FDA and Industry: How Dangerous is the Revolving Door?

Regulatory NewsRegulatory News | 16 November 2016 |  By 

Earlier this week, a former deputy director of the US Food and Drug Administration’s (FDA) Office of Generic Drugs (OGD) settled charges that he provided tips on drug approvals to three hedge fund managers that made tens of millions off the non-public information.

The settlement raises some important questions on the so-called revolving door between industry and FDA, and what it means for patient safety. Is it OK for those in the pharmaceutical and medical device industries to take jobs at FDA or vice versa? And does this prior work experience help or hinder these employees in their new positions?

While the answers to those questions may never be fully answered, a recent flurry of employees moving between FDA and industry, as well as this latest settlement, have re-ignited the conversation around the connections between industry and the regulators that protect the public.

But what many who complain about the coziness between industry and FDA do not realize is that both sides work together on a continual basis—from cooperating and offering advice on drug development plans to tracking adverse events to forging agreements on the various user fees that industry must pay to FDA for its services that ensure a structured review process for drugs and devices.

In addition, FDA, which typically pays up to three times less than an industry salary, is struggling to fill more than 500 vacant positions and a lot of that needed expertise can come from within industry.

Recent Moves

On Wednesday, Greenleaf Health Inc., an FDA regulatory consulting firm, announced that two former FDAers will join its ranks: David Elder, former principal advisor to FDA’s associate commissioner of regulatory affairs, and Kate Cook, former associate director for regulations and policy within the Center for Devices and Radiological Health (CDRH) and senior advisor in FDA’s Center for Biologics Evaluation and Research (CBER).

Back in September, Parexel also confirmed to Focus that Ron Farkas, MD, PhD, of the division of neurology products in the Office of New Drugs, had joined the contract research organization that same month following FDA’s decision to approve Sarepta Therapeutics’ Duchenne Muscular Dystrophy drug.

On the flip side, FDA announced earlier this month that it’s bringing on Peter Stein, MD, former vice president for late stage development, diabetes and endocrinology at Merck Research Laboratories, who has more than 30 years of academic, clinical and industry experience.

While it remains to be seen how these recent employee changes will impact public health, if at all, what’s clear is that concerns over the performance of FDA Commissioner Robert Califf because of his links to drugmakers have proven to be unfounded.


But the uglier side of this revolving door can be seen in this week’s settlement of Securities and Exchange Commission (SEC) charges of insider trading against two hedge fund managers and their source, Gordon Johnston, who worked for a dozen years at FDA and later at the Generic Pharmaceutical Association. Johnston leaked approval information to two of the hedge fund managers, one of whom reaped unlawful profits of nearly $32 million.

One of those hedge fund managers committed suicide in June and Johnston has pleaded guilty to multiple charges that carry possible prison terms and millions in fines.

And this isn’t the first time an FDA official has been charged with insider trading. In 2012, Cheng Yi Liang, a former FDA chemist was sentenced to five years in prison for engaging in insider trading on multiple occasions based on material, non-public information he obtained in his capacity as an FDA scientist. 

FDA Deputy Commissioner for Operations and COO Walter Harris, in 2014, also testified before the House Committee on Oversight and Government Reform about monitoring FDA personnel’s use of the agency’s IT systems, saying, “FDA personnel are permitted access to information provided to the Agency by medical product sponsors and others and are required to maintain the strict confidentiality of that information.”


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