In 1976, two small manufacturers of soft contact lens products initiated a mutually beneficial business transaction which, in a matter of about four years, helped make the companies and their founders millions of dollars.
But in order to work, the business deal needed a helping hand from a third party -- the Food and Drug Administration. Now questions raised in Congress and by others in the soft lens industry about the role of the FDA in this and other financial deals have attracted the interest of the Federal Bureau of Investigation, according to congressional sources.
Sources say that among the subjects under investigation by the FBI is possible criminal conduct by the companies and possible complicity by two FDA officials.
The two companies involved are Soft Lenses Inc. of San Diego and Burton, Parsons & Co. of Seat Pleasant, Md., a suburb of Washington, D.C.
The investigation is the latest chapter in the FDA's controversial decade-plus history of regulation of the soft lens industry, which was the subject of a Nov. 23 article in The Washington Post.
To understand the latest allegedly questionable transaction, it is necessary to review some of the earlier revelations about the FDA and soft contact lenses.
At the center of the controversy is Mary Bruch, a 50-year-old microbiologist in the FDA's Bureau of Anti-Infective Drugs who from 1974 through 1978 was the self-appointed arbiter of which companies were licensed to sell their soft contact lenses and cleansing solutions to the public. The decisions by Bruch, a middle-level bureaucrat, were given a scientific aura by the findings of an FDA opthomologist, Dr. Arnauld Scafidi, who, like Bruch, is a subject of the FBI probe.
Members of the Manfuso family, which until recently owned Burton, Parsons & Co., had a special relationship with Bruch that extended beyond FDA business to social occasions. Bruch's decisions during her tenure resulted in fortunes being made by her friends in the Manfuso family -- John A. Manfuso Sr. and sons John A. Jr. and Robert.
At the time when Bruch -- who by all accounts is extremely strong-willed -- took control of regulating soft lens products from her less assertive superiors, Burton, Parsons was only a minor factor in the fast-growing industry. But as a direct result of Bruch's decisions at FDA, the Manfusos' company for several years enjoyed a virtual monopoly in the manufacturing and marketing of various cleansing and purifying solutions that must be used by wearers of soft contact lenses.
In one of Bruch's most controversial decisions, based on highly questionable; scientific evidence supplied by lenses -- to be removed from the market in 1978.
For Burton, Parsons, the decision was a boon because soft lens users were left with little alternative except to buy its products.
Last July, during a one-day hearing before the House subcommittee on oversight and investigations, then acting chairman Albert Gore Jr. (D-Tenn.) grilled Bruch about why she caused salt tablets to be removed from the market, forcing consumers to buy the more expensive prepared solutions manufactured by Burton, Parsons. Gore claimed that the growing numbers of soft lens wearers had to pay a total of an extra $200 million to buy the prepared solutions rather than the salt tablets.
Bruch, a persuasive witness, responded that she was concerned that if salt tablets were used improperly, they could result in serious eye infections.
During the hearing, Scafidi invoked the Privacy Act and a faulty memory in refusing to document his findings concerning some 200 cases of adverse reactions allegedly suffered by users of rinsing solutions prepared with salt tablets. These findings, which Scafidi presented to the National Registry on Ocular Side Effects, had been cited as justification for the FDA having removed the salt tablets from the market. According to congressional testimony, the FBI is investigating the legitimacy of Scafidi's research.
The FBI is also interested in the role played by FDA officials in the lucrative 1976 business deal between Burton, Parsons and Soft Lenses Inc. This transaction came to the FBI's attention when another company, Automated Optics Inc. of Clearwater, Fla., complained to Rep. Gore's committee of getting unfair treatment before the FDA.
At a Dec. 12 hearing to review Automated Optics' complaint and to pursue further the salt table controversy, Gore disclosed that the FBI and the U.S. Attorney's office in Baltimore, whose area includes Burton, Parson's headquarters in Seat Pleasant, were teaming up in the investigation.
Briefly stated, Automated Optics in its testimony questioned why the FDA's Bureau of Anti-Infective Drugs apparently did not apply the same standards to Soft Lenses Inc. that it did to other companies.
The events leading up to Automated Optics complaint are complex and have their origins in the history of soft contact lens manufacturing in the United States.
The lens came to this country from Czechoslovakia in the 1960s when National Development Patent Corp. of New York apparently acquired Western Hemisphere rights to a plastic material used in the lens from its Czech inventors. National licensed Bausch & Lomb Inc. of Rochester to manufacture the lenses.
But then the FDA decided that a soft lens was a drug because the liquid-filled plastic material was a natural breeding ground for bacteria that could cause serious eye infection. By 1971, however, the Bausch & Lomb lens was cleared by the FDA for sale to the public, and the upstate New York company enjoyed a corner on the soft lens market for the next three years.
During this time, a Hollywood inventor named Maurice Seiderman produced a U.S. version of the Czech lens. Automated Optics acquired rights to Seiderman's patented lens material, which came in the form of a chunk of plastic called a "button." Automated Optics sold the license to the button to four manufacturing companies, including Soft Lenses Inc. of San Diego.
In 1974, Soft Lenses manufactured a lens from the button and became the second company -- after Bausch & Lomb -- to be approved by the FDA to sell soft contact lenses. Under its agreement with Automated Optics, Soft Lenses had to pay 15 percent royalty on lens sales to Automated Optics.
According to testimony by Automated Optics' attorney, Norman H. Stepno of Alexandria, in March 1977 Soft Lenses was granted FDA approval to market its own contact lens. Steno testified at the congressional hearing earlier this month that Automated Optics wasn't even aware its licensee was seeking approval to market a new lens. Stepno said his client later learned that Soft Lenses was "granted this approval in but nine months with virtually no data."
In tracing this affair, congressional investigators noted that Soft Lenses got its new lens as a result of a deal struck with Burton, Parsons.
At the time, Soft Lenses manufactured a preserved saline solution called Boil-n-Soak, which was licensed exclusively to Burton, Parsons. Neither company appeared at the hearing, but Stepno testified that the deal struck by the two companies was that Soft Lenses sold Burton, Parsons the patent rights to Boil-n-Soak. In return, Burton, Parsons -- which had not been in the business of manufacturing lens materials before -- came up with a lens button that it provided to Soft Lenses.
The exchange earned the two companies rich rewards. For example, between 1977, when it got the lens approved by the FDA, and 1980, Soft Lenses' sales tripled, according to an industry source. And just a few months ago, Soft Lenses, which only recently was a minor player in the lens marketing business, was acquired by Revlon Inc. for more than $100 million.
As for Burton, Parsons, the acquisition of Boil-n-Soak and Mary Bruch's rulings helped it grow from annual sales of about $5 million in 1974 to the point where the Manfusos were able to sell it to Nestle S.A. of Switzerland last year for an estimated $110 million.
Of particular interest to congressional investigators -- and reportedly is being probed by the FBI -- was the role of Burton, Parsons in this process. Sources say the FBI is also probing what part, if any, was played by Bruch, a self-described stickler for detailed research, in her bureau's approving the Soft Lenses' new product without demanding even minimal testing of the lens on humans.
According to congressional testimony, the questionable process began in 1975 when Soft Lenses submitted a new drug application for another lens, which was based on the button acquired from Burton, Parsons. It claimed that the new lens was "chemically indistinguishable and physically identical" to the lens licensed to it by Automated Optics.
This application was rejected because of a lack of research, the congressional testimony showed. Then, in 1976, Soft Lenses resubmitted the application with a different chemical composition for the lens. Even with this change in formula, the FDA did not require normal testing on humans before approving the new lens in 1977.
At the congressional hearing earlier this month, the FDA chemist who had reviewed the new lens application acknowledged that the two lenses were, in fact, not "chemically indistinguishable."
Gore: "The statement . . . that this material was chemically indistinguishable from earlier material, was that true or false?"
Gore: "It was false?"
Korkert: "It was not true."
There was further testimony about the chemical differences of the two lenses in an unrelated law suit at U.S. District Court in Los Angeles. In that patent infringement suit involving Soft Lenses Inc., an expert chemist hired by the company was asked if the lenses were "chemically indistinguishable."
"I wouldn't say they were," said the expert, Dr. William Burke of Arizona State University.
As with so many questions raised about the FDA's handling of soft lenses, the reason why the new lens made it to market without any testing on humans now rests with the FBI.