Apothecus Alleges Contractor Breached Contract, ‘Concealed’ FDA Violations

On Wednesday in the Eastern District of New York, Apothecus Pharmaceutical Corp. filed a complaint against Pharmasol Corporation, alleging breach of contract, fraud, and deceit related to the manufacture of a contraceptive product.

Plaintiff Apothecus, according to the complaint, develops and commercially distributes several over-the-counter health products, namely a “contraceptive foam” aerosol spray, under the brand name VCF. In January 2017, the plaintiff hired defendant Pharmasol as a contract manufacturer for one of these contraceptive products. The agreement detailed that the defendant would be responsible for not only the manufacturing but the quality inspection and assurance of the product pursuant to Food and Drug Administration (FDA) regulations, the complaint said.

According to the agreement, Pharmasol was to alert Apothecus when the defendant was notified of an upcoming FDA inspection, which the plaintiff claimed the defendant failed to do on two named occasions in July and August 2018. Further, the defendant failed to notify Apothecus after receiving a notice from the FDA that Pharmasol had violated certain regulations in connection with the manufacture of the contraceptive product in question, which allegedly was another violation of the parties’ contract.

The FDA’s findings were that Pharmasol had “fail(ed) to thoroughly investigate unexplained discrepancy or failure of the batch or any of its components to meet specifications” regarding two product batches, according to the complaint. The plaintiff alleged that Pharmasol knew about these particular deficiencies since July 2017; however, the deficiencies actually were “repeat findings” from inspections in 2013, 2014, and 2015 that earned Pharmsol citations, but which the defendant had “concealed” from the plaintiff.

The plaintiff ended up recalling the product in November 2019 after learning from the FDA that the product was out of specification, deficient, and in violation of certain regulations.

The plaintiff argued that as a result of Pharmasol’s alleged breach of contract and fraudulent representation, “the Product has lost its commercial distribution sales and market positions in leading retailers such as Walmart, the Product was discontinued and plaintiff has lost sales and revenue of the Product going forward” totaling around $500,000 yearly. Apothecus claimed that the purported damages equal $10 million.

The plaintiff is represented by Stanley K. Shapiro.