Drug company fined $10 million jTC Bolar pleads guilty to fraud in generics

March 23, 1991|By Sheridan Lyons

Bolar Pharmaceutical Co. Inc. was fined a a record $10 million yesterday after pleading guilty to putting untested generic drugs on the market by falsifying tests, then destroying evidence and lying to the Food and Drug Administration, a federal grand jury and Congress.

The penalty, issued in U.S. District Court, is the largest criminal fine ever imposed in the District of Maryland, said First Assistant U.S. Attorney Gary P. Jordan.

Bolar, of Copiague, N.Y., the largest publicly held generic drug company in the United States, has dismissed officials from the president on down in a broad purge, according to the company's attorney, William C. Hendricks III, and its new executive vice president and general counsel, Jack J. Kornreich.

They pleaded guilty for the corporation to 20 separate charges; the maximum fine of $500,000 was imposed on each count by Judge John R. Hargrove. Bolar also agreed to pay an assessment of $238,847.10 for the cost of investigating them.

The company has also agreed to give up more than 150 of its approved drug applications -- not only those involved in the investigation -- and to begin anew to seek FDA approval.

According to the lengthy statement of facts on the 20 charges, in 1984 Bolar rushed to take advantage of a new, first-filed, first-reviewed drug approval process for as many generic drugs as possible -- submitting fabricated applications to the FDA, then trying to figure out how to make the drug.

The drugs mentioned in the agreed-upon statement of facts yesterday were an antibiotic, an anti-inflammatory and an anti-tension medication, among others, which earned Bolar more than $183 million.

Beginning in November 1984, when 67 applications with falsified data were submitted, Bolar chemists were told to test the brand-name product and make up test results for a non-existent Bolar substitute. In some cases, Bolar put the actual brand-name drug in its own capsules to be tested against the same brand-name drug.

Later, it created false production records to hide that its FDA-approved formula didn't work and that some ingredients were being increased or decreased or adulterated, according to the plea bargain.

When a congressional subcommittee, the FDA and a Baltimore grand jury began investigating, records and drug supplies were destroyed and employees were rehearsed in lying as part of a cover-up that continued through October 1989, when Bolar hired a law firm to conduct an internal investigation and the scheme was uncovered.

Senior management officials at Bolar ordered reports deleted from the computer and destroyed reserve samples that were different in color, shape and composition from the FDA-approved description. In 1989, according to the statement, a senior official put some of these reserve samples into a steam-heated drug mixer -- referred to by Bolar employees as "the lobster pot," because they also cooked crustaceans in it -- melted the drugs into a liquid and dumped it into the local sewer.

"The criminal conduct at Bolar was extreme, continued over a period of years and involved top management," Mr. Jordan told the judge. "It went to the heart of the FDA's regulatory process for generic drugs. . . . Bolar hadn't tested these drugs on human beings."

But the government agreed to the plea bargain, it said, because last year "Bolar came to its senses [and] got rid of the people who had corrupted the company."

So far, five FDA employees, including the former director of the generic drug division, eight drug company executives, four companies and a consultant have been convicted on fraud and corruption charges.

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