Quality Failures at Generic Drug Maker Put Patients at Risk, FDA Warns

Manufacturing problems at Akorn Inc.’s New Jersey plant “pose a risk to patients,” U.S. regulators have warned the embattled generic-drug maker, which blew a $4.3 billion takeover deal with Fresenius SE two years ago over similar allegations.

In a warning letter to Akorn Chief Executive Douglas Boothe posted Tuesday, the Food and Drug Administration cited a pattern by the company at its Somerset facility of ignoring quality tests that showed its drugs failed to meet U.S. standards. The letter also said Akorn workers didn’t take proper precautions to ensure a sterile environment while making treatments such as the pain reliever lidocaine.

In January, Akorn was issued a warning letter for manufacturing violations at its Decatur, Illinois, plant.

Akorn didn’t immediately respond to a request for comment for this article. But after receiving the most recent FDA warning letter last month, Boothe said in a statement that the company was working to improve its quality systems and would work with the agency to resolve the issues outlined in the letter.

Akorn shares were down 1.2% to $4.91 at 2:05 p.m. in New York, after falling as much as 2.6%

The infractions cited by the FDA in the latest citation echo claims made by Fresenius when it backed out of its takeover offer. The episode was chronicled as part of a Bloomberg News investigation earlier this year into a widespread problem in the generic-drug industry: companies ignoring routine quality tests that fall short of purity and strength requirements for drugs taken by American patients. Fresenius was allowed to walk away from the deal.

Facing questions about its financial future, Akorn reached a pact with its lenders to give the company time to “make progress on operational initiatives and deliver improved results,” Chief Financial Officer Duane Portwood said on a May earnings call.

During the trial over Fresenius’s efforts to pull out of the deal, Akorn had denied that it had major systemic problems. The German company alleged that Akorn’s computer security was so lax that any employee or vendor could review or change the firm’s drug-testing data.

Fresenius spokesman Matthias Link declined to comment.

According to the warning letter, FDA investigators found executives at the New Jersey plant “failed to exercise appropriate controls over computer or related systems” and that Akorn chemists could copy, rename or delete any files they chose, raising questions about the “assurance of quality” of its products.

FDA inspectors also found Akorn workers in the plant were testing drugs as they moved through the manufacturing process to determine whether they met quality standards without recording the results in official records.

Pharmaceutical companies aren’t supposed to run such trial tests because they often are ignored, particularly if the results are failing.

The FDA raised concerns regarding trial testing at Akorn at least as far back as 2015. The company did attempt to look into some failing results, according to the FDA, but the agency found Akorn would leave the investigations open for months.

For example, Akorn’s eye solution failed impurity testing in January 2017. Yet 19 months later, when the agency inspected the facility in July and August of 2018, the company cited multiple potential reasons for the failure and the investigation remained open, posing a potential danger to patients, according to the warning letter.

Akorn recalled all batches of the eye solution after the 2018 inspection.

The company responded to the FDA’s findings multiple times before the warning was sent, but the agency found the responses inadequate, according to the letter. Akorn has hired a consultant to help it meet FDA’s requirements.

–With assistance from Tim Loh.