In the last decade, a large number of pharmaceutical companies have entered into consent decrees with FDA. Consent decrees are issued for various reasons, and they can have a major impact on the company as well as the consumer. However, consent decrees generally have a negative connotation in the industry and to investors. While they may be punitive, they also can be viewed as a win-win situation. Companies under consent decrees have accepted the challenge of complying with FDA's requirements. This article addresses the impact a consent decree has on the company, consumers, investors, and the industry.

BACKGROUND A consent decree is a legal agreement that is reached between a company and the government (in this case, FDA). It is a negotiated agreement detailing the voluntary actions pledged by the affected company to remedy nonconformances, including systems improvements, and to avoid FDA litigation. FDA uses consent decrees to change the overall corporate culture in compliance matters by pulling the company out of a pattern of long-standing cGMP problems and raising it to current standards. A consent decree commits the company to performing corrective actions in a timely manner, as verified by a third party.

Consent decrees are usually imposed as a result of continual non-conformance in a company's quality management systems. Continual nonconformance is defined as repeated Form 483 observations transmitted to a company over the course of several audits and inspections. A repeated "Unsatisfactory" or "No Response" from a company to FDA warning letters also may be reasons for FDA action. A warning letter informs the company that FDA considers one or more products, practices, or processes to be in violation of the Food, Drug and Cosmetic Act.

Figure 1. Pharmaceutical Companies that Received a Consent Decree Within the Last Ten Years.

A consent decree may be viewed as the equivalent to a court order under which the manufacturing and distribution of products can resume, with conditions closely monitored by FDA. It is a voluntary agreement that is signed by the firm's top official, the US Attorney, and the US District Court. It is filed with the Court and submitted to FDA.

DON'T IGNORE WARNING SIGNS Before a consent decree is issued, FDA must show evidence that both parties have made clear efforts to resolve noncompliant situations. The company and FDA review the warning letters, 483s, and other communications. Thus, a consent decree should not be a surprise to the company.

Once the consent decree is issued, the company may be required to cancel or stop production of nonessential and multisource products. The company may be forced to assign testing and release functions and certain QA responsibilities (such as certification of investigation, approval of validation protocols and reports, and annual audits) to a third party. This third party plays a major role in the consent-decree and post-consent-decree periods. In addition to paying a fine, the company may be forced to delay new product introductions and pay additional fines for not completing the corrective actions on an agreed upon timeline.

Since 1999, FDA has been permitted to levy continuous fines on corporations, even dipping into profits. Corporate executives do not always consider these fines punitive measures. Rather, they are perceived as a deterrent to bypassing the rules and part of the normal cost of doing business. But the reality is different. The number of consent decrees, issued per year, has remained fairly constant over the last decade. Most companies, however, have not been able to extricate themselves from the agreements. Therefore, the number of companies that are under consent decree, at a given time, has increased. Generally, a consent decree is considered a permanent agreement, and it takes several years for a company to demonstrate they are in full compliance. Only one company (Vintage) in the last ten years has met all the requirements of a decree. The others still abide by their agreements.