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Executive Summary

SEARLE MANAGER OF SECURITY LARRY KERNESS is filling a newly created position in the wake of Ovulen 21 counterfeiting incident last year and subsequent investigations by the Justice Dept. and by Congress. Kerness will communicate regularly with counterparts in other companies and work with Searle's detail force to handle all field reports of drug supplies that appear to be diverted. His role includes performance of internal checks and investigations as to how suspect supplies entered the distribution chain, according to a Searle spokesman. Previously a manager with Guardsmark, a private security and investigation consulting firm, Kerness has been an assistant special agent in charge with the Drug Enforcement Administration (DEA) in Philadelphia and chief of DEA's Unified Intelligence Div. Early in his career, he was a chemist with FDA. In 1982 Kerness served as vice president in the Internatl. Narcotics Officers Assn. Searle's establishment of a security manager signals an aggressive posture the company is taking in an effort to prevent a repeat of problems like the Ovulen experience. The company also recently filed a complaint against Interstate Drug Exchange, which purchased shipments of the counterfeit product from Panama and distributed the drugs to retailers. The complaint, filed in Brooklyn Federal Court, charges Interstate with trafficking in counterfeit goods, trademark infringement, false designation of origin (the bogus Ovulen came from Panama marked as American goods returned), and fraud. Searle alleged that in June, October, and November 1983, Interstate knowingly bought shipments of the counterfeit and resold the products "to whslrs. and pharmacies in various parts of the U.S. for ultimate resale to the general public." The suit asks that the court order Interstate to pay Searle treble damages (triple the amount of any profits the whslr. gained by the alleged activity) and Searle's court costs and attorneys' fees. In addition, Searle asked that lnterstate be enjoined from representing itself as an authorized distributor for Searle and that it be ordered to deliver to Searle all counterfeit stocks, packaging, and any equipment used to make or package the bogus product.

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