Baltimore-based PharmaKinetics Laboratories Inc. has agreed to plead guilty to a criminal charge and pay a $200,000 fine for obstructing a federal generic drug investigation.
V. Brewster Jones, the company's president and chief executive, announced the plea bargain and expected fine late yesterday, shortly after federal prosecutors filed criminal information documents against the company and its former executive vice president, Mark B. Perkal, in U.S. District Court here.
Prosecutors charged both defendants with obstructing a U.S. Food and Drug Administration investigation last year by aiding a product-switching scheme perpetrated by Bolar Pharmaceutical Co. Inc. in FDA-required bioequivalency tests on a generic hypertension drug.
Perkal, who resigned from PharmaKinetics last fall, also is ex
pected to plead guilty to one obstruction charge. He faces maximum penalties of five years in prison and a $250,000 fine.
U.S. Attorney Richard D. Bennett said the company and Perkal have cooperated with the government in its continuing generic drug investigation. No other PharmaKinetics employees have been implicated in criminal misconduct, he said.
Jones said PharmaKinetics agreed to pay the fine in five installments of $40,000 each, plus about 6.5 percent interest, over five years beginning in June 1992.
He said settlement of the criminal case will allow PharmaKinetics to file its reorganization plan in U.S. Bankruptcy Court within a few months.
The company filed for Chapter 11 protection last November, at least in part due to a loss of business from Bolar as a result of the generic drug investigation. Bolar business accounted for 34 percent of Pharma Kinetics' revenues in the year that ended June 30, 1990, said Taryn L. Kunkel, PharmaKinetics' chief financial officer.
Court documents accuse Bolar of substituting Dyazide, a name-brand hypertension drug, for its own generic substitute, Triamterene/Hydrochlorothiazide, in FDA-required bioequivalency tests conducted by PharmaKinetics in 1987.
The product-switching was done to ensure FDA approval for Bolar to sell Triamterene capsules, which generated $140 million in sales for that firm over the next three years.
Bolar officials told Perkal of the substitution last June, after the drug maker became target of an investigation.
Perkal allegedly allowed the Bolar officials to replace the Dyazide capsules with their own Triamterene in "retained samples" before FDA investigators came to the Baltimore lab to collect the samples. The FDA required PharmaKinetics to keep the samples to support the original test results that led to the FDA's marketing approval of Triamterene.
Perkal, who served as Pharma Kinetics' chief scientific officer, did not report Bolar's drug-switching scheme to FDA investigators who were investigating corruption in the industry, the documents said.
First Assistant U.S. Attorney Gary P. Jordan, who has guided a 2 1/2 -year investigation of the generic drug industry, said there was "no evidence at the time PharmaKinetics performed the tests [in 1987] that they knew they were doing it with disguised drugs."
"PharmaKinetics had been duped, and didn't learn of it until June 1989," Jordan said.
But he said Perkal's alleged misconduct at that point led to the criminal charges filed yesterday.
Bolar and three of its former officers already have pleaded guilty to criminal charges for orchestrating the product-switching scheme. Bolar agreed to pay a $10 million fine and withdraw is FDA approvals of more than 150 generic drugs.
The latest cases bring to 23 the number of defendants charged in the generic drug investigation. All but four of those defendants have been convicted so far.