
[Federal Register Volume 76, Number 153 (Tuesday, August 9, 2011)]
[Notices]
[Pages 48869-48870]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20181]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2010-N-0064]


Ray Nathan; 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) is denying Ray Nathan's 
request for a hearing and is issuing an order under the Federal Food, 
Drug, and Cosmetic Act (the FD&C Act) permanently debarring Nathan 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 Nathan was convicted of a felony under Federal law for conduct 
relating to the development or approval, including the process for 
development or approval, of any drug product. Nathan has failed to file 
with the Agency information and analysis sufficient to create a basis 
for a hearing concerning this action.

DATES: This order is effective August 9, 2011.

ADDRESSES: Submit applications for termination of debarment 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 
Ave., Bldg. 32, rm. 4210, Silver Spring, MD 20993, 301-796-4613.

SUPPLEMENTARY INFORMATION:

I. Background

    On May 3, 2007, the U.S. District Court for the District of 
Massachusetts entered a criminal judgment against Nathan pursuant to 
his guilty plea for wire fraud under 18 U.S.C. 1343 and 1342. The basis 
for this conviction was Nathan's scheme to obtain from Lyne 
Laboratories (Lyne) a copy of a certificate of analysis for the drug 
PhosLo to determine how to manufacture a generic version of the drug. 
Nathan, a founder of a startup drug company named Argus Therapeutics 
(Argus), admitted that he created a fake email account for a senior 
employee at Nabi Biopharmaceuticals (Nabi), a Florida company. In an 
effort to obtain the certificate of analysis, he then sent an email 
from that account to an employee at Lyne, which manufactured PhosLo as 
a subcontractor for Nabi. When the Lyne employee requested a physical 
address to which the certificate should be sent, Nathan provided the 
address of another principal at Argus via email. Nathan subsequently 
sent a third email from the fraudulent email account to inquire about 
the status of his request.
    Nathan is subject to debarment based on a finding, under section 
306(a)(2)(A) of the FD&C Act (21 U.S.C. 335a(a)(2)(A)), that he was 
convicted of a felony under Federal law for conduct relating to the 
development or approval, including the process for development or 
approval, of any drug product. By a letter dated March 2, 2010, FDA 
served Nathan a notice proposing to permanently debar him from 
providing services in any capacity to a person having an approved or 
pending drug product application. In a letter dated April 6, 2010, 
Nathan requested a hearing on the proposal, and he submitted materials 
in support of that request on May 10, 2010. In his request for a 
hearing, Nathan acknowledges his conviction for wire fraud under 
Federal law, as alleged by FDA. However, he argues that the conduct 
underlying the conviction does not relate to the development or 
approval, including the

[[Page 48870]]

process for development or approval, of any drug product or otherwise 
relate to the regulation of drugs under the FD&C Act.
    We reviewed Nathan's request for a hearing, as well as the 
materials submitted in support of that request, and find that Nathan 
has not created a basis for a hearing because hearings will be granted 
only if there is a genuine and substantial issue of fact. 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 Chief Scientist and Deputy Commissioner for Science and Public 
Health has considered Nathan's arguments and concludes that they are 
unpersuasive and fail to raise a genuine and substantial issue of fact 
requiring a hearing.

II. Argument

    In support of his hearing request, Nathan argues that the conduct 
underlying his conviction for wire fraud does not relate to the 
development or approval of a drug product or otherwise relate to the 
regulation of drugs under the FD&C Act. We need not address whether the 
conduct relates to the regulation of drugs under the FD&C Act because 
it clearly relates to the development of a drug product. Nathan argues 
that the ``development or approval'' of a drug product subject to FDA's 
premarket review begins with preclinical testing in animals and ends 
with postmarket studies. He contends that his actions in attempting to 
obtain a certificate of analysis for PhosLo do not relate to that 
process but instead relate to ``pre-development'' market research. 
Nathan maintains that he and Argus were attempting to evaluate 
production costs for a generic version of PhosLo and that Argus did not 
possess the funding necessary to pursue the steps that he asserts are 
associated with the actual development or approval of a drug product.
    Nathan's narrow reading of section 306(a)(2)(A) is not convincing. 
In analyzing the scope of a statute, the first step is to ``determine 
whether the language at issue has a plain and unambiguous meaning.'' 
(Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997)) Statutory 
interpretation turns on ``the language itself, the specific context in 
which that language is used, and the broader context of the statute as 
a whole'' (id. at 341). Here, as FDA has held in denying a hearing in a 
debarment proceeding in the past, ``[t]he statutory language, `relating 
to the development or approval * * *,' by definition encompasses all 
things that are logically connected to the development or approval of a 
drug product.'' (59 FR 62399, December 5, 1994) As defined by 
``Merriam-Webster's Collegiate Dictionary,'' ``develop'' means, inter 
alia, ``to explore the possibilities of'' and ``to make suitable for 
commercial * * * purposes.'' (see ``Merriam-Webster's Collegiate 
Dictionary,'' 10th Edition (2002)). Although Nathan argues that 
researching manufacturing techniques and the commercial viability of 
those techniques is not part of the drug development process, it is 
clearly a necessary step in that process. At the very least, such 
research relates to that development process for a drug product. 
Indeed, the information that Nathan attempted to obtain through his 
illegal conduct would have enabled Argus to begin compiling the 
chemistry, manufacturing, and controls section for an abbreviated new 
drug application (see 21 CFR 314.94(a)(9), 314.50(d)(1)). Debarring 
individuals who have been convicted of a felony for attempting to 
obtain such key information through fraudulent means is consistent with 
the clear remedial goals of section 306 of the FD&C Act.

III. Findings And Order

    Therefore, the Chief Scientist and Deputy Commissioner for Science 
and Public Health, under section 306(a)(2)(A) of the FD&C Act and under 
authority delegated to him, finds that Nathan has been convicted a of a 
felony under Federal law for conduct relating to the development or 
approval, including the process for development or approval, of a drug 
product.
    As a result of the foregoing findings, Nathan is permanently 
debarred from providing 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), effective August 9, 
2011 (21 U.S.C. 335a(c)(1)(B) and (c)(2)(A)(ii) and 21 U.S.C. 321(dd)). 
Any person with an approved or pending drug product application who 
knowingly uses the services of Nathan, in any capacity during his 
period of debarment, will be subject to civil money penalties. If 
Nathan, 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. In addition, 
FDA will not accept or review any abbreviated new drug applications 
submitted by or with the assistance of Nathan during his period of 
debarment.
    Any application by Nathan for termination of debarment under 
section 306(d) of the FD&C Act (21 U.S.C. 335a(d)) should be identified 
with Docket No. FDA-2010-N-0064 and sent to the Division of Dockets 
Management (see ADDRESSES). All such submissions are to be filed in 
four copies. The public availability of information in these 
submissions is governed by 21 CFR 10.20(j). Publicly available 
submissions may be seen in the Division of Dockets Management between 9 
a.m. and 4 p.m., Monday through Friday.

    Dated: July 7, 2011.
Jesse L. Goodman,
Chief Scientist and Deputy Commissioner for Science and Public Health.
[FR Doc. 2011-20181 Filed 8-8-11; 8:45 am]
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