Drug Maker Indicted On Fraud Against FDA
Generic drug manufacturer KVK-Tech (Newtown, PA) and executives Murty Vepuri (defacto owner) and Ashvin Panchal (head of quality assurance) have been indicted on charges of defrauding FDA based on their alleged distribution of unapproved drugs as well as alleged efforts to mislead the agency and conceal information which could impact drug safety and effectiveness. The company was also charged with one count of mail fraud arising from the alleged sale of unapproved drugs to customers who believed the drugs were FDA approved, according to a Justice Department release.
The indictment alleges Vepuri directed KVK-Tech’s day-to-day operations and made decisions related to drug regulatory requirements, drug composition, drug manufacturing quality, purity, and potency. “However, Vepuri — who previously owned a generic drug manufacturer in New Jersey that was subject to a restraining order due to ongoing FDA violations — is charged with hiding his involvement in KVK-Tech by placing its ownership in private trusts for the benefit of his children,” the government contends. “Vepuri then allegedly represented to the FDA that he was merely an advisor or consultant to KVK-Tech, when in reality he exercised unchecked authority over the company.”
According to the government, Vepuri and Panchal also provided false explanations to FDA when inspectors identified violations. “Often, Vepuri and Panchal attributed regulatory failures to a mistake or misunderstanding, and KVK-Tech would falsely assure the FDA that violations had been addressed when they knew no corrective and preventative actions had been taken,” it says.
Under the unapproved drug scheme, KVK-Tech manufactured hydroxyzine, a prescription drug for treating anxiety. Vepuri allegedly purchased an active pharmaceutical ingredient made in Mexico by Dr. Reddy’s Laboratories that was not an FDA-approved source, the indictment says, adding that the defendants also knew the API was considered adulterated by FDA due to significant GMP violations at the Mexico plant.
If convicted, Vepuri and Panchal each face a maximum possible sentences of five years in prison, three years of supervised release, a $250,000 fine and other financial penalties including forfeiture, the government says. KVK-Tech faces fines up to $4 million and other financial penalties such as forfeiture and probation. They also face mandatory exclusion from participating in federal programs.