Lehigh Valley pharmaceutical company pays $4M settlement in FDA case

Listen to this article

The settlement covered allegations that Lehigh Valley Technologies devised a scheme to avoid paying new drug application fees to the U.S. Food and Drug Administration.

The FDA approves all new drugs and normally charges a fee for applications from pharmaceutical companies.

However, the FDA will waive the fee for small-business applicants submitting their first applications. The reason is to “level the playing field” for smaller businesses competing against larger drug companies, the attorney’s office explained in a release.

LVT had received a fee waiver in 2010 on its application for Oxycodone Hydrochloride, making the company ineligible for another waiver when it made two new-drug applications relating to potassium chloride for oral solution.

The Attorney’s Office said that if LVT had submitted the applications in its own name, the FDA would have assessed fees totaling over $2 million, but instead the company allegedly developed a scheme with two other companies in which LVT paid them to submit applications under their names to avoid the fees.

The FDA approved the applications with the fees waived without knowing about the companies’ arrangements.

“As alleged, the sole purpose of the arrangement was for those companies to serve as a front and allow LVT to avoid the FDA fees that the FDA otherwise would have required it to pay,” said U.S. Attorney William M. McSwain. “The arrangement was illegal. Like we did today, we will hold companies accountable that scheme to avoid the fees that enable the FDA to carry out its vitally important drug approval process.”

A spokesperson for Lehigh Valley Technologies issued the following statement on the settlement:

“As set forth in the settlement agreement, acknowledged and executed by the government, Lehigh Valley Technologies did not agree with the government’s contention that the False Claims Act was violated and did not admit to any liability. Having said that, Lehigh Valley Technologies is a good corporate citizen committed to cooperating with the FDA and believes it was in the best interest of all to resolve the dispute in the matter set forth in the settlement agreement. Importantly, the safety and efficacy of these products were never in question.”