FEDS: Former CEO of Pharmakon Pharmacueticals Sentenced to 33 Months in Prison for Defrauding FDA, “Knowingly Endangering Patients”

Paul J. Elmer, 68, former president and owner of Pharmakon Pharmacueticals Inc., was sentenced to 33 months in prison. Elmer also was ordered to pay a $25,000 fine and serve one year of supervised release after serving his prison sentence.

INDIANA – The former president of a drug compounding company was sentenced to prison for his convictions for conspiring to defraud the Food and Drug Administration (FDA) and for multiple counts of distributing adulterated drugs, the Department of Justice announced.

U.S. District Judge James R. Sweeney II sentenced Paul J. Elmer, 68, the former president and owner of Pharmakon Pharmacueticals Inc. to 33 months in prison. Elmer also was ordered to pay a $25,000 fine and serve one year of supervised release after serving his prison sentence.

“The Department of Justice takes seriously conduct that unlawfully undermines the safety of compounded drugs,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “We will not tolerate actions that impede the FDA’s efforts to ensure the safety of such drugs, and we will thoroughly investigate and prosecute those who knowingly endanger patients.”

Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division

On April 10, 2019, after an eight-day trial, a jury in Indianapolis, Indiana, convicted Elmer, formerly a licensed pharmacist, of one felony count of conspiracy to defraud the FDA and to obstruct FDA inspections, three misdemeanor counts of introducing adulterated drugs into interstate commerce, and six misdemeanor counts of adulterating drugs while held for sale after shipment of a drug component in interstate commerce.

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Pharmakon was a Noblesville, Indiana, drug compounding company, founded by Elmer, which made and distributed compounded, sterile, intravenous drugs to military and civilian hospitals throughout the United States.

In June 2017, a grand jury returned an indictment against Elmer and Pharmakon’s former compliance director, Caprice R. Bearden, for the conspiracy and adulteration offenses. On April 29, 2019, Bearden was sentenced to five months in prison and three years of supervised release, following her entry of a guilty plea to all charges.

The evidence at trial showed that, between 2013 and 2016, at Elmer’s direction, Pharmakon routinely shipped compounded drugs to hospitals without having received laboratory test results that verified that the drugs were their purported strengths.  Furthermore, evidence shows that, despite later receiving laboratory test results showing potency failures, Elmer did not recall over- or under-potent drugs, notify the FDA of the potency failures, or conduct any investigation to determine the cause of the potency failures.  The evidence showed that Pharmakon shipped customers at least 70 lots of over- or under-potent drugs from 2013 to 2016.

FDA consumer safety officers testified at trial about two inspections of Pharmakon they conducted in 2014.  One inspection was prompted by Pharmakon’s distribution of 200 percent potent midazolam, a sedative that was used to treat premature infants, to an Indianapolis hospital.  The consumer safety officers testified to observing — and informing Elmer of — numerous violations of FDA regulations during each inspection.  Former Pharmakon employees testified that Elmer and Bearden misled and interfered with these FDA inspections to prevent the FDA from knowing about the potency failures as well as other aspects of the business.  Former employees also testified that certain changes in process that Elmer and Bearden told the FDA Pharmakon would enact never happened.

According to other evidence at the trial, in February 2016, Pharmakon distributed 2,460 percent super-potent morphine sulfate, an opioid pain medication, to hospitals in Indianapolis and Chicago.  Nurses at the Indianapolis hospital administered the morphine, not knowing that it was 2,460 percent super potent, to infants in the pediatric unit.  Three infants suffered adverse effects from the narcotic overdose.  One infant needed to be revived through the administration of Naloxone (commonly known as Narcan) and sent by helicopter to a nearby hospital with a neo-natal intensive care unit.  These adverse events led to a final FDA inspection in which FDA consumer safety officers testified that they discovered evidence of multiple previous potency failures that had been concealed by Bearden during the first two inspections.  Former employees testified that Elmer and Bearden misled and interfered with this final FDA inspection as well.

“Pharmaceutical manufacturers, such as Pharmakon, have a duty to ensure they are producing drugs that are formulated correctly and are safe for public consumption,” said U.S. Attorney Josh Minkler for the Southern District of Indiana.  “The U.S. Attorney’s Office is committed to prosecuting those individuals who prioritize profit over safety and negligently compromise the integrity of their product.”

U.S. Attorney Josh Minkler for the Southern District of Indiana

“Producing unsafe drugs puts patients at risk and is particularly concerning when they reach already vulnerable populations such as premature infants.  This conviction demonstrates that those, including drug compounders, who distribute harmful drugs will be held accountable under the law,” said Director Catherine A. Hermsen, FDA Office of Criminal Investigations.  “The FDA continues to play an important role in protecting patients — including young children — and we will continue to work with our law enforcement partners to pursue and bring to justice those who place profits before the health of U.S. patients.”

Director Catherine A. Hermsen, FDA Office of Criminal Investigations

“When drug compounders disregard safety standards and violate the law, patient health can be put at significant risk. In this case, we saw unacceptable behavior from the defendant whose company distributed dangerous products that led to serious adverse events in infants,” said Stacy Amin, FDA Chief Counsel. “The FDA is fully committed to working with the Department of Justice to stop these bad actors and protect patients from potential public health risks.”

Stacy Amin, FDA Chief Counsel

Assistant Attorney General Jody Hunt and U.S. Attorney Josh Minkler commended the FDA’s Office of Criminal Investigations, which conducted the investigation.  The case was prosecuted by Assistant U.S. Attorney Cindy J. Cho of the U.S. Attorney’s Office for the Southern District of Indiana and Senior Litigation Counsel David A. Frank of the Department’s Consumer Protection Branch, with assistance from Paul Joseph of the FDA’s Office of Chief Counsel.

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.  For more information about the U.S. Attorney’s Office for the Southern District of Indiana visit its website at https://www.justice.gov/usao-sdin.

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