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EX-QUAD EXECS SHAH, FEROZ, KUMAR, BANSAL AND ULLAH INDICTED FOR CONSPIRACY

Executive Summary

EX-QUAD EXECS SHAH, FEROZ, KUMAR, BANSAL AND ULLAH INDICTED FOR CONSPIRACY to defraud FDA by making false statements, concealing material facts, intentionally failing to keep required records and introducing adulterated and misbranded generic products into interstate commerce. The six-count indictment was handed down April 1 by a federal grand jury in Baltimore. The indictment charges former Quad President and co-founder Dilip Shah, ex-Exec VP Operations and co-founder Raja Feroz, former Quad Senior Quality Control Lab Director Arun Kumar, ex- Associate Quality Control Director Surendra Bansal, ex-plant manager Asad Ullah and their co-conspirators with conspiring "to defraud the United States by impeding, impairing, obstructing and defeating the lawful government functions of the FDA in its administration of the federal [FD&C Act] and related regulations." The former execs are scheduled for arraignment on April 16 and they could go to trial in the fall, the Maryland U.S. Attorney's office said. The charges carry a maximum sentence of five years in jail and fines of up to $250,000. The alleged co-conspirators are former Quad VP-Scientific Affairs Dulal Chatterji, ex-VP Regulatory Affairs Jan Sturm and the former associate director of the R&D department Andrew Morris. Chatterji pled guilty on Feb. 2 to conspiracy and obstruction of an FDA investigation ("The Pink Sheet" Feb. 8, T&G-2). He is scheduled to be sentenced on April 14. Sturm pled guilty on Feb. 28 to keeping two sets of product complaint logs, one for FDA inspection and one for company use ("The Pink Sheet" Feb. 1, T&G- 8). Sturm is slated to be sentenced on April 15. Morris pled guilty on Jan. 29 to making a false statement to FDA and obstructing an FDA proceeding. His sentencing is scheduled for April 13. The indictment says the conspiracy was based on the execs' desire to "obtain rapid approval" of Quad's products and to prevent launch delays or product recalls. Among the numerous overt acts allegedly undertaken by the execs was Shah's and Chatterji's instructions to R&D chemists in 1985 or 1986 "to manipulate laboratory test results, employing a process known at Quad as 'normalization', so that the values that were reported to FDA in Rockville, Maryland appeared to fall within preestablished specifications when, in fact, some or all of the values fell outside those specifications," the indictment states. Count two of the indictment charges that Shah fraudulently submitted false batch records for R&D lots of sterile vancomycin in April 1988. Count three charges Shah and Feroz with falsely reporting that "there have been no changes to the manufacturing and control" of ritodrine HCl injection, when "Quad manufactured this product using approximately 20%-25% more antioxidant than was specified in the FDA-approved master formula." Count four of the indictment claims that in July 1988 Shah and Kumar "knowingly and willingly did conceal...the existence of certain drug product complaints." Counts five and six charge that Feroz, Kumar and Ullah in November 1988 and March 1989 introduced into interstate commerce quantities of adulterated glucagon for injection to the Lowey Drug Co, in Baltimore. The indictment also mentions that Bansal and Kumar "discarded and instructed others to discard, failing test results obtained by quality control chemists working under their supervision." Bansal also "sought to conceal the existence of laboratory test results establishing that one or more complaint samples of doxycycline hyclate for injection were subpotent," the indictment states. Shah was sentenced in September 1989 to 60 days work-release and a $250,000 fine for giving $32,000 in illegal gratuities to FDA review chemists. Earlier this year, Shah received a letter from FDA proposing his debarment, which he is appealing.
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