Under an alleged scheme involving fake prescriptions in an effort to facilitate distribution, a compounding company that has marketed treatments to Thoroughbred racehorses recently entered a guilty plea in federal court and one of its executives faces federal charges.
The United States Attorney for the Southern District of New York, Damian Williams, and Christie Curtis, acting assistant director in charge of the New York field office of the Federal Bureau of Investigation, announced July 9 that U.S. Compounding, a subsidiary of DMK Pharmaceuticals, has pled guilty to multiple fraud offenses before U.S. District Judge Arun Subramanian, and a former USC executive, Sam Glover, was charged in an Indictment with conspiring to violate the Food, Drug, and Cosmetic Act.
Pursuant to the plea agreement, USC agreed that it is subject to an approximately $4.2 million forfeiture payment and a criminal fine of up to $16.9 million. According to federal court documents, DMK Pharmaceuticals filed for Chapter 11 in February in Delaware Bankruptcy Court.
According to the release, Glover has been arrested and his case initially will go before a U.S. magistrate judge in the Eastern District of Arkansas. Glover, 45, of Arkansas, is charged with one count of conspiring to violate the FDCA, which carries a maximum sentence of five years in prison.
"Distributing prescription drugs with sham prescriptions is wrong and illegal," Williams said. "The corporate resolution entered into today, and the indictment of Sam Glover, an executive who oversaw and allegedly perpetuated that scheme, reflects this office's commitment to holding accountable those who seek to violate laws designed to ensure that the drugs distributed across the United States are safe, necessary, and legal."
"U.S. Compounding, Inc. and its former executive, Sam Glover, allegedly committed various frauds and violated the Food, Drug, and Cosmetic Act by falsifying prescription orders," Curtis said. "Despite scrutiny by members of the company who suspected the orders were unverified, the company's leadership continued to allow the requests and collect profits as a result. This investigation is part of the FBI's larger effort to ensure that both individuals and organizations who devise complex fraud schemes are prevented from furthering their illegitimate arrangements and making money off mistruths."
The release did not document the alleged use of the compounded drugs beyond noting an alleged illegal arrangement with a veterinarian to generate false prescriptions in order to justify shipping prescription drugs directly to consumers, including consumers in the Southern District of New York, which the release says is in violation of the Food, Drug, and Cosmetic Act.
BloodHorse reached out to a spokesperson for the U.S. attorney but she declined to offer further detail on the release.
BloodHorse also left a message with a number it believes is Glover's based on documents and a voice message but did not immediately receive a response.
U.S. Compounding has been involved in marketing products to horse racing. A 2011 Arkansas Democrat Gazette story quoted a company founder, Eddie Glover, who in a different story by that paper is identified as Sam Glover's father, that U.S. Compounding compounds medications for animals "all the way from your kitty cat to a racehorse at Churchill Downs and everything in between."
A 2017 press release from Adamis Pharmaceuticals, which counted U.S. Compounding as a subsidiary and would later change its name to DMK Pharmaceuticals, noted that U.S. Compounding had, "developed a unique compound to manage ulcers in horses." The release, which notes a pair of Breeders' Cup winners that used the product, says the ulcer treatment was being marketed to racehorses, as well as horses in nearly every other competitive discipline.
Dr. Dennis J. Carlo, identified in the release as Adamis' president and CEO at the time, stated in the release that, "This new compound is the first in the expansion of our veterinary product line. As a side note, since the Breeders' Cup, two additional horses using our products won their respective races, one setting a track record."
While Carlo seemed to hint at performance benefits in that quote, the case, based on available details to date, seems to focus on the alleged wrongdoing in the distribution of these compounded substances that were marketed to compete with other permitted but regulated medications in the sport.
The U.S. Attorney for the Southern District of New York alleges that an illegal arrangement with a veterinarian allowed a sales rep to generate false prescriptions that would justify shipping prescription drugs directly to consumers. The charges date back to 2015.
Complete allegations for this case from U.S. Attorney for the Southern District of New York
