AmerisourceBergen hands over $260M for a decade of illegal drug manufacturing
- A subsidiary of AmerisourceBergen Corp. has pleaded guilty to selling misbranded cancer drugs made at an Alabama manufacturing site that wasn't registered with the Food and Drug Administration.
- As a result, AmerisourceBergen Specialty Group LLC (ABSG) will hand over $260 million in criminal fines and forfeitures for violating the Food Drug and Cosmetic Act. The company may have to pay more, though, if the U.S. Attorney's Office for the Eastern District of New York (USAO-EDNY) lobs civil claims as well.
- While the company is trying to resolve such claims, a filing from August said significant disagreements exist between the parties, clouding a path to a settlement. If federal officials do file a civil lawsuit, AmerisourceBergen said it would "vigorously defend itself."
The criminal charges and resulting guilty plea affect four companies that fit into each other like a Russian nesting doll. There's AmerisourceBergen Corp., ASBG, Oncology Supply Co. (OSC) and Medical Initiatives Inc. (MII) — each of which operates as a subsidiary under its preceding company.
The USAO-EDNY first began investigating MII's pre-filled syringe (PFS) program during AmerisourceBergen's 2012 fiscal year.
Located in Dothan, Alabama, MII served as a pre-filler for cancer medications, including Eisai Inc.'s Aloxi (palonosetron HCl), Johnson & Johnson's Procrit (epoetin alfa) and Amgen Inc.'s Neupogen (filgrastim), until it stopped operating in 2014.The company's primary business model under ASBG and OSC was to take FDA-approved treatments out of their glass vials and repackage them in syringes.
The problem with that, federal officials charged, is MII wasn't registered with the Food and Drug Administration for the repackaging or manufacturing of drugs. What's more, MII's production practices put consumers at risk.
"The processes by which MII created, packaged and shipped PFS had the substantial potential to — and on numerous occasions, did — adversely affect the strength, quality, purity and/or potency of the original drug product in the glass vials," the USAO-EDNY wrote in charging documents filed on Sept. 27.
"This is evidenced by, among other things, the fact that some PFS had floaters; tested positive for bacteria; had inadequate volume for the marked dosages; and were exposed to unapproved temperature and handling conditions."
MII made money by using to its advantage "overfill" — the little amount of extra drug product included in a purchase to use in cases where air bubbles or other factors throw off the exact right dose. The company pooled together those extra doses to create more product that could be sold at no additional cost. Over its lifetime, millions of syringes produced at MII were sold.
Federal officials skewered ABSG, OSC and MII, though, for being more focused on profits than on patients — a criticism that, while not new, has become increasingly prominent across the pharmaceutical sector as lawmakers and consumers decry sky-high drug prices.
"MII did not dispense PFS pursuant to a prescription that identified the individual who would actually receive each PFS. Rather, MII matched PFS to order forms, the majority of which did not even provide the identifies of individual patients," the USAO-EDNY wrote.
Given AmerisourceBergen's immense $148 billion in revenues during 2016, however, the $260 million settlement isn't much in the grand scheme of things. Investors appeared to understand that too, as shares closed at $82.43 apiece on Wednesday, up less than 1%.
- AmerisourceBergen Form 8-K
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