Prescribed Behavior: Operating Under a Consent Decree

Dec 01, 2013
By Pharmaceutical Executive

When regulatory officials impose a Consent Decree, biopharmaceutical companies often experience a litany of side effects along with it: tarnished reputations, lost sales, massive fines and remediation expenses, hostile working environments, diminished morale, legal disputes, employee retention problems and product shortages, to name several. No stakeholder or aspect of the business is left untouched. It takes a broad-based effort to effectively address the concerns of regulatory agencies while simultaneously managing a company's current and future business. This effort goes beyond simply developing and executing a remediation plan; executives are tasked with balancing a need to survive the remediation period with an equally important mandate to set the company on a trajectory for future success.

Overview of a Consent Decree Environment

A Consent Decree (CD) is a three to five year court-approved legal agreement between a company and a US regulatory agency, enforced by the US Department of Justice. By agreeing to the terms of a CD – which is often a result of one or more inspections or investigations by the regulatory agency – a company may be allowed to continue manufacturing and selling products, but with strings attached. Commercial activity is highly scrutinized, with significant limitations on how and when a product may be sold to customers. In some cases, production is halted entirely at the impacted sites until the remediation efforts are concluded.

CDs don't usually fall out of a clear blue sky. They're typically preceded first by signals like recalls and Warning Letters, and then by a major agency enforcement action like a product seizure or injunction. The volume of FDA's initial signals is trending up across the industry, suggesting serious and widespread compliance breakdowns. As a result, major enforcement actions leading to CDs are on the rise. A related increase in monetary fines imposed through civil and criminal penalties also suggests a more active and intense regulatory agenda at FDA.



On top of enforcement actions and financial penalties, CDs could lead to other adverse events. The recent manufacturing suspension of an oncology product made it difficult for patients to access adequate supplies of a life-saving drug. Even when the situation is less dire for patients, but popular products still fail to reach the consumer, brand loyalty is negatively impacted. Inside company walls, a CD could shake an organization's cultural foundation for years to come. A hostile environment can impact employee morale and push talent out the door. When a CD is imposed, dozens of contractors and/or new employees may join the organization. Roles and responsibilities rapidly change.

A prophylactic compliance structure to prevent the onset of a major regulatory action is a strong strategy. But when something does happen, it's equally important to minimize as much as possible the impact to the business. Many companies are reassessing their compliance practices, embracing Quality by Design, improving quality controls, adopting forward-looking compliance metrics and emphasizing a culture that respects and builds quality into everyday business operations. Addressing these areas proactively versus dealing with them after a regulatory action occurs is an important way to prevent the negative financial, cultural and social impacts of a CD. However, being able to continue operations when a major regulatory incident has occurred is equally as important.

Effectively Managing a Business through a Consent Decree

Whether currently under Consent Decree or on a path toward one, our client engagements have given us an opportunity to see how a wide variety of diverse manufacturers and executive management teams respond to this very difficult environment. Companies commonly use a point solution or functional response approach to addressing the situation. While regulatory and QA experts and leaders are a critical part of the response team, the magnitude of the problem requires a holistic response that coordinates the remediation effort with the ongoing business operations. Senior executives should be involved in the day-to-day decision-making and planning required to address a remediation order while maintaining viable, compliant business operations. While quality and regulatory executives are making time-sensitive, compliance-driven decisions, those decisions should concurrently be sustainable and viable for the business over the long term. Sustainability is a more likely outcome when there is an executive team that represents all aspects of the business dedicated to the remediation efforts, including the allocation of resources between remediation activities and the core business operations, and the development of a compliant and sustainable operating model.

To create a sustainable model, compliant behavior and actions should be the easy thing to do; complex and cumbersome processes have a high probability of failure. Instead of throwing resources at compliance problems, executives should identify and address root causes, and develop meaningful training and education for employees. Fostering a healthy tension between different stakeholders, business functions and perspectives—enabled by a formalized communication process—can bring about mutually acceptable, long-term outcomes. Employees should be able to raise their hands about potential compliance issues without fear of retribution.