KV settles federal suit hoping to resume production
KV Pharmaceutical Co. has reached a deal with federal prosecutors that bars the embattled drug maker from resuming production until it can comply with Food and Drug Administration regulations.
Still, it remains far from clear when Brentwood-based KV might be able to meet those standards and what products it will be allowed to make.
KV agreed to an injunction contained in a court order called a consent decree. Prosecutors filed the decree Monday at the same time they filed the complaint against KV and its top officers. The defendants are accused of using manufacturing methods that failed to comply with FDA regulations and making new drugs that had not yet been approved for distribution.
KV, which produces drugs through its ETHEX and Ther-Rx subsidiaries, has a history of manufacturing problems despite continuous warnings by the FDA, prosecutors allege.
"The deficiencies observed by FDA at the most recent inspection in February 2009 are the same as, or similar to, prior violations observed by FDA at several other inspections conducted during the last eight years," the suit states.
During the FDA’s most recent inspections between Dec. 15 and Feb. 2, FDA investigators found 35 separate deviations from manufacturing regulations, according to the complaint filed in U.S. District Court in St. Louis.
KV already halted production and shipping of products it makes, and the company has been voluntarily recalling most of its drugs. When it announced the decision in January, KV only said the products might not have met FDA manufacturing regulations.
The move came after the company had initiated a series of recalls, some of which involved oversize drugs that might contain too much morphine and other active ingredients. As recently as Feb. 3, KV began a recall of prescription prenatal vitamin and iron supplement products.
In the consent decree, KV agreed not to make products until the FDA gives its approval.
Before KV can resume production, it will have an independent third-party manufacturing consultant review the company’s facilities and certify they comply with FDA regulations auto loans.
The decree also sets out inspection requirements for the five years after KV resumes production.
If KV fails to comply with any provisions of the decree, it could be ordered to pay damages of $15,000 per day. It could also be subjected to an additional $15,000 for each violation, up to $5 million per year. The decree requires KV to destroy all drugs recalled between May 2008 and Feb. 3.
"Predicting the timing for the return and the ultimate product assortment that we will market are presently very difficult due to the range of variables that must be managed," David Van Vliet, KV’s interim chief executive said in a statement. "As we gain certainty, we will notify customers and all other stakeholders."
Van Vliet, who assumed that position in December, is one of the defendants named in the case. Others include Marc Hermelin, the former chief executive who was fired by KV in December and still sits on the company’s board of directors; Rita Bleser, president/pharmaceutical division; and Jay Sawardeker, vice president, corporate quality assurance/quality control.
The defendants consented to the decree without admitting or denying guilt.
In addition to the FDA probe, KV is being investigated by the Securities and Exchange Commission. It also faces mounting private lawsuits filed by shareholders, employees and consumers alleging they have been injured by KV drugs.
Last week, KV said it plans to reduce its work force to 690 jobs by March 15 as part of a cost-cutting move as it tries to resume production. The company said it had 1,700 employees on Dec. 31.
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