Some FDA Officials Under Ethics Probe : 17 May Have Taken Drug Industry Gifts, House Panel Charges

From Reuters

As many as 17 Food and Drug Administration officials may have violated government ethics rules by accepting subsidized hotel rooms to attend drug industry meetings at a luxury resort, congressional probers charged Tuesday.

In some cases, the subsidy exceeded $200 per room per night, and some of the officials also charged drinks, limousines and gift-shop items to their rooms, said the investigators, who asked that they not be identified.

The tab for the subsidies and the other items was picked up by the National Assn. of Pharmaceutical Manufacturers, an industry group that represents generic drug companies, the investigators said.

The subsidies enabled the drug industry regulators to attend the group’s annual conferences during the period 1986 to 1988 at a posh Dorado Beach, Puerto Rico, resort and not exceed their government expense allowances, the investigators and NAPM officials said.


Government rules prohibit U.S. officials from accepting things of value from private groups, and they bar FDA officials in particular from taking gifts from firms they regulate.

Spokesmen for the FDA and the NAPM said the FDA officials were unaware of the subsidies and stopped accepting them as soon as they learned of them earlier this year.

Used Cheaper Hotel

But investigators for the House Energy and Commerce Committee’s investigations subcommittee said they believed that at least some of the FDA officials “must have known” about the subsidies and stopped accepting them only after the investigators found out about the arrangement.


For this year’s six-day meeting, which began Jan. 28, eight of the nine FDA employees who attended stayed at a cheaper hotel in San Juan, 40 miles away, NAPM executive director Robert Milanese said. The ninth stayed at the Dorado Beach facility but paid his own way, Milanese said in a telephone interview.

“They made the decision,” Milanese said of the FDA officials. “Apparently they have a very stringent policy on what might be seen as an indirect gratuity.”

This year, “we just told the association we would all be staying together in San Juan,” FDA spokesman Bill Grigg said.

Investigators said the FDA officials had in the past paid $100 a night--the maximum permitted under their government allowances--for rooms that cost up to $330 a night.

Grigg said the officials did not know the association was picking up the difference.

Grigg and Milanese said the meetings were an important forum for federal regulators and industry officials to exchange views and information, and Grigg said no officials had been disciplined for accepting the room subsidies.

At the subcommittee’s request, the Inspector General of the Health and Human Services Department has been looking into the subsidies and the results of that probe are expected in the next two to three weeks.

The probe is an offshoot of a federal grand jury and congressional investigation of alleged FDA favoritism in the approval of generic drugs, in which some drug companies are alleged to have received special treatment at the drug safety agency in return for bribes and other favors.


Government sources said the criminal investigation, which is being heard by a federal grand jury in Baltimore, is expected to result in the indictment later this month of “several” FDA employees and as many as half a dozen generic drug firms, Reuters reported last week.

The FDA’s Grigg said he had no word of developments in the criminal probe.

The investigations subcommittee, chaired by Rep. John Dingell (D-Mich.), kicked off the grand jury investigation after being tipped off by unidentified individuals to alleged criminal law violations at the FDA.

Generic drug firms market their own copycat versions of well-known name-brand prescription drugs after the original makers’ patent protection has expired.

Before the drugs can be sold, they must go through a special FDA licensing procedure intended to speed them onto the market and promote drug industry price competition.

Though the companies that are to be indicted are unknown, Par Pharmaceutical Inc. of Spring Valley, N.Y., disclosed in October that it, its Quad Pharmaceuticals subsidiary and a Quad executive were targets of the grand jury investigation.

Congressional investigators said American Therapeutics of Bohemia, N.Y., and its Chief Executive Raju Vegesna were subpoenaed last year by the investigations subcommittee and declined to testify, invoking their constitutional protection against self-incrimination. American Therapeutics lawyer David Weeda declined comment.