Judge Orders South Carolina Drug Manufacturer to Pay $10M

July 10, 2008

A federal judge ordered a drug manufacturer that operated a plant in South Carolina to pay $10 million in connection with fraud.

U.S. District Judge Joseph F. Anderson Jr. fined Leiner Health Products LLC $1 million and ordered the company to forfeit an additional $9 million in profits for falsifying information on expiration dates for its medications, U.S. Attorney Walt Wilkins said.

The now-bankrupt Leiner, based in Carson, Calif., is one of a few major companies that produce off-brand over-the-counter medications like pain relievers, antacids and decongestants for retail giants such as Wal-Mart and Target. Wilkins said the government found no evidence the drugs were unsafe.

The Food and Drug Administration suspended drug-making operations at Leiner’s manufacturing facility in Fort Mill last year after inspectors said the plant was not complying with policies. Samples taken from seven different product lines showed more than 1,200 batches of drugs sent by Leiner to retailers and pharmacies did not meet shelf-life, Wilkins said.

The investigation, which was prompted by a tip from an employee, led to product recalls and the company temporarily stopped making and distributing its generic over-the-counter medications — about 25 percent of its total business. In June, the manufacturer pleaded guilty to mail fraud, a charge prosecutors linked to sending falsified data about its product stability and shelf-life to the FDA.

Leiner filed for Chapter 11 bankruptcy protection in March. Last month, nutritional supplement maker and retailer NBTY Inc. bought Leiner for about $371 million at an auction. NBTY has said it expects the deal to close by September.

An attorney for Leiner did not immediately return a message seeking comment.

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