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NORWICH EATON SEEKING MONETARY DAMAGES FROM BOLAR

Executive Summary

NORWICH EATON SEEKING MONETARY DAMAGES FROM BOLAR for lost revenues resulting from the fraudulent substitution of brandname Macrodantin in Bolar's ANDA. Procter & Gamble subsidiary Norwich Eaton filed a complaint May 8 in Newark federal court seeking damages resulting from Bolar's marketing of a generic version of Macrodantin (nitrofurantoin macrocrystals). The ANDA was later withdrawn due to Bolar's fraudulent ANDA submissions. The suit alleges that Bolar's income from generic nitrofurantoin "rightfully belongs to Norwich Eaton." The company is seeking treble damages in the suit. Bolar noted that "this action, if concluded adversely to Bolar will have a material adverse impact" on the company's financial situation. Generic nitrofurantoin was estimated by Bolar to account for 10% of company sales when the ANDA was withdrawn in 1989. Bolar sales that year totaled nearly $ 128 mil. Bolar and its founder and former President Robert Shulman are named as defendants in the complaint, which alleges that they "violated certain federal and state laws in the methods used" to obtain ANDA approval for nitrofurantoin, Norwich Eaton said. Specifically, the suit charges that Bolar and Shulman "knowingly and purposefully disguised Macrodantin in Bolar's own capsules" for bioequivalence testing. The suit also charges the company and Shulman with the "creation of false production records" for the product. Bolar's nitrofurantoin was approved June 24, 1988 and was the only competitor to Norwich Eaton's innovator product. On Oct. 13, 1989,FDA began proceedings to withdraw the ANDA on the basis of evidence suggesting that Norwich Eaton's product was used in the bioequivalence testing ("The Pink Sheet" Oct. 16, 1989, p. 5). Bolar pled guilty this year to making a submission to FDA "that falsely described the master formula" being used to manufacture the product ("The Pink Sheet" March 25, T&G-10). The Norwich suit is the second to seek money from Bolar for illegal substitution of innovator drugs in ANDA biostudies. The company also is named in a suit filed by Dyazide pioneer SmithKline Beecham June 12, 1990 in Philadelphia federal court. SB is seeking unspecified monetary damages from Bolar, Shulman, Bolar's comarketer Schein, and Vitarine, which marketed a second generic Dyazide ("The Pink Sheet" June 18, T&G-8) (see related T&G above). Norwich Eaton said it waited to file suit until the completion of investigations of Bolar, including the IG investigation that led to the company's guilty pleas. Separately, Bolar has settled 12 consolidated shareholder class action suits stemming from its fraudulent ANDA submissions to FDA, the company said May 15. Subject to court approval, Bolar will pay the shareholders $ 20 mil. Shulman and former Exec VP Jack Rivers "each have agreed to contribute 500,000 shares of Bolar stock owned by them to a settlement fund for distribution to the class," Bolar added. The 12 class action suits, filed by Bolar shareholders in 1989-1990 and later consolidated in Brooklyn federal court, charged the company and its officers with, among other things, violating federal securities laws, mismanaging the company, and defrauding investors. The settlement comes two months after Bolar pled guilty to 20 counts of fraud in Baltimore federal court March 22. Bolar agreed to a $ 10 mil. fine plus $ 238,000 to cover costs of Maryland U.S. Attorney's Office and Justice Department investigations of the firm's fraudulent generic drug regulatory approval submissions. To date, three former Bolar employees have pled guilty to charges of falsifying submissions to FDA: former regulatory affairs director Susan Long, former regulatory affairs manager Gloria Schetlick, and former R&D lab director Gena Finelli. Finelli's sentencing has been rescheduled from May 23 to Oct. 4, at 10 a.m. Schetlick is now scheduled to be sentenced Sept. 10 at 9:30 a.m. Long's sentencing is scheduled for June 14 at 10 a.m.
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PS019197

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