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GENERIC PROBE: NEW CRIMINAL CHARGES EXPECTED WITHIN 90 DAYS

Executive Summary

GENERIC PROBE: NEW CRIMINAL CHARGES EXPECTED WITHIN 90 DAYS, Maryland U.S. District Attorney Breckinridge Willcox said in a March 30 press release. Issued jointly with HHS Inspector General Richard Kusserow, the release announced the guilty pleas of former FDAer Jan Sturm and generics firm American Therapeutics. Noting that the investigation of the generic drug industry has expanded beyond bribery to now include "allegations of product substitution, fraud, deliberate falsification of manufacturing records and obstruction of the FDA regulatory and inspection process," Willcox said that he "expect[s] to announce initial criminal charges in this phase of the investigation within the next ninety days." * Among the generic firms which have been found by FDA to have falsified data in product ANDAs are Bolar, Vitarine, Par, Quad, Superpharm, and Quantum. Bolar and Superpharm, in particular, were named as companies expected to be referred for criminal prosecution in a memo prepared for a Nov. 17 hearing by Rep. Dingell's (D-Mich.) Oversight and Investigations Subcommittee ("The Pink Sheet" Dec. 1, p. 7). On March 30, former FDA Generic Drug Division Consumer Safety Officer Jan Sturm pleaded guilty to "one count of receiving an illegal gratuity," facing a maximum penalty of two years in jail and a $250,000 fine, according to the release. American Therapeutics pleaded guilty to "one count of use of interstate facilities in aid of racketeering." The company faces a maximum fine of $500,000. Sturm will be sentenced in Maryland Federal Court on June 12 and ATI on July 23. ATI consultant Mohammed Azeem, who previously pleaded guilty to paying illegal gratuities to FDAers, will be sentenced on April 23 ("The Pink Sheet" March 19, T&G-1). According to evidence submitted in support of the guilty pleas by Assistant U.S. Attorney Gary Jordan, Sturm provided information to former ATI President Raju Vegesna in 1986 on the status of ATI's ANDA for the antidepressant trazodone (Mead Johnson's Desyrel). "Sturm advised Vegesna that upper management of the DGD was 'sitting on' approval of the bioequivalency section of ATI's trazodone ANDAs even though the Division of Bioequivalence Review had completed its examination," Jordan noted. Sturm also expedited a biostudy waiver for one strength of ATI's trazodone and changed the mention of an "unacceptable outside laboratory" in the ANDA on Oct. 20, 1986. ATI's trazodone was approved nine days later. In November, Vegesna paid Sturm $20,000, with which the FDAer bought a new car. Although "Vegesna offered Sturm $20,000 per year if he would stay at FDA and assist ATI," the release states, "Sturm declined the offer." However, while Sturm was still at FDA, until April 1987, Vegesna convinced him to gather information regarding formulations and analytical methods for 25 brandname drugs that were coming off patent. Sturm agreed to show the files to Vegesna for a $10,000 retainer plus $30,000 to $40,000 if Vegesna found the information useful. Vegesna eventually only paid Sturm the initial sum of $10,000, saying that he had not found the information from the files to be useful. "Mr. Sturm was involved in additional unlawful activity," the release notes, adding that "the government will present this information to the court at sentencing." ATI pleaded guilty to providing over $20,000 in furniture, computers, and vacations to former FDA Generic Drug Division review chemist Charles Chang. When Dingell's subcommittee issued a subpoena in July 1988 for ATI's records relating to the unlawful payments, the release states: "Vegesna directed ATI employees to obtain altered records from the shipping company in which 'David Chew,' i.e. Charles Chang's Potomac, Maryland address was eliminated and the purpose of ATI's expenditures were described as 'employee relocation'." It was ATI's legal counsel that discovered the falsification and reported it to the subcommittee. "Vegesna provided unlawful gratuities to other DGD employees which will be described in evidence presented in Vegesna's case," the release adds. Vegesna is scheduled for arraignment on April 2.
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