Can the FDA Shut Down Companies? (w/Examples) + FAQs

Yes, the U.S. Food and Drug Administration (FDA) can shut down companies—but it does not happen overnight. The Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 331) grants the FDA authority to take enforcement actions against firms that violate federal safety regulations, including seeking court-ordered injunctions that halt all manufacturing and distribution. Between fiscal years 2024 and 2025, FDA warning letters increased by 73%, with the drug industry alone receiving 82 more warning letters than the prior year.

The FDA has shut down major corporations, small manufacturers, and dietary supplement companies alike. In 2022, Abbott Nutrition’s Sturgis, Michigan plant—which produced approximately 20% of the nation’s infant formula—was closed after FDA inspectors discovered insanitary conditions linked to Cronobacter infections. The four-month shutdown triggered a nationwide formula shortage that left parents desperate for alternatives.

In this article, you will learn:

📋 The exact legal authority the FDA uses to shut down companies under federal law

⚠️ Real-world examples of FDA shutdowns across food, drug, medical device, tobacco, and supplement industries

🔍 The step-by-step enforcement process from inspections to consent decrees

❌ Common mistakes companies make that lead to FDA shutdowns

✅ How to protect your business and respond effectively to FDA enforcement actions

How the FDA Gets Legal Authority to Shut Down Companies

The FDA does not simply walk into a business and close the doors. The agency must follow a specific legal process rooted in federal law and court approval.

The Federal Food, Drug, and Cosmetic Act (FD&C Act)

Congress passed the Federal Food, Drug, and Cosmetic Act in 1938. This law grants the FDA authority to regulate food, drugs, medical devices, cosmetics, and tobacco products. Under Section 301 of the FD&C Act, certain actions are “prohibited acts” that can trigger enforcement—including manufacturing adulterated or misbranded products, failing to register facilities, and refusing FDA inspections.

When a company commits prohibited acts, the FDA can pursue two categories of enforcement: administrative and judicial. Administrative actions include warning letters, import alerts, and facility registration suspensions. Judicial actions—like injunctions and seizures—require the involvement of federal courts.

Three Main Ways the FDA Shuts Down Companies

The consent decree is the most powerful enforcement tool the FDA can deploy. It is a legally binding agreement between a company and the FDA that is approved by a federal court. Companies under a consent decree must halt operations until they demonstrate compliance with the FD&C Act. The decree permanently enjoins defendants from manufacturing or distributing products until every requirement is met—and the FDA typically wants five years of continuous compliance before lifting a decree.

The FDA Enforcement Ladder: From Inspection to Shutdown

The FDA does not jump straight to shutting down companies. Instead, the agency follows a progressive enforcement approach designed to encourage voluntary compliance before escalating to court action.

Step 1: The FDA Inspection

FDA inspections come in four main types:

• Surveillance inspections – Routine checks to verify ongoing compliance
• For-cause inspections – Triggered by complaints, recalls, or prior violations
• Pre-approval inspections – Conducted before approving new products
• Compliance follow-up inspections – Verifying corrections after previous problems

During inspections, FDA investigators examine facilities, production processes, records, and may collect samples. For-cause inspections can happen without prior notice when the FDA has reason to believe a facility has quality problems.

Step 2: Form 483 Observations

If inspectors observe conditions that may violate the FD&C Act, they issue an FDA Form 483 at the inspection’s conclusion. The Form 483 lists specific observations—not final agency determinations—but it signals serious problems.

Companies have 15 business days to respond with a written plan addressing each observation. The response should include:

Failing to respond adequately can escalate the matter to a warning letter.

Step 3: Warning Letters

A warning letter is a formal written communication advising that the FDA has found violations and expects prompt correction. Warning letters cite the specific laws or regulations violated and typically give 15 working days to respond.

Between July 1 and December 3, 2025, the FDA issued 327 warning letters—a 73% increase over the same period in 2024. The agency also issued 58 untitled letters in fiscal year 2025, up from just five the year before.

Warning letters explicitly state: “Failure to adequately address this matter may result in legal action, including, without limitation, seizure and injunction.”

Step 4: Consent Decree or Injunction

When companies fail to correct violations after warning letters and regulatory meetings, the FDA refers the case to the Department of Justice (DOJ) to seek a consent decree. The DOJ files a civil complaint in federal court.

A consent decree permanently enjoins companies from manufacturing, processing, packing, labeling, holding, and distributing products until they:

• Hire independent third-party experts to audit operations
• Implement corrective actions and receive FDA approval
• Pass FDA re-inspection showing compliance
• Receive written FDA notification permitting resumed operations

Consent decrees may also impose liquidated damages of $5,000 or more per day for violations. Some decrees require companies to destroy all existing inventory under FDA supervision.

Real-World Examples: Companies the FDA Has Shut Down

Food Industry Shutdowns

Rizo Lopez Foods (2024) – A California cheese manufacturer was prohibited from manufacturing and selling food products after its queso fresco and cotija cheeses caused a Listeria outbreak. The outbreak sickened 26 people across 11 states, hospitalized 23, and killed two. Whole genome sequencing confirmed the Listeria strain in their cheese matched the strain in sickened patients.

Totally Cool, Inc. (2025) – An ice cream manufacturer received a consent decree after FDA inspections identified Listeria monocytogenes contamination and multiple food safety violations. The FDA suspended the facility’s registration, and the company recalled more than 60 products.

Blue Bell Creameries (2015) – After a Listeria outbreak killed three people and sickened 10, Blue Bell voluntarily recalled all ice cream products for the first time in its 108-year history. The company shut down its Broken Arrow, Oklahoma plant and later all three manufacturing facilities. FDA inspection reports revealed a long list of problems including improper sanitation and equipment maintenance.

Pharmaceutical Industry Shutdowns

McNeil (Johnson & Johnson Subsidiary) – After four years of out-of-compliance findings and product recalls, the FDA obtained a consent decree forcing McNeil to close its Fort Washington plant until its cGMP status was re-certified. The decree named the company’s Vice President of Operations and Vice President of Quality Control personally.

Cantrell Drug Company (2018) – The FDA prohibited this compounding pharmacy from manufacturing or distributing sterile drugs after repeated cGMP violations. The FDA alleged the company manufactured injectable opioids and antibiotics that were adulterated. The consent decree effectively shut down Cantrell for the third time—the owner predicted it would “be the end of the company.”

Abbott Laboratories (Diagnostics Division, 1999) – Abbott signed a consent decree requiring it to discontinue sales of certain diagnostic tests within 30 days due to long-standing failure to comply with FDA Good Manufacturing Practices. The company paid $100 million and was prohibited from manufacturing certain diagnostic products until compliance was verified.

Medical Device Shutdowns

Philips Respironics (2024) – The FDA entered a consent decree restricting production and sale of new CPAP and BiPAP machines at several U.S. facilities. This followed Philips’ 2021 recall of millions of sleep therapy devices due to degrading foam that could release particles and toxic gases. The decree included novel provisions requiring the company to offer remediation payments to affected patients—a first for a device consent decree.

Atrium Medical Corporation – The FDA entered a consent decree suspending some operations until the company addressed manufacturing violations.

Dietary Supplement Shutdowns

Balance of Nature (2023) – A federal court ordered this dietary supplement company to stop selling products after the FDA cited repeated manufacturing violations, unfounded marketing claims, and concerns that supplements may not contain what they claimed. The company had to agree to a consent decree requiring improved complaint handling and removal of violative marketing before resuming operations.

Riddhi USA Inc. (2017) – The DOJ filed a civil complaint shutting down this Long Island supplement manufacturer for distributing adulterated and misbranded dietary supplements. The company failed repeated inspections, including lack of identity tests on ingredients and failure to correct deficiencies noted in a previous warning letter.

Tobacco Industry Shutdowns

Six E-Cigarette Manufacturers (2022) – The FDA and DOJ sought permanent injunctions against E-Cig Crib, Soul Vapor, Super Vape’z, Vapor Craft, Lucky’s Vape & Smoke Shop, and Butt Out. These companies ignored FDA warnings about selling unauthorized tobacco products without required premarket authorization.

From January 2021 through May 2023, the FDA issued more than 560 warning letters to tobacco companies, filed 10 civil money penalties, and filed six injunctions against e-cigarette firms.

FDA Enforcement by Industry: What You Need to Know

Food Companies

The Food Safety Modernization Act (FSMA) of 2011 gave the FDA authority to suspend food facility registrations—a power it has used just six times as of 2024. When registration is suspended, the company cannot import, export, or introduce food into commerce.

Pharmaceutical Companies

Drug manufacturers face strict Current Good Manufacturing Practice (cGMP) requirements under 21 CFR Part 211. The most common violations leading to enforcement include:

• Failure to investigate out-of-specification results (21 CFR 211.192)
• Inadequate stability testing programs (21 CFR 211.166)
• Failure to test components before use (21 CFR 211.84)
• Data integrity problems in laboratory systems

In fiscal year 2025, the drug industry received 249 warning letters—82 more than the previous year. Much of this increase came from a September 2025 crackdown on deceptive drug advertising that resulted in over 60 warning letters in a single day.

Medical Device Companies

Device manufacturers must comply with the Quality System Regulation (QSR) under 21 CFR Part 820. The most common triggers for enforcement in 2022 were:

Medical device warning letters reached their highest level in recent years during fiscal year 2024, with 47 device-related warning letters compared to 24 in fiscal year 2023.

Cosmetics Companies

The Modernization of Cosmetics Regulation Act of 2022 (MoCRA) was the most significant expansion of FDA authority over cosmetics since 1938. MoCRA now gives the FDA:

• Mandatory recall authority if products cause serious adverse health consequences
• Facility registration suspension power for dangerous manufacturing conditions
• Records access authority to review safety and adverse event documentation
• Criminal prosecution authority for refusing access to records

Refusing to permit FDA access to records is now a prohibited act that can result in civil action, criminal prosecution, or refusal of imported products.

Compounding Pharmacies

The 2012 New England Compounding Center meningitis outbreak—which killed 64 people and infected 798—led Congress to create Section 503B outsourcing facilities. These facilities must register with the FDA, comply with cGMP requirements, and submit to risk-based inspections.

Over the last five years, 72% of enforcement actions against API manufacturers targeted sites exclusively supplying compounding pharmacies—even though these sites represent just 18% of API manufacturers.

Criminal Prosecution: When FDA Violations Lead to Jail Time

The FDA does not just shut down companies—it can also pursue criminal charges against individuals, including company executives.

The Park Doctrine: Holding Executives Personally Liable

The Park Doctrine (also called the Responsible Corporate Officer Doctrine) imposes strict, vicarious criminal liability on corporate officers for misdemeanor FD&C Act violations. This means executives can be penalized without having personally participated in the violation, being aware of it, or having criminal intent.

The doctrine comes from the 1975 Supreme Court case United States v. Park, where the CEO of Acme Markets was convicted for rodent contamination in company warehouses—even though he did not personally cause the contamination. The Court ruled that Park had a duty to remedy violations and implement preventive measures.

Notable Criminal Prosecutions

Stewart Parnell (Peanut Corporation of America) – Parnell received a 28-year prison sentence—the harshest ever for a corporate executive in a food poisoning case. His company’s contaminated peanut products caused a Salmonella outbreak that sickened over 700 people and killed nine. Prosecutors proved he knowingly shipped products that tested positive for bacteria, using the phrase “just ship it” in emails.

Insys Therapeutics Executives (2019) – The company’s founder and four executives were convicted for bribing doctors to prescribe the company’s fentanyl-based painkiller.

Nader Pourhassan (CytoDyn, 2026) – The former CEO was sentenced to 30 months in prison for securities fraud, wire fraud, and insider trading related to misleading investors about his company’s drug development during COVID-19. He was ordered to pay over $5.3 million in restitution.

Peter Stoll (Medical Device Regulatory Affairs, 2024) – A regulatory affairs specialist was sentenced to 12 months in prison for creating fake FDA clearance letters with forged digital signatures—a case demonstrating that even lower-level employees can face criminal prosecution.

FDA Debarment: Banned from the Industry

Beyond criminal prosecution, the FDA can debar individuals from working in the drug industry entirely. Debarment prohibits individuals from:

• Submitting drug applications
• Working “in any capacity” for drug companies—including in the cafeteria

Debarment can be permanent for felonies or last 1-10 years for misdemeanors. The FDA maintains a publicly available debarment list updated quarterly.

Import Alerts: How the FDA Stops Foreign Products

For foreign manufacturers, the FDA uses import alerts to detain products at the border without physical examination (DWPE). The import alert system uses three lists:

Foreign manufacturers can end up on import alerts for:

• Violative inspection findings
• Products testing positive for pathogens or contaminants
• Refusing FDA inspection
• Failing to meet cGMP requirements

In fiscal year 2024, import alerts affected 75 sites, primarily OTC manufacturers and API suppliers.

Mistakes to Avoid: What Gets Companies in Trouble

The most common cGMP violations leading to FDA enforcement include process validation deficiencies (26%), data integrity issues (21%), and quality control problems (15%).

Do’s and Don’ts for FDA Compliance

Do’s

✅ Respond to Form 483s within 15 business days – This deadline is critical. Missing it signals you are not taking the FDA seriously.

✅ Conduct root cause analysis for every observation – The FDA wants to see you understand why violations occurred, not just what happened.

✅ Include supporting documentation – Updated SOPs, training records, validation reports, and CAPA records prove you are implementing real changes.

✅ Keep the FDA informed – Provide regular progress updates even after submitting your initial response. Transparency builds credibility.

✅ Engage senior leadership – Have executives sign response letters to show organizational commitment to compliance.

Don’ts

❌ Do not argue or dismiss observations – Even if you disagree, provide respectful, evidence-based explanations rather than confrontational responses.

❌ Do not overpromise and underdeliver – Set realistic timelines you can actually meet. Missing committed deadlines creates evidence against you.

❌ Do not ship violative products – Knowingly shipping contaminated or out-of-spec products can result in criminal prosecution.

❌ Do not wait for enforcement to fix problems – Proactively address compliance gaps before inspectors arrive.

❌ Do not destroy or alter records – This constitutes obstruction and dramatically worsens your legal exposure.

How Long Do FDA Consent Decrees Last?

Consent decrees are not permanent, but they typically last many years. The FDA generally wants five years of continuous compliance before lifting a decree—and that clock resets if you have a bad inspection during the period.

Scenario: What Happens Under a Consent Decree

Some companies never recover from consent decrees. Cantrell Drug Company received compliance notification just five months after its consent decree was entered—but by then, the company had already declared bankruptcy and shut down permanently.

Voluntary vs. Mandatory Recalls: Understanding the Difference

Most FDA recalls are voluntary—the company initiates the recall without being ordered to do so. However, “voluntary” does not mean optional. A product subject to voluntary recall still violates the law and must be removed from the market.

The FDA has mandatory recall authority for food under FSMA, cosmetics under MoCRA, and medical devices in certain circumstances. For drugs, most recalls remain voluntary because companies typically comply rather than face more severe enforcement.

Pros and Cons of FDA Enforcement Authority

Pros

✅ Protects public health – FDA enforcement prevents contaminated, ineffective, or dangerous products from reaching consumers.

✅ Creates accountability – Companies know violations have consequences, incentivizing investment in quality systems.

✅ Establishes industry standards – cGMP requirements create baseline expectations that benefit consumers and legitimate manufacturers.

✅ Removes bad actors – Criminal prosecution and debarment permanently remove individuals who demonstrate disregard for public safety.

✅ Enables informed choices – Warning letters, recalls, and import alerts are publicly available, allowing consumers and business partners to make informed decisions.

Cons

❌ Can disrupt supply chains – Shutdowns like Abbott’s infant formula plant can cause nationwide shortages.

❌ Lengthy remediation process – Companies may take years to emerge from consent decrees, causing economic harm to employees and communities.

❌ Inconsistent enforcement – Limited resources mean some violations go unaddressed while similar violations elsewhere receive enforcement.

❌ Regulatory burden on small businesses – Compliance costs can disproportionately affect small manufacturers.

❌ Potential for overreach – Park Doctrine liability can punish executives who were genuinely unaware of violations.

FAQs

Can the FDA close a business without going to court?

Yes, for food companies. Under FSMA, the FDA can suspend a food facility’s registration directly without court involvement if products have a reasonable probability of causing serious adverse health consequences or death. For drugs and devices, court orders are typically required.

Does a warning letter mean my company will be shut down?

No. A warning letter is a formal notice allowing you to voluntarily correct violations. If you respond adequately and implement corrections, the FDA may issue a close-out letter confirming the matter is resolved without further enforcement.

Can individual employees be criminally prosecuted?

Yes. Under the Park Doctrine, corporate officers can face criminal liability even without personal involvement in violations. Lower-level employees like regulatory affairs specialists have also been sentenced to prison for fraud.

How long does a consent decree last?

Typically 5+ years. The FDA generally requires five years of continuous compliance before lifting a consent decree, and any violations during that period can restart the clock.

Can foreign companies be shut down by the FDA?

Yes, through import alerts. Foreign manufacturers can be placed on the FDA’s Red List, resulting in automatic detention of all shipments at U.S. borders without physical examination.

What happens to products during an FDA seizure?

Products are taken into custody by U.S. Marshals. A court may order destruction, sale, reconditioning, or export. Owners can contest the seizure but must prove products are not adulterated or misbranded.

Can companies continue operating while negotiating a consent decree?

It depends. Some consent decrees allow manufacturing of “medically necessary” products to continue while violations are addressed. Others require complete shutdown until compliance is demonstrated.

What is the difference between a Form 483 and a warning letter?

A Form 483 lists inspectional observations at the conclusion of an inspection. A warning letter is a formal agency communication issued after review by FDA compliance officials, indicating the agency considers violations significant and expects correction.

Can I appeal an FDA enforcement action?

Yes. Companies can request administrative hearings, contest seizures in court, and challenge injunctions. However, most companies consent to decrees rather than litigate because fighting the FDA is expensive and uncertain.

Does the FDA have to prove harm before shutting down a company?

No. The FDA can take enforcement action based on violations of the FD&C Act even without direct evidence of consumer harm. Manufacturing in unsanitary conditions or failing to follow cGMP is sufficient basis for enforcement.