Pennsylvania generic drug maker pleads guilty, pays $2 million to settle False Claims Act allegations
October 16th, 2024 | No Comments
On March 6, the Department of Justice announced that a Pennsylvania-based maker of generic drugs has pleaded guilty under the Food Drug & Cosmetic Act, and to pay $2 million to resolve False Claims Act allegations that the company provided adulterated drugs to federal health care programs. According to DOJ’s press release:
KVK Research Inc., a generic drug manufacturer in Bucks County, Pennsylvania, pleaded guilty today to criminal charges that it introduced adulterated drugs into interstate commerce.
A criminal information filed in federal court in Philadelphia charged KVK Research and its corporate affiliate, KVK Tech Inc., with two misdemeanor counts of introducing adulterated drugs into interstate commerce in violation of the Federal Food, Drug and Cosmetic Act (FDCA). Pursuant to a plea agreement, KVK Research pleaded guilty to the information and agreed to a proposed fine and forfeiture amount of $1.5 million.
KVK Tech agreed to a three-year deferred prosecution agreement (DPA) that will allow the company to avoid conviction on the charges in the information if it complies with the terms of the agreement, which include implementation of a compliance program designed to prevent and detect violations of federal regulations regarding current good manufacturing processes. The DPA also requires KVK Tech to engage an independent compliance monitor to evaluate the company’s corporate compliance program to address and reduce the risk of future violations.
U.S. District Judge Harvey Bartle III presided over the KVK Research plea hearing.
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As part of the plea agreement and the DPA, the companies admitted that between January 2011 and October 2013, KVK Tech introduced into interstate commerce at least 62 batches of adulterated hydroxyzine tablets. The tablets were manufactured with an active pharmaceutical ingredient (API) made at a foreign facility. KVK Tech failed to notify FDA or seek FDA authorization to use that facility as a source of API for its hydroxyzine products. The companies also admitted that between Feb. 27, 2019, and April 16, 2019, KVK Tech manufactured prescription drugs while failing to exercise appropriate controls over computer and related systems as required by current good manufacturing practices regulations. Under federal law, such drugs are deemed to be adulterated.
Additionally, KVK Tech agreed to pay $2 million to resolve its civil liability under the False Claims Act arising from the company’s failure to exercise appropriate controls as required by current good manufacturing practice regulations, which caused KVK Tech to introduce into interstate commerce drugs deemed to be adulterated. During the Feb. 27, 2019, through April 16, 2019, time period, KVK Tech sold the adulterated pharmaceuticals, which resulted in alleged false claims submitted to the TRICARE program, Federal Employees Health Benefits Program (FEHBP), Veterans Administration (VA) and Department of Labor, Office of Workers Compensation Programs (DOL-OWCP), in violation of the False Claims Act.
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The case apparently arose from the government’s investigation, and not from a whistleblower’s qui tam complaint.
