KV Pharmaceutical to Recall Most of its DrugsJan 27, 2009 | Parker Waichman LLP
Amid lawsuits and ongoing recalls, KV Pharmaceutical is recalling most of its drugs, said the St. Louis Business Journal. Yesterday—with the exception of some of the products it distributes, but does not manufacture—KV suspended manufacturing and shipping of all of its products. KV is also conducting a voluntary recall of most of its products, said the St. Louis Business Journal.
KV said it is likely these moves will have a significant and an adverse effect on its financial profile, which might place it an out-of-compliance status with a number of aspects of its credit agreements, said the St. Louis Journal. The moves will also “wipe out” most of KV’s market value, Reuters said. KV’s line of credit totaled around $30 million at year-end, 2008, said the St. Louis Business Journal.
KV is in discussions with the U.S. Food and Drug Administration (FDA)—which has been inspecting the drug maker’s operations and inventories since December 2008—to determine the impact of the recall, said the St. Louis Business Journal. KV is also working with Lachman Consultant Services, Inc., an outside consultant, to and review KV’s manufacturing and packaging processes, reported the St. Louis Business Journal.
Reuters said KV has faced a number of production issues that resulted in oversized tablets, is in the midst of a number of class-action lawsuits that allege KV officers falsified information and exaggerated stock prices, and is also in the midst of an informal enquiry by the U.S. Securities and Exchange Commission (SEC). According to a regulatory filing yesterday, KV fired its senior vice president and general counsel, Gregory Bentley, said Reuters; its board of directors also fired KV chief executive, Marc Hermelin, in early December for cause and amid a probe alleging mismanagement, said the St. Louis Business Journal, which said David Van Vliet has been named interim chief executive.
In December, KV, suspended shipments of all its tablet medications and recalled one lot of Hydromorphone HCl 2 mg tablets because the painkiller’s tablets were oversized, said the St. Louis Business Journal. The medication is a narcotic painkiller used in the treatment of moderate to severe pain. An overdose, which could occur when too much medication is received from an oversized tablet, could result in respiratory problems, coma, bradycardia, hypotension, apnea, circulatory collapse, cardiac arrest, and even death, to name some.
In response to the mounting problems, KV has convened a committee—which has retained its own legal council—to handle the shareholder lawsuits, which allege federal securities law violations; the SEC enquiry; and requests from both the Office of the U.S. Attorney for the Eastern District of Missouri and FDA representatives working with that office, said the St. Louis Business Journal.
Meanwhile, KV’s emerging drug, Gestiva, a medication prescribed to prevent preterm birth in women with a history of such deliveries, will not receive FDA approval until certain criteria are met, said Reuters. The drug was expected to receive approval by late last year; KV had made plans to purchase U.S. and international rights to the drug from Hologic, Inc. for $82 million in cash upon FDA approval, said Reuters, which noted that KV’s stock has been plummeting to historic lows since yesterday.