Medical Drug Re-Packager And Company’s Senior Executives Indicted On Fraud Charges And Criminal Violations Of The Food, Drug And Cosmetic Act

Earlier today, a 37-count indictment was unsealed in Brooklyn federal court charging Med Prep Consulting, Inc. (“Med Prep”), a Tinton Falls, New Jersey, medical drug re-packager and processer, together with its president and owner Gerald Tighe and pharmacist-in- charge Stephen Kalinoski, with wire fraud and violations of the Federal Food, Drug and Cosmetic Act (“FDCA”) for introducing adulterated and misbranded drugs into interstate commerce 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.1

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Margaret A. Hamburg, M.D., Commissioner of the FDA.

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.

“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 U.S. Attorney Lynch. “Instead of working to extend and enhance human lives, the defendants illegally pursued corporate profits while putting at risk the health and safety of vulnerable patients suffering from disease. This indictment should send a strong message to those who would seek to put their bottom line before the health and safety of the public – those we entrust with preparing the medications that save lives must clean up their acts or face prosecution.” In announcing the indictment today, Ms. Lynch gratefully acknowledged the assistance and cooperation of the FDA’s Office of Criminal Investigations; the United States Department of Health and Human Services, Office of the Inspector General, Office of Investigations; the United States Office of Personnel Management, Office of the Inspector General; the Department of Justice, Civil Division, Consumer Protection Branch and Commercial Litigation Branch; the FDA’s Office of the Chief Counsel; the Office of the Attorney General of New Jersey; and the New Jersey Board of Pharmacy.

“The production of unsafe and contaminated drug products poses a serious threat to the health of the American public and cannot be tolerated,” said FDA Commissioner Hamburg. “We continue to use all our authorities and to work with the Department of Justice and the states to ensure such practices are quickly identified and stopped. Americans deserve nothing less.”

According to the indictment, 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 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.

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.

The government’s case is being prosecuted by Assistant U.S. Attorneys Justin D. Lerer, Ameet B. Kabrawala, and Erin E. Argo.

1 The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The Defendants:

MED PREP CONSULTING, INC.

Tinton Falls, New Jersey

GERALD TIGHE

Age: 57

West Long Branch, New Jersey

STEPHEN KALINOSKI

Age: 51

Middletown, New Jersey