HALSEY DRUG FORMER PRESIDENT MARCUS AND FOUR OTHER FORMER EXECS INDICTED

HALSEY DRUG FORMER PRESIDENT MARCUS AND FOUR OTHER FORMER EXECS INDICTED July 12 by a federal grand jury in Baltimore, charged with conspiracy to obstruct the regulatory function of FDA. The six-count indictment charges that the defendants changed ingredients and manufacturing processes on generic drug products without obtaining required FDA approvals, kept alternate formulas for different drug products on "phony cards" that were hidden from FDA inspectors, and did not document the unapproved ingredients and processes on batch records maintained for FDA inspection. Named in the indictment along with former Halsey President and CEO Jay Marcus are former VP-Manufacturing Hedviga Herman, former Senior VP-Technical and Regulatory Affairs Fredrick Shainfeld, former VP-Technical Services Amirul Islam, and former Assistant VP-R&D Muhammad Uddin. The defendants are variously charged with shipping adulterated and unapproved new drug products in interstate commerce, false statements to the FDA and obstruction of an FDA inspection. The case derived from joint work by the FBI, which conducted an undercomver investigation, and the FDA Special Prosecution Staff in Baltimore. Among the drugs allegedly manufactured by alternate, "phony card" formulas were quinidine gluconate, propylthiouracil, metronidazole, and acetaminophen and codeine phosphate, according to a statement issued by the Maryland U.S. Attorney's Office. The products were recalled by Halsey in March and April for use of unapproved ingredients. The indictment also charges that when Halsey products failed quality control testing, the company retested the products until it obtained a passing result, or reworked batches without obtaining required FDA approvals. The indictment lists reworked batches of quinine sulfate capsules and hydralazine hydrochloride. Marcus resigned as a company officer and director in June as part of Halsey's plea agreement with the Maryland U.S. Attorney's office ("The Pink Sheet" June 28, T&G-9). The generic firm pled guilty to five criminal counts of adulterating quinidine gluconate batches and agreed to pay a $2.5 mil. fine over five years. The plea was entered in Baltimore federal court July 16. Marcus, who had served as Halsey president since 1985, is one of several family members involved with the publicly traded company. His father, Halsey Chairman Alexander Marcus, and his uncle, Vice Chairman Seymour Marcus, are not currently active at the firm. Halsey also has faced civil action as a result of compliance problems at its Brooklyn manufacturing plant. The company entered into a consent decree with the U.S. Attorney's office in Brooklyn June 29, under which it suspended shipment of non-liquid drugs from its Brooklyn plant and agreed to bring the plant into compliance with current Good Manufacturing Practices ("The Pink Sheet" July 5, T&G-11). FDA 483 inspection reports for inspections conducted at the Brooklyn facility from Oct. 9, 1992 to Feb. 1, 1993 and from March 16 to May 11, 1993 cite problems with unapproved reprocessing, quality assurance procedures, raw material reconciliation, SOP availability, validation procedures for batches, cleaning, granulation, drying ovens, moisture and encapsulation, master and batch production records, equipment and laboratory procedures. During the first inspection, investigators reported observing workers who were engaged in the compression of lots of digoxin, ibuprofen, and oxycodone HCl and acetaminophen into tablets collecting excess powder from the tableting machine and placing it on top of the bulk granulation drum. The material was then returned to the granulation drum and back into the hopper at the top of the tableting machine. The investigators also noted rodent activity in the capsule department, coating department, capsule storage area and garbage room. Halsey responded to the inspection observations in letters dated Feb. 12 and May 26, explaining how the problems referred to in the inspection reports had been or were in the process of being addressed. Further actions under consideration were reported to the FDA district office at a meeting held May 27. Under the June 29 consent decree, Halsey agreed to bring the plant into compliance with cGMPs, with specific reference to those regarding SOPs, a cGMP training program, investigation of product failure and product validation.