FDA Bans KV Pharmaceuticals CEO from Industry

In a move that may signal an increasing willingness to get tough on pharmaceutical company executives, federal regulators have banned the former CEO of a generic drug manufacturer from doing business with federal health care programs. 

The Department of Health and Human Services’ Office of Inspector General (OIG) has banned KV Pharmaceutical Co. director Mark Hermelin from doing business with federal health care programs for 20 years, effective today. The ban means that the company would be unable to do business in the United States as long as Hermelin is part of the company. As a result Hermelin, who owned a 52 percent voting stake in the company, was forced to step down and will sell his shares.

The ban follows a long list of recalls and violations by both KV Pharmaceutical Co. and its subsidiary, Ethex. Production by the company in the U.S. was put on hold in 2009 after the FDA cited KV Pharmaceuticals for selling unadulterated and unapproved drugs, and in 2008, Ethex Corp suspended manufacturing and shipments for all products after issuing several generic drug recalls due to oversized tablets. Among tablets that were distributed with too much of the active medication were generic versions of morphine, which could cause a potentially fatal morphine overdose. Also included in the recall were dextroamphetamine tablets that were generic versions of Dexedrine and Dextrostate. Ethex pled guilty to two felony charges by the U.S. Department of Justice (DOJ) and paid a fine of more than $23 million.

For some, Hermelin’s ban signifies a continuing escalation of enforcement against pharmaceutical companies since President Barack Obama’s administration took office in 2009. Since then, the DOJ has won a number of blockbuster settlements from pharmaceutical companies over illegal marketing, false claims and other federal violations.

In September 2009, for example, Pfizer agreed to pay a $2.3 billion for illegally marketing Bextra and other drugs. It included the largest criminal fine in U.S. history. Last month, GlaxoSmithKline agreed to pay $750 million in criminal and civil fines over quality control problems at a plant that manufactured Avandamet and Paxil. And in September, Allergan, Inc. plead guilty to charges that it illegally marketed Botox for unapproved uses and agreed to pay $600 million.

Many critics of the FDA and pharmaceutical companies have complained that the fines allow the companies to buy their way out of criminal acts that, in some cases, have cost lives. They have long urged federal regulators to go after individual corporate executives, saying that if executives whose companies broke the law were faced with actual consequences for their actions, it would be a far more powerful incentive for the industry to obey the law. The move against Hermelin appears to be a step in that direction.