FORT MILL -- Federal investigators believe Leiner Health Products falsified and manipulated test results at its Fort Mill drug manufacturing facility, according to an affidavit filed Friday with the U.S. District Court in Columbia.
The federal Food and Drug Administration also says the company should have immediately recalled several drugs during the past two years after the company's testing raised doubts about the drugs' expiration dates, according to the affidavit, signed by an FDA special agent.
The FDA is investigating whether the Carson, Calif.-based drug and vitamin company committed criminal violations of the Food, Drug and Cosmetic Act, the affidavit states. Leiner supplies over-the-counter, store-brand drugs and vitamins to national retailers, including Wal-Mart, Target, CVS, Walgreens and Costco.
Federal law- requires drug companies to test sample lots of its products for quality and shelf-life, the affidavit states. But records gathered by the FDA show that several tests conducted by the company since Aug. 3, 2005, revealed several drugs did not meet standards.
Investigators believe Leiner manipulated some tests, according to the affidavit. The 29-page affidavit states such violations can compromise the safety and effectiveness of the drugs.
The affidavit and a search warrant for the facility in Lakemont Business Park off Carowinds Boulevard state U.S. Food and Drug Administration officials searched the site Sept. 5 and seized multiple documents, computer records and other evidence related to Leiner's testing of its over-the-counter products since Jan. 1, 2004.
Leiner executives could not be reached for comment Friday or Saturday.
The FDA investigation began in January after an employee notified federal officials of alleged violations. Following the initial complaint, 10 more complaints were received from several more employees, sparking a wide FDA probe at the plant, the affidavit states. The inspections revealed "serious widespread violations within the laboratory and manufacturing divisions at the facility," substantiating most employee allegations, the affidavit states.
The most serious violations include:
• manipulating and falsifying purity test results
• not obtaining data to support expiration dates
• not obtaining data supporting the quality and safety of the products
• not recalling drugs already on store shelves; and
• failing to document out-of-specification test results.
One employee told the FDA that Fort Mill Laboratory Quality Control Director Ramon Montes de Oca instructed laboratory personnel to "manipulate or falsify" lab test data that showed an allergy drug did not meet company standards for shelf life.
Montes de Oca denied instructing analysts to obscure impurities when he met with investigators, the affidavit states. He could not be reached for comment.
One lab analyst told investigators she was instructed by other analysts to ignore impurities and change test parameters to "see what they wanted to see," the affidavit states. Another analyst told investigators that it was "just common knowledge" that impurities could be ignored, according to the affidavit.
The affidavit listed the results of 38 failed tests between August 2005 and Jan. 1, 2007. Of those, the FDA considered more than half to be "grossly" out of specifications, the affidavit states. Among the drugs listed were an anti-inflammatory, a laxative and an antihistamine.
The affidavit also says that employees accused Leiner's upper management of directing lab managers and analysts to change data to obtain desired results. Leiner's upper management also was accused of pressuring managers and analysts to "use any means necessary to get the product released quickly," according to the affidavit. Complaints further alleged that upper management received cash bonuses for achieving product release quotas, the affidavit states.
During a conference call with reporters and investors last week, Leiner Chief Executive Officer Bob Kaminski said the FDA investigation is a result of Fort Mill employees acting apart from company standards. He said the responsible parties have been identified and "relieved of their duties." Kaminski did not name the individuals or entertain any questions.
Attempts to contact Kaminski Friday and Saturday were unsuccessful.
After the FDA began its investigation earlier this year, Leiner management agreed to a voluntary recall of all affected products at the distribution level but not from stores because of their "inability to trace the product at that level," the affidavit states. Leiner officials also agreed to halt production of all over-the-counter drugs, hire a third party to retest samples and temporarily suspend Montes de Oca.
In June, the company announced it would lay off more than 500 workers from the Fort Mill facility and stop manufacturing and packaging over-the-counter drugs, vitamins and supplements at the plant. It will remain a distribution center.
Prior to the FDA investigation, Leiner was twice alerted to potential problems, according to the affidavit.
In December 2006, an employee told company officials about a problem with an allergy drug, according to the affidavit.
Jeff Lukens, senior director of quality assurance and control at the Fort Mill site, told investigators the complaint was handled by the human resources department because the company believed the complaint may have been filed by a disgruntled employee who was denied a promotion, the affidavit states.
The affidavit states Lukens met with Montes de Oca regarding the complaint and "felt the product in question was OK." Lukens also told FDA officials no further laboratory investigation into the failed test results was conducted, the affidavit states.
When contacted by The Herald on Saturday, Lukens declined to comment and referred all questions to Leiner's corporate office.
The affidavit also reveals a 2006 audit conducted by Phizer Inc. uncovered issues with the company's testing process.
Montes de Oca told investigators that the audit by Phizer, a Leiner customer who purchased an over-the-counter allergy drug, revealed the product failed to meet specifications for impurities and expiration date, the affidavit states. Montes de Oca told investigators Phizer canceled its contract with Leiner after learning about the audit findings, the affidavit states.
After learning of the audit, Montes de Oca told investigators he reviewed test data and determined they did not meet specifications, the affidavit states. Montes de Oca told investigators he sent his findings to company executives, the affidavit states.
When FDA officials asked Senior Vice President Nanette Monreal about the audit, she said she read Montes de Oca's findings, but the products were allowed to remain on the market because the company believed the drugs' tentative expiration dates were supported by data.
Monreal also told investigators there was no additional follow-up investigation of the Phizer audit because Phizer canceled its contract, the affidavit states.
When asked on Jan. 30 by federal investigators why the product was allowed to remain on the market despite the Pfizer audit and Montes de Oca's findings, Leiner Chief Science Officer Patrick Dunn said he did not know, according to the affidavit. Later that day, Dunn told the FDA that Leiner would recall the allergy drug, according to the affidavit.
FDA investigators also suspect Leiner made false representations to Pfizer and other retail clients by indicating that Leiner's over-the-counter products were made according to FDA regulations and the terms of their contracts, the affidavit states.
Previous FDA inspections show Leiner's facilities in Fort Mill, Wilson, N.C., and Carson, Calif., have a history of failure to comply with good manufacturing practices, the affidavit states. A 2001 inspection at Fort Mill revealed "multiple significant good manufacturing practices violations, which included failure to conduct adequate stability testing for five OTC drugs," the affidavit states.
Leiner officials have made several changes since the FDA investigation began. Last week, Kaminski, the CEO, said Leiner has hired a new vice president for quality control. He also said Leiner is working with a consultant to meet FDA standards, and the company received "generally positive feedback" from the FDA. He said the company has hired a leading law firm with FDA experience to help navigate the FDA investigation.
Leiner's most recent earnings reports showed a 34 percent drop in U.S. over-the-counter sales following the spring recalls. The company recorded $27.5 million in net losses last quarter, according to earnings reports.
FDA and U.S. Department of Justice officials have repeatedly declined to comment on the Leiner investigation. Officials from both offices said it's against policy to comment on active investigations.