New Law Would Allow Property Seizure for "Health Fraud"; Hearing August 7

A bill to expand "war on drugs" property seizure to cases

involving unapproved medical treatments has passed the California

State Senate, and could soon become law. The last chance for

public input may be early next week. While this law would only

affect California, it has national importance because other state

legislatures often follow California's example, and because of

the extensive medical research conducted here.



The proposed law, SB 2872, would allow seizure and

forfeiture proceedings against property -- including entire

companies -- in some cases even before conviction of a crime.

After expenses were paid, proceeds would be split 50-50 between

State and local prosecutors -- financing more health-fraud

investigations, and creating an organizational incentive for

prosecution against unapproved medical treatment, apart from any

public-policy objective.



Arguments For and Against



SB 2872 was introduced by Senator Marian Bergeson at the

request of the California Department of Health Services. The

initiative did not come from industry, the professions, or the

public; in fact, as late as April 17, when the bill was

considered by a Senate committee, not one person or organization

had contacted the legislature to support it.



By July 27, there were three supporters: the American

Cancer Society, the American Council on Science and Health, and

the Cancer Advisory Council of the State Department of Health

Services. The American Cancer Society could only give us its 91-

word letter to the legislature. This letter does not address the

merits of this particular bill, and shows no evidence that anyone

in the organization examined the bill's specifics.



The American Council on Science and Health could give us

even less. Its president was on vacation, and no one in the

office knew that the organization had taken any such position.



The short letter from the Cancer Advisory Council said that

the bill had been discussed briefly at its last meeting, and it

did give an argument in support. It praised California's

existing laws against unorthodox cancer treatment, but said that

"funding is not readily available for enforcement activities, and

thus some of our very effective laws tend to have a hollow ring

to them. The Bergeson Bill will help to rectify this."



As of July 27, two organizations were listed as opposing the

bill: the pharmaceutical company Genentech, Inc., and the

California Attorneys for Criminal Justice. The two and a half

page letter from Genentech's lawyers did provide a detailed

critique:



"Under the provisions of SB 2872, a pharmaceutical company

such as Genentech could have its entire manufacturing and

research facility seized and made subject to forfeiture

proceedings, even if a conviction has not yet been won. In

addition, the bill allows for the entire forfeiture of a

company's facility if intent is proven in even minor violations

of the instances enumerated in Division 21."



Division 21 (of the Health and Safety Code) covers "no fewer

than thirty activities which may be violated," Genentech's letter

explained. "The following list is just a sampling of those

activities which, if violated, would cause a pharmaceutical

company operating in California to become subject to forfeiture

proceedings," if there was a second violation, or any violation

"with intent to defraud or mislead." The list of 14 items

summarized in the letter mostly concerned drug labeling

deficiencies, prescribing or administering an experimental drug

in violation of State requirements, claiming that a new drug is

effective, or failing to maintain adequate records. A company

could also be seized if a product label failed to carry a warning

message required by California's Proposition 65. Inadequate

filing of paperwork with the State could also lead to a company's

seizure.



Another problem mentioned by the letter is that it is common

practice for a pharmaceutical company to make claims for a drug

which may later be contested by the FDA, based on a different

interpretation of the data. In such a case, SB 2872 would allow

the State to "arrest an appropriate company employee and thus

cease the operations of the company until the FDA matter is

settled."



The other letter opposed to SB 2872, from the California

Attorneys for Criminal Justice, said that the current forfeiture

law, in effect now for about one year, was "the result of careful

and lengthy negotiations by all parties and interests concerned.

It was generally agreed that the new law would be in effect for a

period of five years, at which time it could be closely evaluated

before it was expanded to other areas or eliminated."



An April 17 legislative analysis by the Senate Committee on

Judiciary pointed to other possible problems:



* Bounties could cause district attorneys to unduly

emphasize crimes which provide financing to their offices, to the

neglect of other serious crimes, such as rape, which do not.



* Increased prosecutions due to bounties could strain

courts, jails, or other parts of the criminal-justice system.



* Expenses could be recovered from persons not convicted of

or even charged with any crime. And the debt for such expenses,

unlike other debts, could not be discharged in bankruptcy.



Comment



Our concern is that funding law-enforcement agencies through

seizure of property could lead to enforcement actions conducted

primarily for generation of revenue, reducing patients' treatment

options and slowing the pace of research. People may believe it

is impossible that a major company like Genentech, capitalized at

four billion dollars, could be seized and sold as a result of

minor or technical law violations. But SB 2872 creates strong

incentives for prosecutors to build their budgets by seizing

assets. This kind of bounty hunting happens routinely in the

"war against drugs"; under SB 2872, it could happen in

pharmaceuticals, too, threatening California's industry and its

leadership in research.



Options for medical care not explicitly approved by the FDA

would be at even greater risk. California's existing laws

against unorthodox treatment acknowledge no right of patients to

make their own choices. Advertising that any kind of non-

approved treatment has any effect on AIDS or ARC is illegal; the

fact that the claim is true, and the person making it can prove

it, is legally irrelevant. Other laws allow astronomical fines

for even minor violations. SB 2872 would provide incentives for

prosecutions which could reduce accepted treatment for AIDS to

little more than giving patients AZT until they die.



Until recently, U. S. law has minimized seizure of property

as a way to fund prosecution. Historical examples show the

danger of creating such monetary incentives for prosecution which

otherwise would not need to occur. In the Middle Ages,

witchcraft trials became prevalent only in countries which

allowed seizure of property, which could be shared by religious

authorities, civil authorities, and accusers. Generation of

revenue -- not popular hysteria, as commonly assumed -- was the

real engine of the witch-hunts. So much property was transferred

in this way that after a century of the trials, one inquisitor

lamented that there were "no more rich heretics," and therefore

the future of his office was in doubt.



No one can guarantee a monopoly on truth. Law enforcement

should compete for funding with other public priorities, not fund

itself through seizures to expand prosecution without regard to

real needs.



How to Be Heard



SB 2872 has already passed the California Senate.

Legislators do not have time for the details, but want to look

"tough on crime," and not be portrayed as supporting quack cures

and other health fraud. Few people knew about SB 2872 until it

was almost too late to affect it.



The last chance to address the substance of the bill may be

next week, at hearings scheduled August 7 in the Assembly

Committee on Public Safety. Comments must arrive by mail or fax

before then, and should be addressed to:





Assembly Member John Burton

Chair, Assembly Committee on Public Safety

State Capitol -- Room 2179

Sacramento, CA 95814





Organizations can also send someone to testify in person at

the hearing. Anyone planning to testify should call the

Committee on Public Safety in advance.



It is a courtesy to also notify the legislator who

introduced the bill of any opposition, so she can be prepared

before the hearing. Send a copy of the letter to: Senator

Marian Bergeson, Member, California State Legislature, State

Capitol, Sacramento, CA 95814.