Document ID: FDA-2002-N-0106-0003
Agency: fda
Document Type: Notice
Title: Denial of Hearing on Application for Special Termination of Debarment: Baldev Raj Bhutani
Posted Date: 2012-12-21T05:00Z

[Federal Register Volume 77, Number 246 (Friday, December 21, 2012)]
[Notices]
[Pages 75636-75638]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-30709]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2002-N-0106 (formerly 2002N-0291)]

Baldev Raj Bhutani; Denial of Hearing on Application for Special 
Termination of Debarment

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is denying Baldev Raj 
Bhutani's application for special termination of debarment under the 
Federal Food, Drug, and Cosmetic Act (FD&C Act). Mr. Bhutani has failed 
to file with the Agency information and analyses sufficient to create a 
basis for a hearing concerning this action.

DATES: This order is effective December 21, 2012.

ADDRESSES: Comments should reference Docket No. FDA-2002-N-0106 and be 
sent to the Division of Dockets Management (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT:  G. Matthew Warren, Office of 
Scientific Integrity, Food and Drug Administration, 10903 New Hampshire

[[Page 75637]]

Ave., Silver Spring, MD 20993, 301-796-4613.

SUPPLEMENTARY INFORMATION:

I. Background

    Mr. Bhutani is the former President and Treasurer of Alra 
Laboratories, Inc. (Alra), a drug company. On February 12, 1996, in the 
U.S. District Court for the Northern District of Illinois-Eastern 
Division, Mr. Bhutani was found guilty of one count of conspiracy, a 
Federal felony offense under 18 U.S.C. 371, and six other Federal 
felonies related to violations under sections 301(a), (e), and (k) and 
303(a)(2) of the FD&C Act (21 U.S.C. 331(a), (e), and (k) and 
333(a)(2)). The basis for these convictions was Mr. Bhutani's conduct 
surrounding his company's manufacture and distribution of the drug 
products LACTULOSE Syrup and K + 10. According to the records of Mr. 
Bhutani's criminal proceedings, he and Alra violated the FD&C Act by, 
inter alia, including decomposed raw material in finished drug products 
and deviating from approved manufacturing procedures by adding an 
undocumented substance, sodium hydroxide, to drug products in an 
unapproved manner. On October 12, 1999, Mr. Bhutani also pled guilty to 
one count of wire fraud, a Federal felony under 18 U.S.C. 1343. On 
February 15, 2000, the district court sentenced Mr. Bhutani for his 
felony convictions. On December 2, 2004, pursuant to section 306(a)(2) 
of the FD&C Act (21 U.S.C. 335a(a)(2)), FDA permanently debarred Mr. 
Bhutani based on the foregoing Federal felony convictions (see 69 FR 
70148 (Dec. 2, 2004)). As a result of his debarment, Mr. Bhutani may 
not provide services in any capacity to a person with an approved or 
pending drug product application under section 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).
    On August 18, 2010, Mr. Bhutani applied for special termination of 
debarment under section 306(d)(4) of the FD&C Act. Under sections 
306(d)(4)(C) and (D) of the FD&C Act, FDA may limit the period of 
debarment of a permanently debarred individual if the Agency finds 
that: (1) The debarred individual has provided substantial assistance 
in the investigation or prosecution of offenses described in section 
306(a) or (b) of the FD&C Act or relating to a matter under FDA's 
jurisdiction; (2) termination of the debarment serves the interest of 
justice; and (3) termination of the debarment does not threaten the 
integrity of the drug approval process.
    By a letter dated March 2, 2011, the Director of the Office of 
Enforcement, Office of Regulatory Affairs (the Director) offered Mr. 
Bhutani an opportunity for a regulatory hearing under 21 CFR part 16 on 
a proposal to deny his application for special termination of 
debarment. In the letter, the Director set forth his determination that 
Mr. Bhutani's application did not demonstrate that he provided 
substantial assistance in investigations or prosecutions of any 
offenses related to any matter within the jurisdiction of FDA in 
accordance with section 306(d)(4)(C) of the FD&C Act. In a submission 
received April 7, 2011, Mr. Bhutani requested a hearing on the 
Director's proposed denial of his application.
    Under Sec.  16.26(a), FDA may deny a request for a hearing upon a 
determination that ``no genuine and substantial issue of fact has been 
raised by the material submitted.'' The Chief Scientist has reviewed 
Mr. Bhutani's request for a hearing, as well as the materials submitted 
in support of that request, and concludes that Mr. Bhutani's request 
for a hearing fails to raise any genuine and substantial issues of fact 
requiring a hearing and that his application for termination of 
debarment does not satisfy any of the statutory grounds for 
termination.

II. Arguments

    In his application for termination of debarment, Mr. Bhutani argues 
that FDA should terminate his debarment under section 306(d)(4) of the 
FD&C Act for a number of reasons, including many focusing on the 
fairness of the criminal convictions underlying his permanent debarment 
under section 306(a)(2). Section 306(d) of the FD&C Act describes the 
circumstances under which FDA may terminate an individual's debarment. 
Under section 306(d)(3)(B)(i) of the FD&C Act, FDA must withdraw an 
order debarring an individual upon reversal of the criminal conviction 
or convictions forming the basis for his or her debarment. Section 
306(d)(3)(B)(ii) of the FD&C Act provides that FDA must grant an 
application for termination of debarment submitted by an individual 
under 306(d)(1) ``if such termination serves the interests of justice 
and adequately protects the integrity of the drug approval process,'' 
but only if the individual was subjected to permissive debarment under 
section 306(b)(2)(B) or (b)(3). In fact, section 306(d)(1) of the FD&C 
Act specifies that an individual permanently debarred may not submit 
such an application. Finally, under section 306(d)(4) of the FD&C Act, 
FDA may grant an individual's application for special termination of 
debarment upon a finding that he or she ``has provided substantial 
assistance in the investigations or prosecutions of offenses which are 
described in [section 306(a) or (b)] or which relate to any matter 
under the jurisdiction of [FDA]'' (see section 306(d)(4)(C)).
    Inasmuch as FDA permanently debarred Mr. Bhutani under section 
306(a)(2) of the FD&C Act, based on his Federal felony convictions for 
conduct related to drug products, he is only eligible for termination 
of debarment if: (1) The convictions underlying his debarment were 
overturned (see section 306(d)(3)(B)(i)) or (2) he has provided 
substantial assistance in the investigations or prosecutions of 
offenses which are described in section 306(a) or (b) or which relate 
to a matter within FDA's jurisdiction (see section 306(d)(4)(C)). Mr. 
Bhutani has presented no reason to believe that a court has overturned 
the felony convictions on which his permanent debarment was based. If a 
court were to overturn his convictions based on the arguments Mr. 
Bhutani now makes with respect to the fairness and validity of those 
convictions, however, FDA would withdraw the order debarring him. The 
sole remaining issue is whether Mr. Bhutani is eligible for special 
termination of debarment under section 306(d)(4)(C) of the FD&C Act, 
and to be so eligible he must have provided substantial assistance in 
the sense contemplated by that provision.
    In his application for termination of debarment and request for a 
hearing, Mr. Bhutani argues that his debarment should be terminated on 
the grounds that he provided substantial assistance and cooperated with 
FDA in related investigations regarding Alra's compliance with FDA's 
current good manufacturing practices (cGMP) regulations and offered his 
full support to bring his own company, Alra, into cGMP compliance. Mr. 
Bhutani asserts that he and Alra twice entered consent decrees with 
FDA, both in 1991 and 1999, that required the correction of many of the 
violations of the FD&C Act underlying his felony convictions. Mr. 
Bhutani contends that, in accordance with those consent decrees, he 
worked cooperatively with FDA to ensure that Alra was manufacturing and 
distributing drugs in compliance with the FD&C Act. He also claims 
that, in 1991, he provided some of the information to investigators 
that led to his own criminal convictions and the criminal investigation 
and prosecution of Alra and him.

[[Page 75638]]

    Section 306(d)(4)(C) of the FD&C Act does not define ``substantial 
assistance.'' When FDA has granted requests for special termination of 
debarment, however, it has stated that the Agency ``considers a 
determination by the [United States] Department of Justice concerning 
the substantial assistance of a debarred individual conclusive in most 
cases'' (see, e.g., 68 FR 58352 (October 9, 2003)). The U.S. Department 
of Justice typically determines whether an individual has provided 
substantial assistance in accordance with section 5K1.1 of the U.S. 
Sentencing Guidelines (USSG) during the sentencing phase of a Federal 
criminal trial. Section 5K1.1 states, ``Upon motion of the government 
stating that the defendant has provided substantial assistance in the 
investigation or prosecution of another person who has committed an 
offense, the court may depart from the [sentencing] guidelines.'' Rule 
35(b) of the Federal Rules of Criminal Procedure and 18 U.S.C. 3553(e) 
also permit a court to depart from the guideline range or a statutory 
minimum sentence upon motion by the government if the defendant 
``provided substantial assistance in investigating or prosecuting 
another person.'' The Generic Drug Enforcement Act (GDEA) amended the 
FD&C Act to provide FDA with debarment authority. The language in 
section 306(d)(4)(C) of the FD&C Act, which was included in the GDEA in 
response to a request from the U.S. Department of Justice (see 138 
Cong. Rec. S5614 (April 10, 1992) (statement of Sen. Kennedy)), clearly 
mirrors the forgoing language applicable to Federal criminal 
defendants.
    Much of the conduct to which Mr. Bhutani points as the basis for 
claiming that he has provided ``substantial assistance in 
investigations or prosecutions'' of offenses within the jurisdiction of 
FDA occurred before his sentencing in 2000. Mr. Bhutani, however, does 
not provide any evidence that the U.S. Department of Justice moved for 
a downward departure on the basis of a substantial assistance 
determination under USSG section 5K1.1 when he was sentenced for the 
convictions that triggered his permanent debarment. Furthermore, even 
assuming that FDA could grant special termination of an individual's 
debarment under section 306(d)(4)(C) of the FD&C Act if the government 
has never moved a court for downward departure on the basis of 
substantial assistance, the conduct described by Mr. Bhutani does not 
suffice to show substantial assistance in the sense contemplated by 
that statutory provision. Mr. Bhutani merely claims that he voluntarily 
provided some information about the offenses he and his own company, 
Alra, committed and that he cooperated with FDA in resolving 
outstanding civil matters involving Alra and him on two separate 
occasions.
    Although section 306(d)(4)(C) of the FD&C Act does not explicitly 
specify that the substantial assistance must be for the investigation 
or prosecution of another person's offenses, the appropriate statutory 
interpretation should be consistent with ``substantial assistance'' 
when used as a ``term of art'' \1\ in the context of criminal 
proceedings. (See Sullivan v. Stroop, 496 U.S. 478, 483 (1990) (holding 
that, ``where a phrase in a statute appears to have become a term of 
art, * * * any attempt to break down the term into its constituent 
words is not apt to illuminate its meaning'')). As noted above, USSG 
section 5K1.1, Rule 35(b) of the Federal Rules of Criminal Procedure 
and 18 U.S.C. 3553(e) permit a court to depart from the guideline range 
or a statutory minimum sentence upon motion by the government if the 
defendant ``provided substantial assistance in investigating or 
prosecuting another person.'' FDA therefore construes ``substantial 
assistance in the investigations or prosecutions of offenses'' to 
require that the assistance be provided with respect to another 
person's offenses.
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    \1\ See United States v. Ellis, 527 F.3d. 203, 206 (1st Cir. 
2008) (holding that ``substantial assistance,'' in the context of 
original sentencing, is a term of art and that the meaning of the 
term in USSG section 5K1.1 and Rule 35(b) is the same).
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    As a result, under section 306(d)(4)(C) of the FD&C Act, the 
information provided by Mr. Bhutani about his own offenses, and those 
of his own company, very early in a criminal investigation does not 
qualify as substantial assistance. Likewise, Mr. Bhutani's assertions 
that he decided to resolve pending regulatory issues with FDA by 
entering into consent agreements that required him and his company to 
comply with the law do not show that he provided substantial assistance 
in the investigation or prosecution of offenses of another person. In 
fact, all Mr. Bhutani claims to have done was decide to take steps to 
comply with the law after he had violated it. Such steps clearly do not 
constitute substantial assistance in the investigation or prosecution 
of offenses.

III. Conclusion

    Therefore, the Chief Scientist, under authority delegated to him, 
denies Mr. Bhutani's application for special termination of debarment 
under section 306(d)(4)(C) of the FD&C Act. A hearing on this request 
is not necessary because there are no genuine and substantial issues of 
fact (see 21 CFR 16.26(a)).
    Any person with an approved or pending drug product application who 
knowingly uses the services of Mr. Bhutani, 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 Mr. Bhutani 
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 Mr. Bhutani during his period of debarment 
(section 306(c)(1)(B) of the FD&C Act (21 U.S.C. 335a(c)(1)(B))).

    Dated: December 10, 2012.
Jesse L. Goodman,
Chief Scientist.
[FR Doc. 2012-30709 Filed 12-20-12; 8:45 am]
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