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[Federal Register Volume 89, Number 234 (Thursday, December 5, 2024)]
[Notices]
[Pages 96655-96658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28452]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2024-N-0604]

Yong Sheng Jiao; Denial of Hearing; Final Debarment Order

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA or Agency) is denying a 
request for a hearing submitted by Yong Sheng Jiao, also known as 
Yongsheng Jiao and Wilson Jiao (Jiao), and is issuing an order under 
the Federal Food, Drug, and Cosmetic Act (FD&C Act) debarring Jiao for 
5 years 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 Jiao was convicted of a felony under Federal law for 
conduct relating to the importation into the United States of any drug 
or controlled substance under the FD&C Act. In determining the 
appropriateness and period of Jiao's debarment, FDA considered the 
relevant factors listed in the FD&C Act. Jiao submitted a request for 
hearing but failed to file with the Agency information and analyses 
sufficient to create a basis for a hearing.

DATES: The order is applicable December 5, 2024.

ADDRESSES: Any application for termination of debarment by Jiao under 
section 306(d) of the FD&C Act (21 U.S.C. 335a(d)) (application) may be 
submitted as follows:

Electronic Submissions

     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. An application 
submitted electronically, including attachments, to https://www.regulations.gov will be posted to the docket unchanged. Because 
your application will be made public, you are solely responsible for 
ensuring that your application does not include any

[[Page 96656]]

confidential information that you or a third party may not wish to be 
posted, such as medical information, your or anyone else's Social 
Security number, or confidential business information, such as a 
manufacturing process. Please note that if you include your name, 
contact information, or other information that identifies you in the 
body of your application, that information will be posted on https://www.regulations.gov.
     If you want to submit an application with confidential 
information that you do not wish to be made available to the public, 
submit the application as a written/paper submission and in the manner 
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand Delivery/Courier (for written/paper 
submissions): Dockets Management Staff (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For a written/paper application submitted to the Dockets 
Management Staff, FDA will post your application, as well as any 
attachments, except for information submitted, marked and identified, 
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All applications must include the Docket No. FDA-
2024-N-0604. An application will be placed in the docket and, unless 
submitted as ``Confidential Submissions,'' publicly viewable at https://www.regulations.gov or at the Dockets Management Staff between 9 a.m. 
and 4 p.m., Monday through Friday, 240-402-7500.
     Confidential Submissions--To submit an application with 
confidential information that you do not wish to be made publicly 
available, submit your application only as a written/paper submission. 
You should submit two copies total. One copy will include the 
information you claim to be confidential with a heading or cover note 
that states ``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The 
Agency will review this copy, including the claimed confidential 
information, in its consideration of your application. The second copy, 
which will have the claimed confidential information redacted/blacked 
out, will be available for public viewing and posted on https://www.regulations.gov. Submit both copies to the Dockets Management 
Staff. If you do not wish your name and contact information to be made 
publicly available, you can provide this information on the cover sheet 
and not in the body of your application and you must identify this 
information as ``confidential.'' Any information marked as 
``confidential'' will not be disclosed except in accordance with 21 CFR 
10.20 and other applicable disclosure law. For more information about 
FDA's posting of comments to public dockets, see 80 FR 56469, September 
18, 2015, or access the information at: https://www.govinfo.gov/content/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket, go to https://www.regulations.gov 
and insert the docket number, found in brackets in the heading of this 
document, into the ``Search'' box and follow the prompts and/or go to 
the Dockets Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, 
MD 20852 between 9 a.m. and 4 p.m., Monday through Friday, 240-402-
7500. Publicly available submissions may be seen in the docket.

FOR FURTHER INFORMATION CONTACT: Karen Fikes, Office of Scientific 
Integrity, Food and Drug Administration, 10903 New Hampshire Ave., 
Bldg. 1, Rm. 4232, Silver Spring, MD 20993, 301-796-9603.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 306(b)(1)(D) of the FD&C Act permits FDA to debar an 
individual if the Agency finds that the individual has been convicted 
of a felony under Federal law for conduct relating to the importation 
into the United States of any drug or controlled substance. On January 
24, 2023, Jiao, the owner and operator of Santec Chemicals Corporation 
and Syntec Pharma Corporation, pled guilty to a Felony count of Causing 
the Delivery of Misbranded Drugs into Interstate Commerce in violation 
of sections 301(a), 303(a)(2), and 502(a) of the FD&C Act (21 U.S.C. 
331(a), 333(a)(2), and 352(a)). Then, on January 8, 2024, the U.S. 
District Court for the Eastern District of New York entered a judgement 
convicting and sentencing Jiao to 2 years of probation and fines.
    Jiao's conviction stemmed from conduct, occurring between on or 
about November 30, 2017, and April 30, 2020, relating to the 
importation of a drug, dipyrone, which is not approved for use in the 
United States. Jiao imported dipyrone from suppliers located in China 
into the United States, addressed to one of his businesses, Santec 
Chemicals Corporation. The shipments of dipyrone were misbranded in 
that they were either not labeled or they were falsely labeled as 
sebacic acid. Jiao pled guilty to knowingly and intentionally 
introducing into interstate commerce, with the intent to defraud and 
mislead the Federal Government, the misbranded drug dipyrone.
    By letter dated March 18, 2024, FDA's Office of Regulatory Affairs 
(ORA) notified Jiao of its proposal to debar him for a period of 5 
years (Proposal). As explained in the Proposal, Jiao's conviction 
stemmed from conduct relating to the importation of any drug or 
controlled substance into the United States by illegally importing and 
introducing misbranded dipyrone, an unapproved drug, into interstate 
commerce in violation of 301(a), 303(a)(2), and 502(a) of the FD&C Act. 
An individual convicted of a felony for conduct related to the 
importation into the United States of any drug or controlled substance 
may be subject to debarment as set forth in section 306(b)(3)(C) of the 
FD&C Act. Therefore, ORA found, on the basis of Jiao's conviction, that 
Jiao is subject to debarment under 306(b)(1)(D) of the FD&C Act.
    The Proposal explained that the maximum period of debarment for a 
Felony under section 306(c)(2)(A)(iii) of the FD&C Act is 5 years. The 
Proposal also outlined findings concerning the three relevant factors 
that ORA considered in determining the appropriateness and period of 
debarment, as provided in section 306(c)(3) of the FD&C Act: (1) the 
nature and seriousness of any offense involved; (2) the nature and 
extent of voluntary steps to mitigate the impact on the public of any 
offense involved; and (3) prior convictions under the FD&C Act or under 
other Acts involving matters within the jurisdiction of FDA. ORA found 
that the nature and seriousness of the offense and the nature and 
extent of voluntary steps to mitigate the effect on the public are 
unfavorable factors for Jiao. ORA found the lack of prior convictions 
involving matters within FDA jurisdiction as a favorable factor for 
Jiao. ORA concluded that the facts supporting the unfavorable factors 
outweigh those supporting the favorable factor, thereby warranting a 5-
year period of debarment. The Proposal also informed Jiao of an 
opportunity to request a hearing under section 306(i) of the FD&C Act 
and part 12 (21 CFR part 12).
    In response to the Proposal, Jiao submitted a timely request for a 
hearing, which included a notice of appearance and a statement of 
intent to prepare and submit materials in support of the hearing 
request. In a letter submitted to the Dockets Management Staff dated 
May 12, 2024, Jiao submitted information in support of his request for 
a hearing (Response). Jiao's Response included multiple documents meant 
to

[[Page 96657]]

address the two unfavorable factors identified in ORA's Proposal.
    Under the authority delegated to him by the Commissioner of Food 
and Drugs, the Director, Office of Scientific Integrity (OSI Director) 
has considered Jiao's request for a hearing. Hearings are granted only 
if there is a genuine and substantial issue of fact. 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 justifies a hearing. Hearings will not be granted on issues 
of policy or law, on mere allegations, denials or general descriptions 
of positions and contentions, or on data and information insufficient 
to justify the factual determination urged (see 21 CFR 12.24(b)). The 
OSI Director has considered Jiao's arguments and concluded that they 
are unpersuasive and fail to raise a genuine and substantial issue of 
fact requiring a hearing.

II. Argument in Support of a Hearing

    Jiao's Response included documents and claims that challenge ORA's 
proposed findings in determining the appropriateness and period of 
permissive debarment. Specifically, Jiao argues that he should not be 
``punished'' for wrongdoing by his company's supplier in China and that 
he incorrectly signed the plea agreement due to a misunderstanding, 
contending that FDA approved bulk importation of dipyrone during the 
time of his illegal importation. As a preliminary matter, debarment, 
under section 306 of the FD&C Act, is a remedial measure to protect 
public health, not a punishment. (See DiCola v. FDA, 77 F.3d 504, 507 
(D.C. Cir. 1996) (permanent debarment of convicted individual is not 
punishment, but instead is a remedy to protect the integrity of the 
drug industry and public confidence in that industry)). Insofar as Jiao 
is arguing that he is actually innocent of the offense to which he pled 
guilty, under section 306(l) of the FD&C Act a person is convicted of a 
criminal offense, inter alia, when a Federal court enters a judgment of 
conviction or when a Federal court accepts a plea of guilty. The 
administrative record, including Jiao's supporting documents, 
establishes that he pled guilty in Federal court on January 24, 2023. 
After accepting Jiao's guilty plea, the Federal court entered a 
judgment of conviction. Jiao does not dispute the court's judgment of 
conviction or acceptance of his guilty plea based on his admission to 
knowingly and intentionally importing misbranded dipyrone with an 
intent to defraud or mislead the Federal Government. Jiao cannot now 
dispute the facts to which he admitted in support of his guilty plea 
during the criminal proceedings against him. Federal court is the 
proper venue for any challenge to Jiao's guilty plea based on a claim 
of actual innocence, not this remedial proceeding.
    Jiao next challenges the proposed period of debarment, arguing that 
the two considerations in section 306(c)(3) of the FD&C Act deemed 
unfavorable in the Proposal should be treated as favorable in light of 
the arguments and documents submitted by him in support of his hearing 
request. Relying on the Presentence Investigation Report, Plea 
Agreement, and Mitigation Letter from his criminal proceedings, Jiao 
first challenges ORA's findings regarding the nature and seriousness of 
his offense under section 306(c)(3)(A) of the FD&C Act. Jiao contends 
that, as reflected in the documents from his criminal proceedings, his 
supplier in China is the cause of shipping the dipyrone as sebacic acid 
to avoid the ``unreasonable testing requirement in China'' and that he 
relabeled the product before shipment to customers. As noted above, 
however, Jiao pled guilty to causing the introduction of an unapproved 
and misbranded drug into the United States. The basis for his guilty 
plea was his misbranding the product upon entry into the United States, 
not the subsequent shipment to customers. Without FDA premarket review, 
such illegally imported drugs pose a significant risk to patients 
because they lack findings of safety and effectiveness, manufacturing 
quality standards, and appropriate labeling for use. Inasmuch as Jiao 
admitted, as part of his guilty plea, to ``knowingly, intentionally, 
and voluntarily'' causing the introduction of such drugs into the 
United States with an intent to defraud or mislead the Federal 
Government, Jiao's attempts to mitigate the nature and seriousness of 
his offense by placing some responsibility on his suppliers and 
claiming that he relabeled the product before further shipment fail to 
raise a genuine and substantial issue of fact regarding the 
consideration under 306(c)(3)(A) of the FD&C Act, which the OSI 
Director will treat as unfavorable.
    Jiao also argues that FDA should treat as favorable the 
consideration under section 306(c)(3)(C) of the FD&C Act, which 
requires the Agency to consider ``the nature and extent of voluntary 
steps to mitigate the impact on the public of any offense involved'' in 
determining the appropriateness and period of his debarment. Citing a 
Federal Register document from 2019 (84 FR 64080, November 20, 2019), 
Jiao argues that FDA ``approved'' dipyrone for bulk importation and 
that, therefore, his company's sales after 2019 should not have created 
a negative ``impact on the public.'' Jiao's reading of this Federal 
Register document is incorrect. FDA did not indicate in this Federal 
Register document that the Agency was either approving, or exercising 
enforcement discretion with respect to bulk dipyrone for use in 
compounding under limited circumstances. Regardless, as discussed 
above, Jiao admitted to knowingly and intentionally importing a 
misbranded drug with an intent to defraud or mislead the Federal 
Government. Any change in FDA's enforcement policies with respect to 
that drug would not qualify as a voluntary step taken by Jiao to 
mitigate the impact of his offense on the public, nor does he provide 
information regarding any additional steps he took to mitigate the 
effects of his offense on the public under section 306(c)(3)(C) of the 
FD&C Act. Accordingly, Jiao has failed to raise a genuine and 
substantial issue of fact with respect to ORA's proposed finding that 
he did not to take any voluntary steps to mitigate the potential impact 
on the public under section 306(c)(3)(C) of the FD&C Act, and thus the 
OSI Director will treat this consideration as unfavorable. 
Additionally, as FDA's enforcement policies with respect to dipyrone 
remain unchanged, Jiao's argument would not affect the nature and 
seriousness of his offense, under 306(c)(3)(A) of the FD&C Act or alter 
the OSI Director's treatment of this consideration as unfavorable.
    Based on the undisputed record, including the facts to which Jiao 
pled guilty in his criminal proceedings, a 5-year debarment period is 
appropriate. Although it is undisputed that Jiao has no previous 
criminal convictions related to matters within the jurisdiction of FDA, 
this single favorable factor does not counterbalance the nature and 
seriousness of his offense and lack of voluntary steps promptly taken 
to mitigate the impact of his offense on the public. Therefore, the OSI 
Director agrees with ORA's conclusion that ``the facts supporting the 
unfavorable factors outweigh those supporting the favorable factor, and 
therefore warrant imposition of a five-year period of debarment.''

III. Findings and Order

    Therefore, the OSI Director, under section 306(b)(1)(D) of the FD&C 
Act and authority delegated to him by the Commissioner of Food and 
Drugs, finds that Jiao has been convicted of a felony under Federal law 
for conduct relating to the importation into the United States

[[Page 96658]]

of any drug or controlled substance and is subject to debarment, as set 
forth in section 306(b)(3)(C) of the FD&C Act. FDA has considered the 
applicable factors listed in section 306(c)(3) of the FD&C Act and 
determined that a debarment period of 5 years is appropriate.
    As a result of the foregoing findings, Jiao is debarred for 5 years 
from providing services in any capacity to a person with an approved or 
pending drug product application under sections 505, 512, or 802 of the 
FD&C Act (21 U.S.C. 355, 360b, or 382), or under section 351 of the 
Public Health Service Act (42 U.S.C. 262), effective December 5, 2024 
(see 21 U.S.C. 335a(c)(1)(B) and (c)(2)(A)(iii) and 21 U.S.C. 321(dd)). 
Any person with an approved or pending drug product application, who 
knowingly uses the services of Jiao, in any capacity during his period 
of debarment, will be subject to civil money penalties (section 
307(a)(6) of the FD&C Act (21 U.S.C. 335b(a)(6))). If Jiao, during his 
period of debarment, provides services in any capacity to a person with 
an approved or pending drug product application, he will be subject to 
civil money penalties (section 307(a)(7) of the FD&C Act). In addition, 
FDA will not accept or review any abbreviated new drug applications 
submitted by or with the assistance of Jiao during his period of 
debarment (section 306(c)(1)(B) of the FD&C Act).

    Dated: November 27, 2024.
George M. Warren,
Director, Office of Scientific Integrity.
[FR Doc. 2024-28452 Filed 12-4-24; 8:45 am]
BILLING CODE 4164-01-P
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