by Ben Vernia | March 11th, 2011
One day after the Inspector General of HHS highlighted potential corporate executive exposure, the Justice Department announced the guilty plea of the former Board Chairman and CEO of KV Pharmaceutical Co., for production of oversized morphine tablets. According to DOJ’s press release:
Marc S. Hermelin, the former chairman of the board and chief executive officer of St. Louis-based KV Pharmaceutical Company, pleaded guilty and was sentenced today in a case involving KV’s production and distribution of oversized morphine sulfate tablets, the Justice Department announced. U.S. District Judge E. Richard Webber of the Eastern District of Missouri ordered Hermelin to pay a $1 million fine, forfeit $900,000 and serve a sentence of 30 days in jail.
Hermelin pleaded guilty to two misdemeanor violations of the Food, Drug and Cosmetic Act (FDCA). In a plea agreement that was submitted to the court, Hermelin admitted that KV introduced misbranded morphine sulfate tablets into interstate commerce in 2007 and 2008. Morphine sulfate is a pain relief drug and opiate. The government charged that the morphine sulfate discussed in the plea agreement included some oversized tablets, which contained more active ingredient of the drug morphine than was specified in its labeling. This made the morphine sulfate “misbranded” under federal law, according to the court documents.
In May 2008, KV received complaints about oversized morphine sulfate tablets, according to court documents. An oversized tablet discovered by a pharmacist in California weighed twice as much as a normal pill. An oversized tablet found by a Canadian drug distributor was approximately 65 percent heavier than a normal pill. Both oversized tablets had been made on “BB2” pill press machines, which KV used to make many other tablet drugs. In June 2008, KV disclosed the discovery of the oversized morphine sulfate tablets to the Food and Drug Administration (FDA) and publicly recalled various morphine sulfate lots. At the same time, the government alleged that although KV knew of other oversized, BB2-made tablets and that its BB2 machine could randomly produce some oversized tablets, the company did not inform FDA of the other oversized tablets.
Hermelin also served as an officer of Ethex Corporation, a KV subsidiary that branded and distributed generic drugs, according to court documents. The government charged that by virtue of his roles at KV and Ethex, Hermelin was a “responsible corporate officer” with the authority and responsibility to prevent and correct FDCA violations at both companies.
According to court documents in a related federal case in St. Louis, several months after the oversized drug tablets came to light, FDA conducted an inspection of KV’s facilities and found numerous drug-production problems and potential law violations. In March 2009, the Justice Department filed a civil suit against KV, Ethex and of their several senior executives, including Hermelin, asking the court to have the companies and the executive officers take immediate action to remedy problems. The U.S. District Court in St. Louis issued an order the same month that required the companies and their executives to take prompt remedial action , according to court documents.
In another related case, in March 2010, the Justice Department filed criminal charges against Ethex, which pleaded guilty to two felony offenses as a result of its failure to file required reports with the FDA concerning certain oversized drug tablets. Ethex was ordered to pay $28.1 million in fines, forfeitures and restitution, and was placed on probation for five years.
Although the case did not involve health care fraud, it underscores the risks presented by the so-called Parks doctrine, under which responsible corporate officers can be held strictly liable for violations of the Food, Drug & Cosmetic Act occurring on their watch.
