Former Pharmakon owner arrested for distribution of over- and under-potent drugs, obstruction

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By Sadie Hunter

Elmer

The former president and owner of former Noblesville business Pharmakon Pharmaceuticals, Paul J. Elmer, has been arrested and charged in connection with his distribution of over-and under-potent drugs, as well as “defrauding the U.S. government by interfering with and obstructing the lawful functions of the Food and Drug Administration,” according to a press release from U.S. Attorney Josh J. Minkler.

Elmer, 64, Fishers, was charged in a 10-count indictment, which included one count of conspiracy to defraud the U.S. government, three counts of distributing an adulterated drug in interstate commerce, and six counts of adulterating drugs while held for sale after shipment of a drug component in interstate commerce.

Caprice R. Bearden, 62, Carmel, Pharmakon Pharmaceuticals’ director of compliance, was also charged with the same crimes.

Elmer was arrested June 21 and had his initial court appearance in U.S. District Court in the Southern District of Indiana, where he pleaded not guilty. Bearden was issued a summons to appear before the court. Trial has been scheduled for 9 a.m. Aug. 21.

“These defendants put greed and the reputation of their company ahead of the health and safety of our most innocent victims,” Minkler stated. “Their actions put lives in danger and they will be held accountable.”

“The distribution of over- and under-potent drug products poses a serious risk of harm to patients,” Acting Assistant Attorney General Chad A. Readler of the Justice Dept.’s Civil Division stated. “FDA’s efforts to ensure the safety of compounded drugs is critically important. Impeding FDA’s ability to do its job and uncover these types of safety concerns will not be tolerated. The Justice Department is committed to working with FDA to protect patients and ensure compounded drugs are safe.”

Pharmakon Pharmaceuticals, a drug compounding company, operated at a new location in Noblesville from January 2016 through the end of September 2016, when it was announced immediate mass layoffs. At the time, Elmer said a majority of the layoffs were the result of unexpectedly losing a “major client.” Approximately 200 employees lost their jobs upon the company’s closing.

The indictment alleges that from July 2013 through mid-February 2016, Bearden received approximately 70 potency test failure notices from companies used by Pharmakon to test for potency, indicating that drugs such as morphine sulfate and fentanyl were either under- or over-potent. According to the indictment, Bearden discussed the out-of-specification test results with Elmer, a licensed pharmacist, and until Pharmakon compounded over-potent morphine sulfate in February 2016, Elmer determined that Pharmakon should not contact any individuals or entities – including hospitals – who received the drugs, nor conduct any product recalls before FDA intervention.

On several occasions, according to the indictment, infants were injected with drugs compounded by Pharmakon that were significantly over-potent. For example, the indictment alleges that in early February 2016, Pharmakon distributed over-potent morphine sulfate, an opioid typically used for relief of moderate to severe acute and chronic pain, to a hospital in Indiana and a hospital in Illinois. As alleged in the indictment, three infants at the hospital in Indiana received the morphine sulfate, which was nearly 25 times the strength indicated on its label, and one infant was taken by emergency helicopter to a nearby children’s hospital.

Further, as alleged in the indictment, during FDA inspections of Pharmakon in 2014 and 2016, Bearden lied about Pharmakon’s never having received any out-of-specification drug potency test results. According to the indictment, Elmer learned of Bearden’s lies during or shortly after the FDA’s inspections and took no action to correct her and to inform the FDA of the extent of Pharmakon’s drug potency failures. The indictment alleges further that Elmer and Bearden conspired to defraud the United States by interfering with and obstructing the lawful functions of the FDA and obstructing, influencing and impeding FDA inspections. In addition, during the 2016 inspection, Elmer directed at least one Pharmakon employee to backdate batch records of compounded drugs.

During two inspections of Pharmakon in 2014, the FDA observed conditions that did not comply with its regulations. Elmer and Bearden allegedly failed to investigate the root causes of the drug potency failures and otherwise failed to make changes in Pharmakon’s compounding operations to reduce the incidence of these failures. Instead, under the direction and supervision of Elmer and Bearden, Pharmakon continued to distribute under- and over-potent drugs, shipping these drugs before receiving the potency test results.

The conspiracy charge carries a statutory maximum sentence of five years in prison and a fine of $250,000, or twice the gross gain or gross loss from the offense. The charges of distributing an adulterated drug in interstate commerce and adulterating drugs while held for sale after shipment of a drug component in interstate commerce each carry a statutory maximum punishment of one year in prison and a fine of $100,000, or twice the gross gain or gross loss from the offense.


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