GENERIC DRUG MAKER RECEIVES THIRD FORMAL WARNING FROM FDA

Letter Cites Neil Labs For Dozens Of Violations

WASHINGTON -- Neil Laboratories, a manufacturer of prescription and
over-the-counter medicines, describes itself on its Web site as "an
upcoming young dynamic" company committed to the safety and efficacy
of its products.

But the public record offers a different picture of the privately
held East Windsor pharmaceutical company.

Last month, the Food and Drug Administration charged Neil Labs with
selling adulterated and unapproved prescription drugs, as well as
mislabeling over-the-counter medications.

This was the third formal FDA warning letter sent to the company
since 1997 for manufacturing, drug quality and other violations. Neil
was also among a group of companies cited in a separate 2002 FDA
letter for selling a cold remedy without government approval.

Bharat Patel, the chief executive of Neil Laboratories, said his
company has responded to the issues cited by the FDA.

"We don't want to say anything right now. We are promising the agency
to remain in compliance and to work with the agency," said Patel.
"These are observations made by the FDA when they inspected our
plant, and we correct them and go forward."

Government documents show the Drug Enforcement Administration issued
29 warning letters to the company between 1999 and 2001 for selling
pseudoephedrine tablets that were later diverted to the
methamphetamine black market.

DEA agents raided the company's headquarters in 2002 as part of a
nationwide investigation, seizing "multiple tons of ephedrine and
pseudoephedrine" and arresting a part-owner of the company who later
served jail time. Pseudoephedrine, a nasal decongestant, and
ephedrine, a stimulant and cold remedy, can be used in the illicit
manufacture of methamphetamine, or "speed."

The latest FDA letter warned Neil Laboratories that failure to
correct the violations could result in "seizure of your products," or
a civil injunction that would bar continued production or
distribution of the company's products.

An FDA spokeswoman said the letter shows the agency considers the
violations "significant," but she declined further comment.

Neil Laboratories is one of hundreds of companies that make low-cost
generic drugs, which are copies of brand-name prescription medicines,
and produce over-the-counter medicines that are available to
consumers without a prescription.

Its products have included pain relievers, allergy medicines,
laxatives and cough and cold remedies.

According to a June report by D&B, the business information service,
Neil Labs has estimated annual sales of $4.1 million and employs
about 34 people.

The generic drug industry, plagued by scandal in the late 1980s and
early 1990s, has matured and grown rapidly, with annual sales
estimated to be $28 billion. But serious problems continue to occur.

Last year, Able Laboratories, another New Jersey generic drug company
with a troubled history of FDA violations, was forced to halt
manufacturing and recall all of its medicines after serious questions
were raised about quality control data used to obtain approval for
its products. The company, which had been publicly traded, has since
declared bankruptcy.

Neil's most recent problems were revealed in a May 31 warning letter
publicly released in June that listed a litany of violations
involving more than two dozen prescription and over-the-counter medications.

Based on an inspection of its East Windsor manufacturing facility in
December, the FDA listed 13 products for which it said the company
failed to establish scientifically sound testing procedures to ensure
the drugs met proper standards for identity, strength, quality and purity.

It also found the company failed to maintain laboratory records with
complete data from all tests, and failed to assure that individuals
responsible for supervising the manufacture and processing of drug
products had the proper education, training and experience.

In addition, the warning letter accused Neil of marketing eight
prescription drugs not approved for sale by the FDA. The drugs,
including a combination of pseudoephedrine HCI and guaifenesin in 120
mg/600 mg tablets, were sold in "time released dosage forms" that the
FDA said are "not generally recognized as safe and effective."
Guaifenesin is an expectorant used to clear mucus from the chest.

The FDA said Neil mislabeled four over-the-counter products,
including aspirin bottles that lacked complete Reyes syndrome
warnings or specific pregnancy warnings, as required by law.

The letter was the latest in a series of FDA warnings:

In October 2002, the FDA cited Neil along with other firms for
marketing three separate single-ingredient extended-release
guaifenesin products without FDA approval.

In October 2001, the FDA charged the company with a series of
manufacturing violations that it said made it impossible to ensure
the safety and effectiveness of some of its products.

In 1997, the company was charged with failing to ensure the purity
and quality of its products, improper maintenance and controls in its
laboratories, and poor quality of some of its medications.

Separately, the company was a target of nationwide DEA probe into the
illicit drug trade. In 2002, DEA agents armed with a search warrant
descended on the company's headquarters and arrested Mantu Patel, the
firm's production manager, a shareholder and brother of CEO Bharat Patel.

Mantu Patel was charged with supplying the chemical pseudoephedrine
to the methamphetamine trade, but the charge was dropped in 2004 and
Patel pleaded guilty to record-keeping violations. He was sentenced
to one year in jail.

After the 2002 raid, the DEA temporarily suspended the company's
registration to manufacture and distribute products containing
ephedrine and pseudoephredrine. A federal judge subsequently upheld
the DEA's claim that the firm's activities constituted an "imminent
danger to public health and safety."

Patel, Neil's CEO, said the issues have been resolved with the DEA.
He said his company was "not involved in any capacity with a
diversion," maintaining the abuse involved the customers who
purchased the products from his company.

"We had no control," he said.

In 2003, Neil Labs formally agreed to surrender its registration to
manufacture a group of chemicals including ephedrine and
pseudoephedrine, and it agreed not to make or distribute over-the
counter pharmaceuticals containing those ingredients. But DEA
spokesman Douglas Collier said the company can still purchase these
ingredients from registered manufacturers for use in some of their products.

Collier said the company remains on the agency's "watch list."

What Consumers Can Do

The Food and Drug Administration found numerous prescription drugs
and over-the-counter medications made by Neil Laboratories were
manufactured improperly, marketed without formal approval or
contained inadequate patient warnings. Consumers can check package
labeling and inserts or consult a pharmacist to determine if their
medicines were made by the company. Below is a list of Neil
Laboratories drugs flagged by the FDA.

# Drugs that didn't conform with good manufacturing standards to
assure appropriate identity, strength, quality, and purity:

Guaifenesin 400 mg Caplets

Guaifenesin/Pseudoephedrine Caplets 600 mg/120 mg and 1200 mg/50 mg

Guaifenesin/Pseudoephedrine Sustained Release Caplets 800 mg/90 mg

Guaifenesin/Dextromethorphan Caplets 400 mg/20 mg and 1000 mg/60 mg

Guaifenesin/Pseudoephedrine/Dextromethorphan Caplets 800 mg/90 mg/60 mg

Guaifenesin/Phenylephrine Caplets 1200 mg/40 mg

Bromphenirimine/Pseudoephedrine Caplets 10 mg/120 mg

Isoxsuprine 20 mg Tablets

Sennoside 8.6 mg Tablets

Sennoside/Docusate sodium 8.6 mg/50 mg Tablets

Bisacodyl 15 mg Tablets

Calcium Polycarbophil 625 mg Caplets

Aspirin 800 mg Sustained Release Caplets.

# Unapproved drugs made in timed-release dosage forms not generally
recognized as safe and effective by the FDA:

Aspirin 800 mg Sustained-Release Tablets

Pseudoephedrine HCI and Guaifenesin 120 mg/600 mg Sustained-Release Tablets

Guaifenesin 1000 mg and Dextromethorphan HBr 60 mg Long-Acting Tablets

Pseudoephedrine HCI 90 mg and Guaifenesin 800 mg Time-Released Tablets

Dextromethorphan HBr 60 mg, Pseudoephedrine 90 mg, and Guaifenesin
800 mg Time-Released Tablets

Guaifenesin 1200 mg and Phenylepherine HCI 40 mg Sustained-Release tablets

Pseudoephedrine HCI 50 mg and Guaifenesin 1200 mg Sustained-Release tablets

Uni-Tex 120/10 (Pseudoephedrine HCI 120 mg/Brompheniramine maleate 10
mg) Extended-Release Capsules.

# Over-the-counter drugs the FDA found were misbranded:

Health Care America Aspirin 325 mg film-coated tablets; Health Care
America Enteric Coated Aspirin 325 mg tablets; Health Care America 81
mg Low Dose Aspirin tablets; NC Low Dose EC Aspirin 81 mg tablets.
(These drugs failed to bear the complete Reye's syndrome warning and
failed have a complete warning regarding the use of aspirin in the
third trimester of pregnancy.)

Preferred Plus Pharmacy Enteric Coated Aspirin 500 mg tablets.
(Failed to bear the complete Reye's syndrome warning and failed to
have the alcohol warning for aspirin products.)

Health Care America Total Allergy Medicine (25 mg diphenhydramine
hydrochloride), two-piece banded capsules packaged in bottles; NL
Diphenhydramine Hydrochloride (25 mg and 50 mg), two-piece banded
capsules packaged in bottles. (Failed to carry proper labeling statements.)

URL Guaifenesin 400 mg tablets; NL Guaifenesin 400 mg tablets.
(Labeling statements did not meet FDA standards.)

Source: Food and Drug Administration