Drug company fined $1 million in fraud case

October 19, 1990|By M. Dion Thompson

A generic drug company was fined $1 million yesterday in U.S. District Court in Baltimore after pleading guilty to making unlawful payments to federal Food and Drug Administration inspectors, making false statements to those inspectors and obstructing a 1988 inspection of the company by the FDA.

American Therapeutics Inc. of Bohemia, N.Y., also agreed to assist federal prosecutors in a continuing investigation of possible misconduct by the company's former employees.

Raju Vegesna, American Therapeutics' one-time chief executive officer, already has been sentenced to two years in prison and fined $50,000 for making unlawful payments to four former employees of the FDA's Generic Drug Division.

Those payments included cash, international travel, home furnishings and personal computer equipment.

According to a statement of facts presented at yesterday's sentencing hearing, American Therapeutics at the direction of Vegesna engaged in a series of acts to defraud the FDA by falsifying company research and development records and by switching the production lot of a drug FDA inspectors were to examine because of consumer complaints.

U.S. Attorney Breckinridge L. Willcox said American Therapeutics' case "reveals a depressing and sinister picture of the generic drug industry. Unfortunately, the picture will get even darker."

Mr. Willcox also said that as bad as American Therapeutics' acts were, such actions were not uncommon in the generic drug industry and were somewhat benign when compared with the actions of some of the company's competitors.

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