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Press Release

Somerset Oncology Practice And Office Manager Plead Guilty To Food, Drug And Cosmetic Act Offenses Related To Misbranded Cancer Treatment Drug

For Immediate Release
U.S. Attorney's Office, Eastern District of Kentucky

LEXINGTON, KY - Hematology and Oncology Center PLLC (HOC) in Somerset, Ky., pled guilty in federal court on Tuesday to charges of knowingly receiving a misbranded cancer treatment drug.

HOC’s former office manager, Natarajan Murugesan, also pled guilty; he admitted to aiding and abetting in the introduction of an unapproved oncology drug into interstate commerce. HOC and Murugesan’s offenses qualify as misdemeanors under the Food, Drug, and Cosmetic Act. The criminal charges stem from a 2014 civil settlement in which HOC, Murugesan, and Dr. N Mullai agreed to pay $2 million, plus interest, to resolve allegations that they violated the False Claims Act by submitting false claims to the Medicare program for misbranded and unapproved chemotherapy drugs that were administered through HOC’s Somerset clinic.

“The Food, Drug and Cosmetic Act establishes a ‘closed’ system of drug manufacturing and distribution to protect the safety of drugs used in the United States,” said U.S. Attorney Kerry Harvey. “Efforts to bypass this system with non-FDA approved foreign source drugs put patients at risk of receiving counterfeit, contaminated, or ineffective medications. The government will continue to prosecute such efforts – particularly when motivated by profit – to minimize the chances of patients receiving unsafe medications, and to ensure that the Medicare program does not pay for unapproved drugs.”

The defendants admitted that, between January 2010 and July 2011, HOC purchased substantial amounts of chemotherapy drugs and other cancer treatment drugs from a foreign distributor in Canada, which was operating under the name Quality Specialty Products (“QSP”). These drugs were sourced from foreign locations including: Turkey, India, the European Union, the United Kingdom, or other unidentified international locations. Often, the drugs arrived at HOC with labeling and dosage instructions in foreign languages. Some of the QSP drugs were distributed with labeling that wasn’t approved by the United States Food and Drug Administration (FDA), and therefore were misbranded. Also, many of these QSP drugs were not the version of the international oncology drug approved by the FDA for distribution within the United States.

Murugesan was responsible for ordering the drugs from QSP. He and HOC purchased the foreign QSP drugs for prices substantially below what drugs from FDA-approved manufacturers and distributors cost. Mullai administered the QSP drugs to her patients, and HOC submitted claims for reimbursement to Medicare, which typically does not cover misbranded or unapproved drugs by the FDA.

The parallel civil and criminal investigation was conducted by the FDA, Office of Criminal Investigation (FDA-OCI), and the plea agreements and settlement resulted from joint efforts of FDA-OCI, the Department of Health and Human Services, Office of Inspector General (HHS-OIG), and the U.S. Attorney’s Office.

HOC and Murugesan are scheduled to be sentenced on October 3, 2014. HOC faces up to five years of probation and a maximum fine of $200,000. Murugesan faces up to one year in prison and a maximum fine of $100,000. However, any sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and other federal statutes.

Updated November 25, 2015