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MY-K LABS FOUNDER BAE CHARGED WITH ILLEGAL $10,000 PAYMENT

Executive Summary

MY-K LABS FOUNDER BAE CHARGED WITH ILLEGAL $10,000 PAYMENT to former FDA Division of Generic Drugs Branch Chief Charles Chang. A criminal information filed April 12 in Baltimore Federal Court against My-K Labs founder and former president Kun Chae Bae charges him with one count of interstate travel in aid of racketeering. If convicted, he faces a maximum penalty of five years imprisonment and a fine of $250,000. "On Aug. 21, 1987, Charles Y. Chang...traveled from his home in Maryland to Illinois where Mr. Bae allegedly gave him$10,000 in U.S. currency," U.S. Attorney for the District of Maryland Breckenridge Willcox and HHS Inspector General Richard Kusserow said in a same-day release. Bae founded My-K Labs in 1973, and retired as president of the firm when Pharmaceutical Basics Inc. acquired it in the summer of 1988 ("The Pink Sheet" July 11, 1988, T&G-11). At the time of the acquisition, My-K was in the process of resolving a series of regulatory problems. Under a consent decree issued in April 1988, My-K was required to obtain lot-by-lot clearance for all of its products prior to shipment. The consent order was issued in response to a number of labeling mix-ups. Former PBI VP-Regulatory Affairs and Product Development Raj Matkari was sentenced in July to five years probation and fined $2,000 for giving a $2,000 illegal gratuity to Chang in August 1987. In a same-day release, PBI disassociated itself from the former My-K exec, stating that Bae: "has never been associated with Pharmaceutical Basics, Inc. in any way. He is not and has never been a consultant, employee, officer or director of [PBI]." In testimony given at a closed May 3, 1989 session of Rep. Dingell's House Energy and Commerce/Oversight Subcommittee, former Division of Generic Drugs Director Marvin Seife said that Bae "was always calling Mr. Chang and I felt uncomfortable. Also, I had seen a couple of applications being approved in early 1985 -- the year before -- in what I considered record time." At a subsequent July 11 hearing, Seife testified that during the period between early 1986 and mid-1987 he diverted My-K's ANDA applications, as well as applications from other firms, away from Chang ("The Pink Sheet" July 17, p. 13). Seife said he was concerned that Chang might show favoritism toward those firms. In October, Chang was sentenced to a one-year work release program, three years of probation and 1,000 hours of community service. He was charged with two counts of interstate travel in aid of racketeering and fined $10,000 for accepting illegal gratuities from a number of generic company executives. To date, it is known that Chang received gratuities from Matkari, former Quad CEO Dilip Shah, former Par Senior VP Ashok Patel, former American Therapeutics CEO Raju Vegesna, and former ATI consultant Mohammed Azeem. Willcox noted in the press release on Bae that "additional corruption charges, and the first fraudulent production charges, are expected within 90 days."
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