October 3, 2017 – Late last week drug wholesaler AmerisourceBergen Corp (ASBG) pleaded guilty in federal court in Brooklyn to violations of the federal Food, Drug and Cosmetic Act. ASBG disclosed in a stipulated statement of facts at the hearing that a former ASBG business unit, the Alabama-based company Medical Initiatives Inc., (MII) had sold misbranded oncology drugs.

Medical Initiatives, which is no longer in operation, opened sterile vials of the drugs, pooled the medication, and then transferred the drugs into single-dose syringes. According to a statement issued by the Department of Justice describing the process:

To prepare pre-filled syringes (PFS), MII removed FDA-approved drug products from their original glass vials and repackaged them into plastic syringes through a process that allowed MII to access and sell excess drug product in the vials, known as “overfill,” that MII was able to extract from the vials. As alleged in the Information, however, MII prepared PFS in an unclean, unsterile environment. Accordingly, MII’s process for creating PFS resulted in some PFS that contained particles or foreign matter, which MII employees identified and termed “floaters.” PFS were also at times not of the quality or purity that MII and OSC represented them to be to their customers.

This process is informally known as “pooling.” However, many of the vials used by MII to prepare PFS were designed by the drug manufacturer as “single use” vials, meaning that the manufacturer could not guarantee the sterility of the drug product if the vials were breached. By its very nature the pooling process required the breaching of drug vials multiple times, dramatically increasing the risk of contamination.

The activity took place between 2001 and ended in 2014, when MII was shut down by ASBG.

Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York stated, “Today’s guilty plea demonstrates our commitment to investigating and holding accountable any pharmaceutical company that fails to ensure the health and safety of the public. This Office will continue to work actively with the FDA to ensure that those responsible for America’s drug supply scrupulously comply with the law and provide safe products that doctors and patients can trust.”

In addition to mishandling and misbranding drugs, ABSG also failed to register MII as a re-packager or manufacturer with the FDA as required by law. Instead, ABSG misleadingly held MII out to both consumers and the Alabama State Pharmacy Board as a legitimate pharmacy in the business of dispensing drugs pursuant to valid prescriptions. This subterfuge enabled ABSG to exploit an exemption to the FDA registration requirement that is reserved for legitimate pharmacies, not for manufacturers or re-packagers.

The guilty plea included a settlement of $260 million—$208 million in fines and $52 million in criminal forfeiture. ASBG also signed on for a three-year supervised compliance and ethics program.

The FisherBroyles Pharmacy and Health Care Law team is pleased to keep you updated on events of interest to those in the healthcare and pharmaceutical industries, including lawsuits and investigations such as the ASBG settlement deal detailed above. Questions may be directed to any of the following attorneys:

Brian Dickerson, FisherBroyles Partner
Brian E. Dickerson

Anthony Calamunci, FisherBroyles Partner
Anthony Calamunci

Nicole Waid, FisherBroyles Partner
Nicole Hughes Waid

Amy Butler, FisherBroyles Partner
Amy Butler

Katy Wane, FisherBroyles Partner
Katy Wane