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FIVE FORMER PAR EXECS INDICTED FOR FRAUD, FALSIFYING ANDAs AND LAB RECORDS ON JULY 14; CHARGES RELATE TO GENERIC MAXZIDE, THREE OTHER PRODUCTS

Executive Summary

Five former Par Pharmaceutical executives were indicted for fraud by a Baltimore federal grand jury on July 14. The indictments, unsealed on July 16, were against former Par Pharmaceutical Senior VPs Ashok Patel and R. K. Patel; ex-VP Regulatory Affairs Barry Geller; former R&D Department head Satish Shah; and Nandlal Rana, ex-head of Par's quality control lab. The five men were charged with eight counts, including conspiracy to defraud FDA, filing false ANDAs and/or false lab records for triamterene/hydrochlorothiazide (a generic version of Mylan/Lederle's Maxzide), thioridazine, methyldopa and megestrol acetate. The latest round of indictments does not affect Par in its current configuration as the operating arm of parent Pharmaceutical Resources, Inc., which announced on June 29 that Par is once again eligible for federal contracts under an agreement with the Defense Logistics Agency. The agreement terminates Par's suspension and proposed debarment resulting from the company's 1990 conviction for paying illegal gratuities to former FDA generic chemists. Par paid $150,000 in fines for that charge. In December 1991, Par settled all criminal liability resulting from its actions uncovered during the generic drug investigations by agreeing to pay a fine of $2.5 mil. and pleading guilty to 10 counts of defrauding FDA. Count one of the July 14 indictment charges all five ex-Par execs with conspiracy to conceal failed stability tests for Par ANDAs by falsifying lab data, with filing false ANDAs at FDA and with manufacturing ANDAed products with unapproved ingredients and manufacturing procedures, the Maryland U.S. Attorney's office said July 16. Count two charges all five men with falsifying the ANDA for triamterene/hydrochlorothiazide. Specifically, count two relates to an R&D test batch that passed bio tests but was made without sodium bicarbonate. The defendants "later added sodium bicarbonate to the product when Par's first formulation failed stability testing," the prosecutors charge. Lab records were later falsified to indicate that the initial batch had contained the ingredient. Count three charges R. K. Patel and Geller with switching samples from one production batch of the diuretic combo drug for samples from another batch during an FDA investigation. Geller then gave the switched sample to an FDA investigator, the indictment alleges. Counts four and five charge both R. K. and Ashok Patel and Geller with submitting false lab tests for thioridazine. Counts six and seven charge R. K. Patel with adding unapproved ingredients to batches of methyldopa and megestrol acetate. Count eight charges Rana with destroying lab notebooks containing results that were not reported to FDA. For Ashok Patel, the July 14 indictments mark a second set of charges in the ongoing generic drug industry investigations. A founding member of Par and one of its largest shareholders at the beginning of the investigations into the firm in 1989, Ashok Patel agreed to plead guilty in April 1989 to giving $3,500 in illegal gratuities to ex-FDAers Charles Chang and David Brancato. In October 1989, Patel received a $150,000 fine, a year's suspended sentence and a year of community service. His sentencing preceded the implementation in May 1991 of stiffened white collar criminal federal sentencing guidelines. R. K. Patel, another founder of the company, long has been alleged to be one of the parties involved in the triamterene switch. Par reported in July 1989 to Rep. Dingell's (D-Mich). House Energy & Commerce/Oversight subcommittee, which spearheaded the congressional investigation into the generic drug scandal, that R. K. Patel had been responsible for the switch. Following Par's reports to congress, R. K. Patel and Barry Geller went on "leaves of absence," never to return; at the same time the company announced that it was recalling generic Maxzide.

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