Can FDA Seek Restitution or Disgorgement?

In the past few years, the FDA has obtained some very large settlements from companies under the novel legal theories of “restitution” and “disgorgement.” Although the Federal Food, Drug, and Cosmetic Act doesn’t explicitly provide for restitution or disgorgement, the FDA has argued that courts have the implicit authority to order restitution or disgorgement if they enter an injunction against a company.

The FDA’s hand in seeking these financial penalties has recently been strengthened. On February 22, 2006, the Tenth Circuit Court of Appeals held in United States v. Rx Depot that federal courts can order disgorgement of profits by companies that had been enjoined. Late last year, the Third Circuit similarly held that courts could order restitution. Both courts relied on Supreme Court decisions dating back 45 years or more. While these decisions can certainly be questioned (view article), they may well embolden FDA to try to impose large financial penalties through disgorgement and restitution against more companies.