Holding Pharmaceutical and Medical Device Executives Accountable as Responsible Corporate Officers
Importance When a drug or medical device company violates federal law, the government has a powerful tool to use: the Park doctrine. The aim of the doctrine is to protect patients from the harms of an unsafe or fraudulent medical marketplace by targeting the executives who run the companies that make revenues on these products while violating federal law, rather than have that risk borne by patients or impersonal corporate entities; however, public reports of drug and device company executives being prosecuted in Park doctrine cases are uncommon.
Objective To identify Park prosecutions and characterize their role in US Department of Justice (DOJ) enforcement efforts related to misconduct in the drug and medical device industry.
Evidence Review A systematic search of Westlaw, Google Scholar, DOJ press releases, and the legal literature was conducted.
Findings Thirteen cases of executives from 6 drug and medical device companies prosecuted under the Park doctrine since 2000 were identified. The prosecutions resulted in 11 guilty pleas and 2 jury trials, leading to 2 convictions. Of the 6 companies, 3 were drug manufacturers, 2 were medical device manufacturers, and 1 was a compounding pharmacy. All 3 drug manufacturers were opioid manufacturers, of which 2 executives were charged for unlawful promotion, and 1 was charged for manufacturing errors. Both device manufacturer executives were charged with unlawful promotion. All but 3 prosecutions alleged the defendants’ complicity or personal involvement in the misconduct, which Park does not require. By contrast, most large settlements with the DOJ over alleged misconduct in the past 2 decades did not result in individual liability for executives.
Conclusions and Relevance These findings suggest that the government has not exercised the full scope of its authority to prosecute corporate officials responsible for the illegal behavior of the drug and device companies they run. Enforcement under a reinvigorated Park doctrine could better promote the doctrine’s goal of protecting patients.
The conviction of Elizabeth Holmes, the chief executive officer (CEO) of the failed blood-testing company Theranos, has focused attention on the personal liability of corporate officers of health care companies that engage in illegal activity. Holmes was charged with defrauding and conspiring to defraud investors, patients, and physicians, each count carrying a maximum 20-year sentence. Prosecutors alleged, among other things, that Theranos’ main blood-testing device failed to work as the company and Holmes had promised.1 Holmes was convicted of defrauding investors2 but faced no personal liability in her role as a CEO responsible for a company that sold faulty diagnostic tests.
When a drug or medical device company, such as Theranos, violates federal law, the government has an important tool to seek justice and deter future misconduct: the Responsible Corporate Officer (RCO) doctrine. Based on precedent from a 1975 Supreme Court case, United States v Park, “responsible corporate officers” of a drug or device company can be convicted of criminal misdemeanors, including up to a year in prison, if they were in a position of authority to prevent or correct the violation but failed to do so.3 A Park prosecution is powerful because it does not require evidence of the officer’s intent to break the law; a conviction can be based solely on the wrongdoing itself and the officer’s position of authority in the company.
The option of holding corporate officers responsible for the actions of their companies by bringing cases under the Park doctrine has often been considered by policy makers and scholars to address the unique problems that arise from corporate malfeasance in relation to drugs and devices regulated by the US Food and Drug Administration (FDA).4 For example, former FDA Commissioner Margaret Hamburg wrote in 2010 that the agency would work to “hold responsible corporate officials accountable”5 through Park prosecutions in a letter to Senator Charles Grassley (R, Iowa) following a government report critical of FDA’s criminal enforcement record.6
Prosecution of individual corporate officers might have been appropriate in numerous medication-related cases in the past few decades, including settlements by Eli Lilly in 20097 over the illegal off-label promotion of its antipsychotic drug olanzapine (Zyprexa) for $1.4 billion and GlaxoSmithKline in 2012,8 for $3 billion for unlawful promotion of various prescription drugs, as well as failure to comply with safety data and price reporting requirements. However, corporate officers were not individually prosecuted in those cases; remarkably, the US Department of Justice (DOJ), which handles federal prosecutions, appears to rarely use this approach.9 Among the only public references to the Park doctrine since 2000 were the misdemeanor convictions of 3 Purdue Pharma executives as RCOs in 2007 for their role in the excessive and unlawful promotion of extended-release oxycodone (OxyContin).10,11
In the case of Elizabeth Holmes, the DOJ did not pursue a Park prosecution, although it likely could have, in addition to or in place of the existing charges. If the government is declining to pursue Park prosecutions in favor of other charges, like fraud in Holmes’s case, it may not be asserting the public health interests the Park doctrine aims to protect through deterrence. To better understand the role the Park doctrine plays in relation to other tools the DOJ has against misconduct by drug and medical device companies, we systematically searched publicly available sources for instances of Park prosecutions in these industries and compared them with more commonly pursued forms of corporate and individual liability.
Corporate officers do not generally bear personal criminal liability for illegal activities of the companies they run as long as their actions fall within the scope of their position; they incur this additional risk under only 3 federal statutes. One is the Food, Drug, and Cosmetic Act (FDCA), the FDA’s main enabling legislation, which prohibits the misbranding or adulteration of drugs or medical devices introduced into interstate commerce.12 This supplemental level of personal risk may reflect the intention of putting greater responsibility on officers of companies engaged in problematic behavior relating to drugs or medical devices, because of the importance of providing sufficient protection for vulnerable patients. Corporate officers found guilty of violating these FDCA requirements under this RCO doctrine can be sentenced to up to 1 year in prison regardless of their intent (a misdemeanor),13 or up to 3 years if they acted with “intent to defraud or mislead” (a felony).14
By many accounts, corporate officers can be held “strictly liable” for the FDCA violations of their companies under the Park doctrine, meaning prosecutors do not have to prove intent, knowledge, or fault to secure a conviction—only that the RCO was in charge when a company violated a relevant FDA requirement, could have stopped the violation, and did not (Box3,15). There is some dispute over whether the Park doctrine extends to cases in which the defendant had no knowledge of the violation.4 Although the exact boundaries of the law may be unclear, most authorities agree that the doctrine extends to negligence—actions or failures to act that the defendant should have reasonably foreseen would result in a violation of the FDCA, whether because of willful blindness or mere ineptitude.
The Responsible Corporate Officer (Park) Doctrine
When a medical product corporation violates certain federal laws, the Supreme Court has held that liability can extend to the corporate officers responsible for preventing the violation.15 The seminal case in this area from 1943 involved the prosecution of Joseph Dotterweich, the president and general manager of a pharmaceutical company that bought and resold drugs, for mislabeling drugs purchased from manufacturers when it repackaged them. The corporation was charged with causing misbranded drugs to enter interstate commerce, as was Dotterweich, as a principal officer of the company. The Court upheld Dotterweich’s conviction, even though prosecutors had not shown that he meant to break the law or even directly participated in the violations, holding that the Food, Drug, and Cosmetic Act (FDCA) authorizes the conviction of a person who is “otherwise innocent but standing in responsible relation to a public danger.” The Court reasoned that Congress in passing the FDCA had decided to place the burden of safety on those best able to recognize and correct danger, rather than “throw the hazard on the innocent public.”
The Court confirmed this rationale in 1975 in United States v Park, when it upheld the conviction of John Park, the CEO of Acme Markets, a national food chain that had allowed stored food to be contaminated by rodents.3 Because Park had chosen to take on a “position of authority” in a profitable business selling “services and products [that] affect the health and well-being of the public,” the Court held that it is the public’s right to expect an extra degree of “foresight and vigilance.” But the Court also imposed a limit: a responsible corporate officer cannot be convicted if preventing the violation was objectively impossible, as would be the case if an unforeseeable natural accident rendered a medication ineffective (and therefore misbranded) during shipping.
The Park doctrine thus extends certain crimes committed by a corporation to the executives responsible for the corporation’s actions. For example, if a CEO violates the FDCA directly, such as by personally switching the labels on medications, he can be convicted without invoking the Park doctrine because the FDCA prohibits any person from misbranding drugs. However, if an employee switches the labels, even if the CEO was not directly involved, the CEO can still be convicted of violating the FDCA under Park as a responsible corporate officer based on holding a position of authority that could have prevented the label switching.
To identify as many Park prosecutions under the FDCA as possible, we conducted a systematic search of multiple sources. These included Westlaw, Google Scholar, DOJ press releases, industry newsletters, and the legal literature (see eMethods in the Supplement for full search strategy). We then compared these results with a 2016 Public Citizen report16 listing 105 settlements between the government and pharmaceutical companies between 1991 and 2015 that included charges of unlawful promotion, an FDCA violation that could have been used to bring a Park doctrine case.
First, we conducted 3 searches using the KeyCite tool of Westlaw, a research database that compiles court decisions and other legal documents. KeyCite searches Westlaw for citations to a case or statute. A KeyCite search of the Park case returned 189 cases and 310 trial court documents (189 and 236, respectively, were found through LexisNexis). We then conducted a separate KeyCite search using the Prohibited Acts section of the FDCA, 21 USC §331, for the same date range and searched within results for the following: (“park doctrine” OR “U.S. v. Park”) OR (“responsible corporate” OR (responsible /s (executive OR officer)) AND (misdemeanor)). This second search returned 20 cases and 85 trial court documents. Finally, we conducted a KeyCite search using the Penalties section of the FDCA, 21 USC §333, using the same filters. This returned 18 cases and 82 trial court documents.
We then conducted a manual search of all Westlaw results for inclusion. We excluded cases in which individuals were prosecuted for personal violations (rather than as corporate officers responsible for preventing or correcting violations), as well as cases relating to food, dietary supplements, or different regulatory regimes, such as environmental law.
A case was included as a Park prosecution if it met the following criteria: a federal prosecution of an executive of a drug or medical device company, charged with a misdemeanor violation of the FDCA for the alleged misconduct of their corporation, on the basis of the executive’s position as a corporate officer responsible for preventing or correcting the alleged misconduct, or in which the prosecution expressly relied on a Park theory. Because this categorization involved minimal subjective judgment, double-coding was not required.
This systematic search was limited in that we could not identify cases not published or otherwise not included in legal databases. Additionally, the search could not identify cases in which the DOJ threatened a defendant with a Park prosecution outside of filed legal documents, potentially leading to a plea or settlement based on non-Park charges.
In addition to the Park cases collected, the search for individual executive liability revealed examples involving non-Park prosecutions. We selected illustrative cases for purposes of comparison and collected characteristics including the defendant, the legal basis for liability, and the outcomes.
The systematic search identified 13 prosecutions covering 6 drug or medical device corporations since 2000 in which the federal government charged individual executives in their role as RCOs for violations of the FDCA under Park (Table 14,17-35). Of the 6 companies, 3 were drug manufacturers, 2 were medical device manufacturers, and 1 was a compounding pharmacy. All 3 drug manufacturers were opioid manufacturers, of which 2 were charged with unlawful promotion, and 1 was charged with manufacturing errors. Both device manufacturers were charged with illegal promotion of their products. The compounding pharmacy was charged with selling an unapproved drug when it filled a prescription for a nurse practitioner who was not authorized to self-prescribe.
A range of actions formed the basis of the prosecutions. In the K-V Pharmaceutical Company case, the government alleged that the CEO had knowingly distributed morphine tablets of inconsistent size and shape, and the CEO pled guilty as a RCO to misdemeanor misbranding. The Purdue Pharma executives pled guilty as RCOs for their company’s misleading representations about the safety of OxyContin. Executives at Indivior PLC were likewise convicted under the Park doctrine of false representations about the safety of their medication for the treatment of opioid use disorder. Both executives pled guilty to the charge that Indivior falsely stated to Massachusetts’s Medicaid program that the film formulation of its buprenorphine/naloxone product had a lower rate of accidental use by children than it actually did.36 Based on a series of emails shared among the defendants, the government alleged some awareness on the part of the Indivior executives that misconduct was taking place.
Executives in the device-related Park cases were charged with marketing their products for inappropriate uses. Synthes conducted an unapproved clinical trial of bone cement for treating vertebral compression fractures. This led to 2 patient deaths, including 1 that had been unreported. The judges emphasized that the executives knew their actions were illegal and dangerous but that they chose to continue their unlawful behavior.4 Acclarent’s nasal sinus delivery device was approved only for use with a saline solution, but the company marketed it for use with a steroid as well (Kenalog-40). In the Acclarent case, as with the Synthes case, the judge found that the executives were aware of the illegal scheme, condemning the defendants’ “crime of greed.”24 The Acclarent executives avoided serving jail time; the 4 Synthes executives were sentenced to between 5 and 9 months.
The prosecutions resulted in 11 guilty pleas on Park charges, as well as 2 jury trials, leading to 2 convictions. For the corporate officers who pled guilty under Park or were convicted, penalties included jail time ranging from 0 to 9 months, probation of up to 3 years, community service of up to 400 hours, criminal fines and forfeitures ranging from $0 to $19 million, and their exclusion from federal health care program reimbursement for up to 12 years.
Public Citizen identified 105 FDCA fraud settlements between the government and pharmaceutical manufacturers that led to $11.1 billion in corporate fines, nearly all of which occurred from 2000 to 2015.16 Three cases illustrative of commonly charged offenses and outcomes were chosen for inclusion in Table 28,37,38. Of the 16 largest pharmaceutical settlements involving FDCA violations occurring from 2000 to 2015, only 1 resulted in Park liability for individual executives, the case involving Purdue in 2007 for unlawful promotion of extended-release oxycodone (OxyContin).
Many of these prosecutions of executives of drug and device manufacturers did not involve Park charges (sample of illustrative examples summarized in Table 31,2,39-42). Elizabeth Holmes, for example, was charged and convicted of wire fraud for lying to investors about Theranos’ medical device but was not charged under the RCO doctrine. Other executives have been charged with distribution of a controlled substance, conspiracy to defraud the FDA, or misbranding of a drug with the intent to defraud or mislead.
This review suggests that federal prosecutors have exercised far less than their full capacity under the Park doctrine to sanction problematic corporate behavior that threatens patients and the public health. With the exception of the Purdue Pharma cases, none of the 13 cases we found included the largest DOJ settlements of the past few decades for corporate misconduct, which instead sanctioned the corporation itself with fines and corporate integrity agreements.
We found a very small number of Park prosecutions despite using broad criteria to define this review’s cohort. For example, in the Facteau and Fabian prosecutions, the government alleged the executives’ direct involvement in the misconduct, making the Park doctrine apparently unnecessary to secure a conviction. These cases are consistent with a broader government strategy of seeking convictions under Park while still alleging some degree of complicity on the part of the executive, even though the Park doctrine does not require complicity or intent as part of its liability premise. Some of these cases (eg, the Acclarent, Indivior, and K-V Pharmaceutical Company cases) may therefore not qualify as true Park cases, because the executives were being charged in part for their own misconduct, although the prosecution invoked the Park doctrine nonetheless. The only exception was the case against the 3 Purdue executives, in which the government did not allege any personal intent to defraud, relying instead entirely on the defendants’ roles as corporate officials.
We also found that the DOJ’s formal use of Park often tracks other forms of individual criminal liability for executives. This may be problematic because non-Park charges may not sufficiently address the type of negligent oversight the Park doctrine was designed to prevent. Because they all require proof of intent, these other charges set a higher bar for a conviction than Park, which covers instances in which the executive negligently caused the misconduct, or oversaw the employees who caused it. The FDA’s guidelines state that “[k]nowledge of and actual participation in the violation” are merely factors to be weighed in deciding whether to refer a potential Park prosecution to the DOJ, and are “not a prerequisite to a misdemeanor prosecution.”43 However, for drugs and medical devices, requiring some degree of direct participation to spark prosecution has effectively relegated use of the Park doctrine to the smaller subset of cases in which the government likely could have proved intent but chose not to.
The government’s apparent hesitancy to make full use of Park prosecutions is further documented by comparison with other legal remedies for corporate misconduct. Some of the biggest settlements for misconduct in the drug and medical device industries have resulted from illegal off-label promotion by pharmaceutical companies. On this basis, over the past 2 decades, the DOJ has charged nearly every major pharmaceutical manufacturer doing business in the US with defrauding Medicare and Medicaid under the False Claims Act. But the DOJ nearly always targeted the corporations, rather than the individuals who ran them. The resulting settlements have included billions of dollars in fines, as well as requirements for 5-year “corporate integrity agreements” with reporting requirements and other mechanisms designed to ensure the corporation’s compliance with the law. Because unlawful promotion constitutes misbranding under the FDCA, Park charges could have been brought by prosecutors in these cases, but they rarely chose to do so.
One possibility is that the threat of Park prosecutions hangs over industry behavior, deterring misconduct. Under this theory, the mere threat of Park serves a public purpose, even if the cases are rarely filed and convictions rarely obtained. However, the relative frequency and severity of known unlawful industry conduct suggest that the threat of Park deters FDCA violations insufficiently if it deters them at all.
Another related possibility is that the threat of Park strengthens the DOJ’s hand in negotiations with corporate defendants, leading to settlements more advantageous to the government. However, Park should not be a factor in these settlement negotiations. The DOJ policy prohibits releasing individuals from prosecution on the basis of a corporate settlement.44 Furthermore, if the only effect of the Park doctrine is to induce marginally higher fines from the corporate defendant in the event of a settlement, it would presumably fail to deter the corporate misconduct that threatens public health, particularly because in off-label promotion cases, the scope of those fines is nearly always dwarfed by the profits made from the improper promotion.45
The government’s hesitancy to use Park prosecutions—either in addition to other charges or in place of them—has many potential explanations. Federal prosecutors use their discretion to prioritize cases and pursue convictions in the public interest. This discretion may lead some to favor cases of clear intentional wrongdoing over cases of mere negligent oversight. Others may be uncomfortable with the strict liability premise of the Park doctrine, adhering to the value that punishment should not be inflicted without proof that the defendant intended to commit wrongdoing. The public may harbor similar doubts, leading prosecutors to avoid putting Park cases before juries.
These intuitions about fairness weigh against policy interests designed to protect the public health. The logic of the Park doctrine in its special applicability to medical products is to bring special legal vulnerability for problematic products to the executives who participate in the lucrative marketplaces of human health and illness, rather than have that risk borne by the patients who depend on the products or only by impersonal corporate entities less responsive to sanctions. The drug and medical device industries present particularly compelling arenas in which to pursue deterrence through such prosecution because misconduct can carry high levels of public risk. Congress recognized this when it passed the FDCA, requiring the safety testing of drugs, in response to the elixir sulfanilamide mass poisoning that killed more than 100 people in 1937.46 More recently, the role of Purdue Pharma in contributing to the opioid crisis is a potent example of the public health consequences of corporate and individual misconduct in the pharmaceutical industry, with opioid-related deaths reaching nearly 500 000 between 1999 and 2019.47
A reinvigoration of the Park doctrine could begin with the recognition that a higher standard of conduct should be expected from corporate officers of drug and medical device companies, as the RCO concept suggests. To address this, the President, FDA, or DOJ could take steps to prioritize Park prosecutions in appropriate cases of corporate negligence in relation to medications and other health care products. Congress could also explicitly codify the doctrine through further legislation, reaffirming prosecutors’ existing authority to bring Park cases in addition to any other legal interventions through a public mandate to deter harms caused by the negligent oversight of corporate officers. Holding corporate actors accountable in the pharmaceutical and medical device industries will require thoughtful enforcement and a willingness to stand behind the public policy rationale of the enhanced prosecutorial opportunities embedded in the Park doctrine. Doing so could serve as an important deterrent against violations of the public’s expectations of proper behavior of corporate leaders in the medical products sector.
Accepted for Publication: July 27, 2022.
Published Online: September 19, 2022. doi:10.1001/jamainternmed.2022.4138
Corresponding Author: Aaron S. Kesselheim, MD, JD, MPH, Program On Regulation, Therapeutics, and Law (PORTAL), Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital, 1620 Tremont St, Ste 3030, Boston, MA 02120 (akesselheim@bwh.harvard.edu).
Author Contributions: Mr Daval had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.
Concept and design: Daval, Kesselheim.
Acquisition, analysis, or interpretation of data: All authors.
Drafting of the manuscript: Daval, Avorn.
Critical revision of the manuscript for important intellectual content: All authors.
Obtained funding: Kesselheim.
Administrative, technical, or material support: Avorn.
Supervision: Avorn, Kesselheim.
Conflict of Interest Disclosures: Dr Kesselheim reported personal fees from the state of West Virginia for having served as an expert witness in a case against various opioid manufacturers (2021-2022) outside the submitted work. No other disclosures were reported.
Funding/Support: This work was supported by grants from Arnold Ventures.
Role of the Funder/Sponsor: The funders had no role in the preparation, review, or approval of the manuscript or the decision to submit the manuscript for publication.
