US Department of Justice asks Third Circuit to reinstate conspiracy charges again KVK

pharmafile | February 8, 2023 | News story | Manufacturing and Production  

The US Department of Justice (DoJ) encouraged the Third Circuit to reinstate ‘conspiracy to defraud’ charges against Philadelphia-based generic drug company KVK, who are accused of distributing an anti-anxiety drug which contained an active ingredient produced in a laboratory not approved by the FDA. 


In February 2022, a federal court in Philadelphia dismissed conspiracy charges, stating the indictment against KVK “failed to state an offence”. Later, in March 2022, The US appealed the dismissal to the Third Circuit, maintaining that the company conspired to “defraud the United States by impeding, impairing and defeating the lawful function of the Food and Drug Administration”, and that they concealed material facts and made false statements.


Between 2011 and 2013, KVK distributed 383,000 bottles of hydroxyzine, a prescription drug used to treat anxiety, which contained a pharmaceutical ingredient made in an unapproved laboratory ‒ Dr Reddy’s Laboratories (DRL) Mexico ‒ in Mexico, according to the DoJ. The FDA issued an alert for all DRL Mexico ingredient users between July 2011 to July 2012, as the plant was found to violate the agency’s Good Manufacturing Practices.


Due to KVK’s association with DRL Mexico, the federal government charged the company, its de facto owner Murty Vepuri and its quality assurance lead Ashvin Panchal in June 2021 with distributing unapproved drugs and misleading the FDA by concealing information about the drug’s safety and effectiveness.


KVK’s defence argues that KVK obtained the drug from an approved manufacturer with operations in Europe which had contracted with the Mexican lab and that the ingredient “was chemically identical and that there’s no allegation of any kind, that it was different.”


“Fundamentally what the defendants were doing was selling a drug to the American public under circumstances where FDA had not approved the sale of that drug manufactured at that place in that way,” attorney Daniel Tenny stated. “That goes to the core of FDA’s mission — the point is a closed system. The idea is that if you want to market a drug, you have to submit to FDA not only what the drug is, not only the composition, but also where it’s going to be manufactured.”


Vepuri and Panchal could face up to five years in prison and $250,000 fines, while KVK could be fined up to $4 million and face other penalties.


James Spargo

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