2 Leiner executives leave company

By Adam O'Daniel - Adam O'Daniel

Leiner Health Products, the over-the-counter generic drug and vitamin maker whose Fort Mill plant has been at the center of a yearlong federal investigation, has lost two of its top executives, according to a document filed with the U.S. Securities and Exchange Commission this week.

CEO Bob Kaminski stepped down, and CFO Kevin McDonnell was terminated as the Carson, Calif.-based company continues to consolidate after a tumultuous 2007.

Company officials could not be reached for comment Friday.

Controversy has swirled around Leiner and its products since January 2007, when an employee inside the company's Fort Mill plant reported violations of good manufacturing practices to the U.S. Food and Drug Administration, including allegations that the company manipulated quality tests and falsified records about product impurity results, according to an affidavit filed in U.S. District Court.

An FDA investigation at the plant off Carowinds Boulevard followed, and a list of violations were found, including allowing drugs that failed quality tests to remain in the market, failing to adequately train staff, not cleaning equipment to standards and not identifying black specks found in some pills, according to an FDA report obtained by The Herald.

Common painkillers (ibuprofen and acetaminophen) and allergy medication (loratadine) were among the drugs listed in the report. Leiner supplies a variety of generic medicines and vitamins to stores including Wal-Mart, Costco and CVS.

After the FDA probe, Leiner shut down all over-the-counter drug manufacturing and distribution last year. In April, it recalled all of its over-the-counter products from store shelves and in June laid off 600 Fort Mill workers, changing the Fort Mill production facility into a distribution center.

The Fort Mill site was one of York County's largest employers before the layoffs. It now employs a small staff for distribution.

Trouble continued last fall when the company confirmed it was being investigated by the U.S. Department of Justice related to the FDA issues in Fort Mill. And in early January, Leiner closed its only other over-the-counter drug plant in Wilson, N.C., and outsourced all remaining orders for over-the-counter drugs, according to SEC filings.

Leiner officials have repeatedly declined to comment on the FDA and DOJ investigations. Federal officials also declined to comment.

The company has said its exit from the over-the-counter manufacturing business, about 30 percent of its overall income, has allowed it to concentrate on its vitamin line, which has not been named in any of the FDA reports.

In November, Leiner said it had lost more than $53 million since the recalls, and sales had dropped $72.4 million from the previous year.

This week's executive shakeup was part of the overall consolidation efforts, Leiner said.

Kaminski, the former CEO, stepped down from his position last week, according to a securities filing, and has been replaced by company president Robert Reynolds, who will take the CEO title.

Kaminski will remain on Leiner's board of directors and serve as a consultant to the company. He will receive a compensation package worth more than $650,000, according to the filing.

McDonnell, the former chief financial officer, was terminated without cause effective Friday, the filing states. He will receive a severance package worth about $300,000.

McDonnell will be replaced by Heidi Crane, formerly the company's senior vice president for finance.