Medical company indicted on charges of fraud, criminal violations of Food and Drug Act

February 20, 2015 Brooklyn Daily Eagle

Loretta Lynch, U.S. Attorney for the Eastern District. AP photo

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The federal government, last week, unsealed a 37-count indictment charging Med Prep Consulting Inc. with wire fraud and violations of the Federal Food, Drug and Cosmetic Act (FDCA).

Med Prep, together with its owner and president, Gerald Tighe, and pharmacist-in-charge, Stephen Kalinoski, allegedly introduced adulterated and misbranded drugs into the commerce stream and misbranded drugs with the intent to defraud and mislead the U.S. Food and Drug Administration (FDA) and Med Prep’s customers, who consisted of hospitals and other healthcare providers.

“The production of unsafe and contaminated drug products poses a serious threat to the health of the American public and cannot be tolerated,” FDA Commissioner Hamburg said about the multiple count indictment announced in Brooklyn’s federal court.

According to the indictment, Med Prep processed numerous drugs — including oncology and dialysis drugs, pain medications, anesthesia drugs and operating room drugs — in purportedly sterile conditions. In an effort to gain market share, Med Prep repeatedly misrepresented to its healthcare provider customers that it adhered to, and in some areas exceeded, industry standards and laws applicable to sterile drug preparation. In fact, the defendants produced drugs in a facility that fell far short of basic industry standards of cleanliness, creating a risk to the health of already ill patients, and lied to healthcare providers about their failures to comply with basic sterility practices.

The government states that Med Prep halted its production of drug products in the summer of 2013 following an incident in which it had distributed intravenous drugs containing visible mold to a Connecticut hospital. Soon after mold was discovered, the FDA inspected Med Prep’s facility and documented numerous incidents of microbiological contamination in the company’s finished drug products.

Notably, the investigators found that the same species of mold present in drugs sent to the Connecticut hospital was also present in Med Prep’s warehouse, where an unsterilized cart was regularly wheeled into a purportedly sterile “cleanroom” in which drugs were prepared by Med Prep employees. FDA investigators also found that Med Prep shipped drug products to healthcare providers in some instances that were mislabeled with incorrect drug strengths and in other instances were labeled as the wrong drugs altogether.

Prior to 2013, the FDA had conducted several inspections of Med Prep’s facilities and repeatedly warned the defendants that their practices and the conditions in their facility were unacceptable. Tighe and Kalinoski both allegedly misrepresented to FDA investigators that Med Prep’s complied with industry standards designed to prevent harm to patients that could result from non-sterility, yet they continued to handle sterile drugs in conditions far below any acceptable industry standards.

As early as May 2007, Kalinoski learned that a Med Prep employee responsible for repacking and processing drugs in Med Prep’s “cleanroom” failed to treat an eczema skin condition for approximately five to six months while working in that room.

The defendants, the government notes, never disclosed the employee’s skin condition to the FDA, nor did they take steps to prevent the delivery to, or issue a recall from, healthcare providers of any of the drug products with which the employee had come into contact.

“As detailed in the indictment, Med Prep and its two most senior executives engaged in a disturbing pattern of dangerous practices in order to save money and line their pockets,” said Loretta Lynch., U.S. attorney for the Eastern District.

If convicted, the individual defendants face maximum prison sentences of 20 years on each wire fraud charge, five years on the charge of conspiracy to violate the FDCA, and three years on each charge of violations of the FDCA.