Parklawn Dr., rm. 1-23, Rockville, MD 20857.

FOR FURTHER INFORMATION CONTACT: Diane M. Sullivan, Center for Drug 
Evaluation and Research (HFD-366), Food and Drug Administration, 7500 
Standish Pl., Rockville, MD 20855, 301-594-2041.

SUPPLEMENTARY INFORMATION:

I. Background

    David J. Brancato, a former review chemist with FDA's Division of 
Generic Drugs, pled guilty and was sentenced on January 5, 1990, for 
receiving unlawful gratuities, a felony offense under 18 U.S.C. 
201(c)(1)(B). This conviction was based on Mr. Brancato's acceptance of 
payment of approximately $4,300 from senior officials of generic drug 
manufacturers, Par Pharmaceutical, Inc. (Par), and its subsidiary, Quad 
Pharmaceuticals, Inc. (Quad), while Mr. Brancato was involved in the 
regulation of Par's and Quad's drug products and while he was 
specifically responsible for reviewing Par's and Quad's applications to 
determine whether those applications met certain statutory standards 
for approval.
    On December 12, 1992, Mr. Brancato received a certified letter from 
the Deputy Commissioner for Operations offering Mr. Brancato an 
opportunity for a hearing on the agency's proposal to issue an order 
under section 306(a) of the act debarring him from providing services 
in any capacity to a person that has an approved or pending drug 
product application. FDA based the proposal to debar Mr. Brancato on 
its finding that he was convicted of a felony under Federal law for 
conduct relating to the development, approval, and regulation of Par's 
and Quad's drug products.
    The certified letter further informed Mr. Brancato that his request 
for a hearing could not rest upon mere allegations or denials but must 
present specific facts showing that there was a genuine and substantial 
issue of fact requiring a hearing. The letter also notified Mr. 
Brancato that if it conclusively appeared from the face of the 
information and factual analyses in his request for a hearing that 
there was no genuine and substantial issue of fact which precluded the 
order of debarment, FDA would enter summary judgment against him and 
deny his request for a hearing.
    In a letter dated December 21, 1992, Mr. Brancato requested a 
hearing and submitted arguments and information in support of his 
hearing request. In his request for a hearing, Mr. Brancato 
acknowledges that he was convicted of a felony under Federal law as 
alleged by FDA; however, he argues that FDA's findings are incorrect 
and that the agency's proposal to debar him is unconstitutional.
    The Deputy Commissioner for Operations has considered Mr. 
Brancato's arguments and concludes that they are unpersuasive and fail 
to raise a genuine and substantial issue of fact requiring a hearing. 
The legal arguments that Mr. Brancato offers do not create a basis for 
a hearing because hearings are not granted on matters of policy or law, 
but only on genuine and substantial issues of fact (see 21 CFR 
12.24(b)(1)). Additionally, the material submitted in support of Mr. 
Brancato's hearing request does not justify a hearing because hearings 
will not be granted on the basis of mere allegations, denials, or 
general descriptions of positions and contentions (see 21 CFR 
12.24(b)(2)). Moreover, all of Mr. Brancato's arguments are 
unconvincing for the reasons discussed below.

II. Conclusions of the Deputy Commissioner Concerning Mr. Brancato's 
Arguments in Support of a Hearing

A. Mandatory Debarment of Individuals Applies Retroactively to 
Convictions Occurring Within the Past 5 Years

    Mr. Brancato first alleges that the debarment provisions do not 
apply to conduct which occurred prior to the effective date of the act. 
Mr. Brancato does not support this claim with further argument.
    The provision of the act applicable to Mr. Brancato is section 
306(a)(2) of the act. Initiation of debarment proceedings under that 
section is not limited by when the conduct underlying the conviction 
occurred, but rather, by when the conviction occurred. Under section 
306(a)(2) of the act, debarment proceedings must be initiated within 5 
years of the conviction (see section 306(l)(2) of the act). Debarment 
of Mr. Brancato is appropriately based upon his January 5, 1990, 
conviction, occurring less than 4 years ago. Because the 5-year statute 
of limitations has not expired, Mr. Brancato's argument fails to raise 
a genuine and substantial issue of fact.
    It is unclear from Mr. Brancato's first argument whether he 
intended to further allege that the debarment provisions do not apply 
retroactively to convictions occurring prior to the effective date of 
the act. Nevertheless, this issue is addressed below.
    Congress intended section 306(a)(2) of the act to be retroactive as 
evidenced by comparing section 306(a)(2) of the act, applicable to 
mandatory debarment of individuals, to section 306(a)(1) of the act, 
applicable to mandatory debarment of corporations. The act treats 
corporations differently from individuals with respect to 
retroactivity. Mandatory debarment of corporations under section 
306(a)(1) of the act is not retroactive because debarment of 
corporations is explicitly limited to convictions occurring ``after the 
date of enactment.'' Conversely, section 306(a)(2) of the act, 
pertaining to mandatory debarment of individuals, does not contain any 
such limiting language. The exclusion of language barring retroactivity 
for section 306(a)(2) implies that section 306(a)(2) of the act was 
intended by Congress to be implemented retroactively.
    In addition, section 306(l)(2) of the act shows that section 
306(a)(2), pertaining to mandatory debarment of individuals, was 
intended to be retroactive. Section 306(l)(2) of the act sets out the 
effective dates for each provision of the act. As noted above, the 
effective dates pertaining to section 306(a)(2) of the act state that 
any relevant conviction may be used as the basis for mandatory 
debarment of individuals, so long as the conviction occurred no more 
than 5 years prior to the initiation of debarment proceedings. Section 
306(l) of the act states that certain other debarment provisions shall 
not be retroactive by limiting application of those provisions to 
actions occurring on or after June 1, 1992. Thus, where Congress 
intended a section not to be retroactive, it provided an effective date 
in section 306(l) of the act. The omission of an effective date for 
section 306(a) of the act and the inclusion of an effective date for 
other sections reveals Congress' intent that this section be 
retroactive.
    Thus, as intended by Congress, and as supported by the explicit 
language of the act, mandatory debarment applies retrospectively and, 
thus, mandatory debarment applies to Mr. Brancato's conviction, which 
occurred within 5 years prior to the effective date of the act. 
Accordingly, Mr. Brancato's claim fails to raise a genuine and 
substantial issue of fact.

B. The Decision To Debar Mr. Brancato Was Based Upon the Relevant 
Considerations and Was Made by an Authorized Designee of the Secretary

    Mr. Brancato next argues that notice to him of his proposed 
debarment does not reflect consideration by the Secretary of Health and 
Human Services or his designee. Mr. Brancato does not support this 
claim with facts or further argument.
    Sections 201 through 903 of the act (21 U.S.C. 321 through 394) 
contain numerous grants of authority to the Secretary of the Department 
of Health and Human Services (the Secretary). The Secretary has, in 
general, delegated this authority to the Commissioner of Food and Drugs 
with authority to redelegate to the Deputy Commissioner for Operations 
and other officers of FDA (see 21 CFR 5.10 and 5.20). The authority 
conferred in section 306 of the act is delegated to the Commissioner, 
even though the legislation formally names the Secretary. The 
Commissioner has redelegated that authority to the Deputy Commissioner 
for Operations (21 CFR 5.20(b) and 5.20(g)(1)).
    The notice of proposed debarment and opportunity for a hearing 
letter received by Mr. Brancato on December 12, 1992, was issued 
legally under authority delegated to FDA's Deputy Commissioner for 
Operations.
    The decision to propose debarment of Mr. Brancato was appropriately 
based upon the following relevant considerations: (1) The nature of the 
conviction (a felony under Federal law) and (2) the conduct underlying 
the conviction (conduct relating to the development, approval, and 
regulation of Par's and Quad's drug products) (see section I. of this 
document). Because the Deputy Commissioner for Operations, an 
authorized designee of the Secretary, considered the relevant factors 
in making the determination to propose debarment, Mr. Brancato's claim 
that the notice of his proposed debarment does not reflect 
consideration by the Secretary or his designee fails to raise any issue 
as to the validity of this proceeding and fails to raise a genuine and 
substantial issue of fact.

C. Mr. Brancato's Conviction Subjects Him to the Mandatory Debarment 
Provisions Not to the Permissive Debarment Provisions

    Mr. Brancato further contends that the conduct for which he was 
convicted is more appropriately conduct subject to permissive debarment 
under 21 U.S.C. 306(b)(2)(B) of the act rather than to mandatory 
debarment. Mr. Brancato fails to support this statement with an 
explanation or further argument.
    Section 306(a)(2)(A) and (a)(2)(B) of the act mandates that FDA 
debar an individual if the Secretary finds that the individual has been 
convicted of a felony under Federal law for conduct: (1) Relating to 
the development or approval, including the process for development or 
approval, of any drug product; and (2) otherwise relating to the 
regulation of any drug product under the act.
    As discussed above, Mr. Brancato's conviction for receiving 
unlawful gratuities triggers the section 306 (a)(2) (A) and (a)(2)(B) 
of the act mandatory debarment provisions. An individual convicted of 
this crime will not be considered a candidate for permissive debarment 
unless FDA finds that the conduct underlying the conviction did not 
relate to the development or approval, or the regulation of any drug 
product (see section 306(b)(2)(B)(ii) of the act). Absent such a 
finding, mandatory debarment based upon such a conviction must follow. 
Because FDA finds that the conduct which served the basis for Mr. 
Brancato's conviction did relate to the development and approval and 
the regulation of Par's and Quad's drug products, the mandatory 
provisions, rather than the permissive provisions, are applicable in 
this case. Mr. Brancato acknowledges that he was convicted of a felony 
under Federal law. Furthermore, he does not dispute FDA's finding that 
the conduct underlying his conviction relates to the development and 
approval and the regulation of Par's and Quad's drug products. 
Therefore, Mr. Brancato's claim fails to raise a genuine and 
substantial issue of fact.

D. The Statutory Criteria Pertaining to Permissive Debarment Are Not 
Relevant to Mr. Brancato's Mandatory Debarment Action

    Mr. Brancato states the following: (1) There is no evidence that 
the Secretary considered the statutory criteria for determining 
appropriateness and period of debarment for nonmandatory (permissive) 
debarment, (2) Mr. Brancato took voluntary steps to mitigate the impact 
of his offense on the public, and (3) Mr. Brancato has no prior 
convictions. Mr. Brancato fails to support these three statements with 
further argument.
    As discussed, the mandatory debarment provisions, not the 
permissive debarment provisions, apply in this case. The criteria 
pertaining to permissive debarment, which include evidence of 
mitigation and prior convictions, may not be considered in making the 
decision to initiate mandatory debarment proceedings. Because Mr. 
Brancato argues for the consideration of irrelevant permissive 
debarment criteria, not applicable to Mr. Brancato's mandatory 
debarment action, his claim fails to raise a genuine and substantial 
issue of fact.

E. Mr. Brancato's Plea Agreement With the Government Does Not Preclude 
His Debarment

    In his next argument, Mr. Brancato states that his guilty plea and 
cooperation with the government were predicated on the assumption that 
no civil penalties would flow from his cooperation and that debarment 
would render his guilty plea subject to collateral attack and 
jeopardizes the integrity of the judicial process. He does not support 
this claim with evidence or citations.
    Mr. Brancato's claim is completely unsubstantiated. The April 13, 
1989, plea agreement represents the complete and final embodiment of 
Mr. Brancato's and the government's intention; the agreement explicitly 
states that ``[t]here are no other agreements, promises, undertakings 
or understandings between Mr. Brancato and this Office.'' Contrary to 
Mr. Brancato's ``assumption,'' the terms of the plea agreement do not 
preclude subsequent civil or administrative actions, including 
debarment. The terms bar only subsequent criminal action. Because the 
plea agreement is the complete and final expression of the compromise 
between Mr. Brancato and the government, and because the agreement does 
not preclude debarment, Mr. Brancato's claim fails to raise a genuine 
and substantial issue of fact.

F. Debarment of Mr. Brancato Is Not Prohibited by the Ex Post Facto 
Clause

    In his final argument, Mr. Brancato states, ``individuals who 
cooperate with the government should not be subject to sanctions of 
this kind ex post facto.'' Mr. Brancato fails to support this statement 
with an explanation or case citation.
    Although it is unclear from this statement what point Mr. Brancato 
is attempting to make, two separate arguments may be implied: That his 
cooperation exempts him from the debarment provisions, and that his 
debarment violates the ex post facto clause of the United States 
Constitution. Both arguments are discussed individually below.
    As discussed above, the mandatory debarment provisions, not the 
permissive debarment provisions, apply in this case. Cooperation with 
the government may not be considered in the decision to initiate 
mandatory debarment proceedings. (Cooperation may, however, be 
considered in determining whether to grant special early termination of 
debarment, under section 306(d)(4)(C) of the act, to individuals and as 
evidence of mitigation, in determining appropriateness and period of 
permissive debarment.) Because Mr. Brancato's cooperation is immaterial 
here, his claim fails to raise a genuine and substantial issue of fact.
    Mr. Brancato further suggests that the ex post facto clause of the 
U.S. Constitution prohibits application of section 306(a)(2) of the act 
to him because this section was not in effect at the time of Mr. 
Brancato's criminal conduct. Section 306(a)(2) of the act was enacted 
on May 13, 1992. The conduct underlying Mr. Brancato's conviction 
occurred in 1987, and his conviction occurred in 1990.
    An ex post facto law is one which punishes acts occurring prior to 
enactment of the law, or which adds a new punishment to one that was in 
effect when the crime was committed. (Ex Parte Garland, 4 Wall. 333, 
377, 18 L. Ed. 366 (1866). Collins v. Youngblood, 110 S.Ct. 2715 
(1990).) Retroactive application of a law to serve a remedial purpose 
does not violate the ex post facto clause.
    Because debarment is intended as a remedy, rather than a 
punishment, retroactive application of the mandatory debarment 
provisions of the act is not prohibited by the ex post facto clause.
    Debarment was clearly intended to be remedial. Congress created the 
Generic Drug Enforcement Act of 1992 (GDEA) in response to findings of 
fraud and corruption in the generic drug industry. Both the language of 
the GDEA itself and its legislative history reveal that the purpose of 
the debarment provisions i