Press Release from U.S. Attorney’s Office Eastern District of Missouri

St. Louis, MO: Marc S. Hermelin, 69, former Chief Executive Officer and Chairman of the Board of St. Louis, Missouri based drug manufacturer KV Pharmaceutical (“KV”), pleaded guilty today to two federal charges of misbranding drugs, the United States Attorney’s office announced today. Hermelin was sentenced to one month of imprisonment and a one million dollar fine. The plea agreement also requires Hermelin to pay a $900,000 forfeiture to the United States.

According to documents filed with the court, KV manufactured a variety of generic prescription drugs under Hermelin’s leadership, including morphine sulfate, an analgesic pain relief drug and opiate. During 2006-08, Hermelin decided to increase the company’s production of drugs on a daily and annual basis. Between 2006 and 2008, KV’s drug production increased approximately 182%, from a daily average production of 4.1 million doses in 2006 to 10.6 million doses in April 2008. During that same time frame, KV’s internal manufacturing controls repeatedly discovered oversized and irregular tablets of several different types of drugs. KV also received complaints from consumers reporting their receipt of oversized and irregularly shaped drug tablets.

In the plea agreement, Hermelin admitted that during the summer of 2008, KV shipped two oversized morphine tablets to retailers in San Francisco, California and Canada. The drugs’ labeling was false and misleading because it stated that the drugs were of uniform strength when the tablets of the drugs were oversized and contained more of the active ingredient of the drug than what was specified on the labels. The California morphine tablet weighed over twice the specified amount, while the Canada morphine tablet was 65% stronger than what the label claimed. Both of the misbranded morphine tablets had the same color and engraving as a normal and correctly sized tablet. KV conducted a safety assessment in May 2008 concluding that oversized morphine tablets raised potential safety concerns for patients, including the possibility of acute over-dosage, respiratory depression, stupor, coma, and even death.

Since March 2009, KV has been under a civil consent decree that was filed in federal court that regulates the company’s ability to manufacture drugs. Currently, KV is not manufacturing morphine sulfate tablets, and Hermelin is no longer the Chief Executive Officer. Hermelin previously resigned from KV’s Board of Directors after receiving a notice of exclusion from participation in the United States’ Medicare and Medicaid programs.

Previously in the same investigation, Ethex Corporation, a subsidiary of KV, pled guilty to two felony counts of failing to file two field alerts with the United States Food and Drug Administration (“FDA”) regarding manufacturing problems related to oversized tablets of propafenone and dextroamphetamine sulfate that failed to meet product specifications. The Court sentenced Ethex with the maximum fine of $23,437,382, as well as ordering restitution payments to the Medicare program in the amount of $1,762,368 and the Medicaid program in the amount of $573,000 to reimburse the programs for their expenditures for drugs from KV that were consumed by program beneficiaries during 2008. Ethex also forfeited $1,796,171.

“FDA’s drug-labeling laws and regulations are designed to ensure that Americans can safely consume effective drug products,” said Special Agent-in-Charge Patrick Holland, FDA’s Office of Criminal Investigations. “We will continue to work with the U.S. Attorney’s Office and the Department of Justice to investigate those companies and individuals who participate in the distribution of misbranded drugs.”

The case was prosecuted with the assistance of the Office of Consumer Litigation for the United States Department of Justice, and investigated by the Office of Criminal Investigations for FDA, with assistance from the United States Postal Inspection Service and Federal Bureau of Investigation.