![[U.S. Food
and Drug Administration]](/icon/header.gif){kind=icon}
Massachusetts-based Copley Pharmaceutical Inc. was ordered to pay $10.65 million--the largest fine ever imposed on a drug company--for defrauding FDA by manufacturing four generic drugs using false abbreviated new drug applications.
The drugs were potassium chloride, a prescription time-release tablet used to treat potassium deficiency; procainamide, a prescription drug for treating irregular heartbeat; brompheril, an over-the-counter time-release antihistamine and nasal decongestant tablet; and hydrocortisone acetate and pramoxine hydrochloride, a prescription foam used to relieve rectal inflammation.
Copley, which is majority-owned by the large German chemical firm Hoechst AG, was sentenced June 19 in the U.S. District Court for the District of Massachusetts. The company pleaded guilty to a one-count criminal information, which charged that the company:
An investigation continued at press time, and though the company was fined, individuals within Copley still could be charged with criminal violations, according to FDA officials. The company also agreed to take corrective actions, including hiring independent auditors approved by FDA to audit 20 Copley drug applications.
"The public needs to have confidence when using generic drugs that [companies] are following the correct, approved manufacturing procedures," says U.S. attorney Donald Stern, whose Boston office prosecuted the fraud case.
The agency had previously uncovered regulatory troubles at the company. In December 1993, Copley, at FDA's urging, recalled nearly 4 million bottles of the asthma drug albuterol sulfate solution for inhalation, the company's best seller, because it was contaminated with Pseudomonas bacteria. A number of albuterol-related lawsuits were instituted in 1995 on behalf of patients harmed as a result of Copley's product. One such class-action suit resulted in a settlement in which the company agreed to pay plaintiffs up to a total of $150 million.
In early 1994, FDA became concerned about information Copley was submitting to satisfy legal requirements for its drug products. "We had suspicions about what they were putting in their applications. The data seemed unrealistic," recalls Sharon Norris, investigator for FDA's special prosecution staff, a group of experts that investigates complex, document-intensive criminal cases of application, reporting and manufacturing fraud involving FDA-regulated products. "Things just didn't add up," she says.
As the investigation continued, Norris says, "we uncovered potentially incriminating evidence about the company's reporting procedures."
In June 1994, two brothers who worked for Copley, Mark and Mike Riley, went to the U.S. Attorney's Office in Boston in June 1994 to report how the company had varied production processes for the antihistamine and nasal decongestant brompheril and falsified the drug's manufacturing records. Jacques Marivic, an FDA special agent based in New York, then interviewed several other Copley employees, who backed up the brothers' accusations.
"The informants gave us crucial information," says Kim Rice, assistant special agent in charge of the special prosecution staff. "Though we already were investigating Copley, [the brothers] saved us a lot of time and pointed us in the right direction."
In September 1994, Copley, prompted largely by the informants' disclosure, and at FDA's urging, recalled 55 million brompheril tablets. Variations in approved production processes had created quality control problems. These included deviations from the required number of pill coatings, which determine how fast and effectively a drug is absorbed by the body. After the recall, the company stopped making brompheril.
In 1995, FDA's investigation merged with the U.S. attorney's. "As other applications were investigated, we documented a pattern of fraud," says Jack Goodson, an FDA national expert in drug and biological investigations.
Generic drug companies, Goodson explains, are supposed to develop manufacturing processes that consistently produce medicines that act like the brand-name products. Most of this work should mainly take place during the early phases of research and development, he says. After FDA approves the generic drug, any process changes must be reported to FDA.
"Copley was unable to manufacture various drugs [to approved specifications], and it changed processes without telling FDA," Goodson says. "Then the company falsified its batch records to not show the real manufacturing steps."
Finally, in May 1997, the company admitted its guilt, entering into a plea agreement to a one-count conspiracy charge and agreeing to pay the $10.65 million fine. The fine amount resulted from stricter federal sentencing guidelines for corporations enacted in 1991 that take into account factors such as profits made during the time of noncompliance.
Under the plea agreement, the company will pay the fine in three installments over two years.
Copley's actions, says U.S. attorney Stern, were "particularly egregious" because they came after prosecutions in the late 1980s and early 1990s involving submissions of false data and bribes of federal officials by other generic drug companies. On notice after those cases and knowing that some of its own processes were not in federal compliance, Copley "continued to violate the law," Stern says.
Steve Johnson, FDA associate chief counsel who assisted the U.S. attorney in the case, says, "The significant impact of this case is twofold in that the company was forced to pay for its misdeeds with the largest fine ever imposed against a drug manufacturer, and at the same time, it agreed, at FDA's urging, to conduct an intensive audit of 20 of its approved drug applications."
John Henkel is a staff writer for FDA Consumer.
The warning arose from an FDA investigation into advertisements for two products marketed by a Bogota, Colombia, company, the Resolve Easy abortion kit and the Femastra female self-sterilization kit. The ads have since been removed from the Internet.
An on-line ad for the abortion kit described the product as a "complete kit for early pregnancy termination without surgery ... scientifically proved safe and unrisky." The ad for the self-sterilization kit said, "This method is similar to the insertion of an IUD, and has a much lower risk than that associated with surgical sterilization."
But FDA found that the kits contained unapproved drugs whose safety and effectiveness for these uses had never been established.
A women's health-care provider called FDA in July 1996 to alert the agency to the abortion kit ad, which she believed contained unfounded statements. She became concerned after several clients directed her to the web site, says Dwight Rawls, a special agent and operations manager in FDA's Office of Criminal Investigations (OCI).
To determine whether the Resolve Easy Kit presented a serious public health risk, FDA's medical experts in the division of reproductive and urologic drug products reviewed the ads in August 1996. According to their report, the kit's components presented a serious health risk to women when used without a doctor's supervision because of the possibility of heavy vaginal bleeding and death.
The ad said the kit contained the drugs methotrexate for injection and misoprostol for intra-vaginal administration. Neither is approved for abortion nor for any use without a doctor's prescription.
Also, the kit's labeling did not disclose the true source of the drugs, raising questions about their quality. Using computer technology and the help of computer security companies, OCI traced the advertisement to Easy Life Labs in Colombia.
FDA's authority over foreign products reaches only those drugs imported into the United States. The agency alerted U.S. Customs Service and U.S. Postal Service officials to be on the lookout for incoming packages with the company's return address. FDA received no reports of any such packages.
To see whether the company was actually shipping drugs into this country, in January 1997, OCI special agents placed an anonymous order over the Internet for the Resolve Easy Kit. The company did not respond.
When OCI agents placed a second order in February 1997, they received a kit containing suppositories and vials of what laboratory analysis showed to be the two drugs described in the ad, methotrexate and misoprostol.
Around March 1997, OCI investigators noticed that the Easy Life Labs web site had been taken off-line for an unknown reason. But in April, the woman who had initially alerted the agency to the advertisement called again, saying the company was running the same ad for the Resolve Easy Kit but under a different company name, Contraceptive Technologies Inc.
This time, the company also was advertising the Femastra Kit for female self-sterilization. The ad stated that the kit contained pellets of a substance called quinacrine hydrochloride. Quinacrine is a drug that has never been approved in the United States.
The pellets were supposed to be injected into the user's uterus, according to the ad, which compared the kit to an IUD. But unlike the IUD, a birth control device that is inserted into the uterus by a health-care professional, the Femastra kit was being offered to Internet users without a prescription and could be used without a health-care professional's supervision.
In evaluating the kit, the division of reproductive and urologic drug products concluded that Femastra posed a serious health hazard because its effectiveness and safety were unproven. "Even if this product, or others like it, were approved as a simple system for female sterilization ..., we cannot envision that it could be safely used without appropriate health-care provider supervision," the division concluded.
In May 1997, FDA informed Contraceptive Technologies' Internet service provider, Rapid Sites Inc. of Boca Raton, Fla., of the agency's public health concerns. Rapid Sites' attorneys determined that Contraceptive Technologies was required under its Internet contract to comply with all U.S. laws and that the company violated the contract when it distributed unapproved drugs through its web site.
The same month, the Internet company voluntarily removed the ads. "Because of Rapid Sites' cooperation and quick response in this case, the ad was pulled from the Internet very soon after we assessed the danger," Rawls says.
Also in May 1997, FDA's Office of International Affairs wrote to Colombian regulators so authorities there could ensure that the products weren't being sold in violation of Colombian law. At press time, FDA had not communicated further with Colombian authorities.
No injuries have been reported to FDA from the Resolve Easy or Femastra kits.
Although these products' ads apparently have been removed from the Internet, "the on-line advertisement of dangerous and unapproved drugs and devices is an ongoing problem," says OCI's Rawls.
Roma Egli, a consumer safety officer in FDA's division of nontraditional drug product compliance, offers this caveat for Internet users: "Know that things on the Internet aren't necessarily true or safe. Your destiny is in your hands, so you have to take responsibility for what you do with the information presented to you on the Internet."
--Tamar Nordenberg
International Seafood Distributors Inc., of Gloucester County, Va., its president, Thomas Fass, and vice president, Irving Luie Fass--Thomas' father--were ordered in June in the U.S. District Court for the Eastern District of Virginia to pay fines and forfeitures totaling $120,000 for selling illegal scallops.
The company and the Fasses entered into a plea agreement March 7, 1997, each admitting guilt to a one-count criminal information. The company pleaded guilty to falsifying facts and trying to import products with false statements. Each of the Fasses pleaded guilty to selling misbranded seafood.
An investigation by FDA's Office of Criminal Investigations (OCI) and Baltimore district office and the U.S. Customs Service uncovered evidence that for more than a year the company puffed up scallops it sold with excess water to increase net weight--and thus net profit since scallops are priced according to weight.
Also to increase profits, the company treated decomposing scallops before sale with a chemical to cover up rotting odors and discoloration.
The health risk from eating the fraudulent scallops could not be determined, according to OCI special agent Dwight Rawls. But the company's practices constitute economic fraud. An informant told Rawls that the company carried out the scheme because "everybody was doing it, and [the company] had to do it, too, to stay in business," Rawls recalled.
The Fass family has been involved in the seafood trade for several generations, and its International Seafood company is the largest employer in Gloucester County, according to Rawls.
Until recently, International Seafood sold seafood mainly to overseas customers, although its clients also included other U.S. seafood companies, discount warehouses, and supermarket chains. The company has since voluntarily gotten out of the scallop business, according to Rawls, and now only exports a marine fish called bonefish.
FDA began its criminal investigation of International Seafood in May 1994, after Charlotte Wilkins, an investigator with FDA's Norfolk (Va.) resident post, notified OCI about two shipments of International Seafood's scallops that had been rejected by foreign governments because of excessive moisture content. FDA had detained the scallops upon their return because they weren't properly labeled but allowed International Seafood to keep the shipments at their plant so that they could relabel them. When Sylvia Dooling, another investigator with FDA's Norfolk resident post, tried to inspect the detained scallops in September 1993, International Seafood told her that the shipments had been sent to another state for storage.
In a series of interviews with current and former employees and business associates of the company, OCI and customs agents developed a list of several "cooperating individuals," Rawls said. At about the same time, two informants came forward. One said he wanted to report the company's practices because he felt guilty about carrying them out while an International Seafood employee. The other indicated that he wanted to exact revenge for the way he was treated at work, Rawls recalled.
Though their reports to customs and FDA were independent of each other, the informants verified parts of each others' stories. They explained how the company oversoaked scallops in water treated with sodium tripolyphosphate, or STP, a chemical that causes seafood to absorb water.
While FDA allows seafood processors to use STP, the water content of scallops treated with the chemical can't exceed 84 percent of the total weight. The water in International Seafood's scallops was above the legal limit, according to the informants.
Whenever STP is used, it must be listed on the product's label under ingredients. If the added water is 80 percent to 84 percent of the scallops' weight, the label must say "water-added scallop product," and the weight of the water must be specified.
One of the informants said the company didn't always disclose STP in the ingredient list when it had been added to a product, nor did it label the product as "water-added" when it should have been.
Informants also reported that the company treated decaying, darkening scallops with Anthium 200 (chlorine dioxide), an industrial metal cleaner, to lighten the color of the shellfish and give it a more appealing odor. Though small amounts of Anthium are approved for use on poultry, FDA has not approved it for use on seafood.
They also reported the company's practice of removing scallops inspected by the U.S. Commerce Department from boxes the on-site commerce inspector had marked as "approved" and returning the scallops to a pile awaiting inspection. One informant said this was to increase the chances of the uninspected scallops getting approved, too. Employees then filled the emptied boxes marked "approved" with scallops that the commerce inspector had rejected or not yet inspected. The uninspected or bad scallops were then shipped to customers.
In other information revealed by one or more informants, FDA learned that:
In February 1995, OCI special agents carried out a search warrant, seizing boxes of various shipping records and computerized files at International Seafood's plant in Bena, Va. They also identified the hiding places for the Anthium, Rawls said.
The company was ordered to pay $15,000 towards community service programs and $200 as a special assessment and to forfeit $54,272 in assets. It also was sentenced to two years' probation.
Each of the Fasses was fined $25,000, assessed a $25 fee, and sentenced to 150 hours of community service and two years' probation.
Although FDA agents were not able to determine exactly how much money the Fasses earned from their scheme, they calculated that the company netted $54,272.40 in the two shipments identified in the plea agreement.
As part of their plea agreement, the Fasses said they would cooperate with FDA and other government agencies. OCI is continuing to investigate economic fraud in the seafood industry.
--Paula Kurtzweil
Illegally promoted for bodybuilding and as a "recreational" drug to produce sensations of euphoria and drunkenness, gamma hydroxybutyric acid, or GHB, is a potentially dangerous drug that can cause vomiting, dizziness, tremors, and seizures. Several deaths have been linked to its use.
Oklahoma City resident Chadrin Gibson, 23, told customers to meet him behind his place of employment, the Tanique facility, where for $240, they could get a 480-milliliter (16-ounce) supply of GHB. Sometimes, according to FDA special agent Wendell Espeland, Gibson also sold GHB in the towel room, where he hid the drug under towels.
His scheme unraveled when he inadvertently sold GHB to an informant for FDA's Office of Criminal Investigations (OCI). Those sales, along with other evidence collected by OCI, led in March to a grand jury indictment against him and his accomplice, Brian Brown, also 23 and of Oklahoma City. Their sentences, handed down in May, included a two-month prison term for Gibson and participation in a drug rehabilitation program for both men.
In late January 1996, the Oklahoma Poison Control Center informed FDA that 10 to 15 GHB overdose cases in Oklahoma City had been reported to the center during the preceding two months. There were no related deaths, but many of the people who overdosed were hospitalized. A 19-year-old woman later told Espeland that she went into cardiac arrest 15 minutes after ingesting GHB and had to be resuscitated.
In February, OCI's informant tracked down Brown and Gibson as the suspected dealers. The informant bought GHB from Gibson, who, in one transaction, was assisted by Brown. The informant then turned his purchases over to OCI.
Throughout spring 1996, Espeland interviewed Brown and Gibson's friends and acquaintances, including some who had overdosed. Espeland also monitored telephone calls between Gibson and a consenting informant, and later an undercover Oklahoma state narcotics officer.
He learned that Gibson was not only selling GHB at Tanique but steroids and cocaine, as well. OCI forwarded this information to the federal Drug Enforcement Administration, which oversees laws pertaining to illegal steroids and narcotics.
OCI agents arrested Gibson and Brown Nov. 27, 1996, after a grand jury for the U.S. District Court for the Western District of Oklahoma handed down a 10-count indictment charging them with misbranding GHB.
Brown pleaded guilty March 10, 1997, to a one-count information for selling misbranded GHB received in interstate commerce. It was misbranded because the label provided no directions for use or warnings.
Gibson pleaded guilty to one felony count of selling misbranded GHB received in interstate commerce with intent to defraud and mislead consumers. Remaining charges for both men were dropped.
Judge Ralph Thompson sentenced Brown May 7 to two years' probation, and on May 9, he immediately ordered Gibson to prison for two months, telling him it was "to shock you into reality."
Thompson sentenced Gibson to one year of supervised release and Brown to two years of probation and both men to 200 hours of community service and participation in an after-care drug program. According to Espeland, the two men had a history of drug abuse.
Though the men no longer work at Tanique, the business remains open. Its owner was never implicated in the sale of illegal drugs, Espeland said.
Agents in OCI's Kansas City, Kan., field office, continue to investigate the illegal sale of GHB, particularly in the Midwest, according to OCI special agent in charge Larry Sperl, because the agency receives a large number of injury reports from there. "It's a pretty widespread problem," he said.
FDA warned consumers about GHB in February 1997, following a resurgence of media and public interest in its use. The agency also reported that GHB abuse, accompanied by reports of GHB-related injuries--including death--were increasing, even though FDA in the early 1990s, had issued a similar public health warning and taken enforcement action against several companies and individuals.
--Paula Kurtzweil
FDA Consumer magazine (November-December 1997)