Newtown-based drug maker, two executives accused of conspiracy to defraud the FDA | New
BUCKS COUNTY >> Acting U.S. Attorney Jennifer Arbittier Williams announced that Newtown-based generic drug maker KVK-TECH, Inc., Murty Vepuri, 69, and Ashvin Panchal, 50-year-old, also from Newtown, has been charged with conspiracy to defraud the United States Food & Drug Administration (FDA) over alleged distribution of unapproved drugs as well as alleged efforts to mislead the FDA and withholding information that could affect the safety and efficacy of medicines.
KVK-TECH was also charged with one count of mail fraud resulting from the alleged sale of unapproved drugs to customers who believed the drugs were manufactured with FDA approval.
According to the indictment, from around October 2010 to at least March 2015, Vepuri, the de facto owner of KVK-TECH, and Panchal, the company’s quality assurance manager, conspired to defraud the United States and its agencies by obstructing, hampering, and overcoming the FDA’s mission to protect the health and safety of the public by ensuring that drugs marketed and distributed in the United States are safe and effective for the uses for which they are destined.
As alleged in the indictment, Vepuri led the day-to-day operations of KVK-TECH and made all key business decisions for the company, including decisions related to drug regulatory requirements, composition of drugs, build quality, purity and potency of drugs. However, Vepuri – who previously owned a generic drugmaker in New Jersey that was under a restraining order due to ongoing FDA violations – is accused of hiding his involvement in KVK-TECH by placing his property in private trusts for the benefit of his children. . Vepuri then allegedly told the FDA that he was only an adviser or consultant to KVK-TECH, when in reality he wielded uncontrolled authority over the company.
As alleged, under Vepuri’s control, KVK-TECH ignored regulatory requirements that could slow the manufacture, distribution and sales of its drugs. Vepuri and Panchal are also accused of providing false explanations to the FDA when inspectors identified violations. Often times, Vepuri and Panchal attributed regulatory failures to an error or misunderstanding, and KVK-TECH falsely assured the FDA that the violations had been corrected despite knowing that no corrective and preventive action had been taken.
The indictment highlights the behavior of KVK-TECH regarding hydroxyzine, a prescription drug from KVK-TECH for the treatment of anxiety, for which Vepuri has purchased an active pharmaceutical ingredient (“API” ) manufactured in Mexico by the laboratories of Dr. Reddy (“DRL Mexico”). DRL Mexico was not an FDA approved source. On the contrary, as alleged, the defendants knew that DRL Mexico’s API was considered tampered with by the FDA due to significant violations of good manufacturing practices (cGMP) at the DRL Mexico manufacturing plant. The cGMP violations were so severe that the FDA issued an Import Alert for all API DRL Mexico from July 2011 to July 2012. Nonetheless, from 2011 to 2013, KVK-TECH is accused of knowingly distributing over 383 000 bottles of unapproved hydroxyzine without FDA knowledge or approval.
“The FDA’s laws and regulations regarding the composition, manufacture, quality and related controls of drugs are designed to protect the health and safety of Americans – so we can all be confident that our prescription drugs will be safe and effective. Acting US Attorney Williams said. “When companies try to play with the system to avoid these regulations and increase their profits, the ramifications are potentially catastrophic. As this indictment makes clear, any person or company that attempts to evade the law in this way will be brought to justice. “
“An important mission of the Office of Inspector General is to investigate allegations of fraud against Ministry of Labor programs. We will continue to work with our law enforcement partners to investigate these types of allegations, ”said Syreeta Scott, Acting Special Agent in Charge, Philadelphia Area, Office of the Inspector General of the Department of Labor. the United States.
If found guilty, Vepuri and Panchal each face a possible maximum sentence of five years in prison, three years on probation, a fine of $ 250,000 and other financial penalties, including forfeiture. KVK-TECH faces fines of up to $ 4 million and other financial penalties such as forfeiture and probation. Parties also face a mandatory exclusion from participation in federal programs.
The case has been investigated by the FDA-Office of Criminal Investigations, Homeland Security Investigations, and the Department of Labor Office of Inspector General, and is being pursued by Deputy U.S. Attorneys, Mr. Beth Leahy and Patrick J. Murray, and Ross Goldstein, Senior Litigation Counsel for the Consumer Protection Branch of the Department of Justice.
An indictment, information or criminal complaint is an accusation. An accused is presumed innocent until proven guilty.