District Court Enters Permanent Injunction Against Florida and New Jersey Companies and Senior Managers to Stop the Distribution of Unapproved, Misbranded, and Adulterated Drugs

The U.S. District Court for the Southern District of Florida entered a consent decree of permanent injunction against Stratus Pharmaceuticals Inc. of Miami, Florida; Sonar Products Inc. of Carlstadt, New Jersey; and individuals Alberto Hoyo and Juan Carlos Billoch, the Department of Justice announced today. The injunction permanently enjoins the defendants from distributing unapproved, misbranded, and adulterated drugs in violation of the federal Food, Drug, and Cosmetic Act (FDCA).

The Department filed a complaint in the U.S. District Court for the Southern District of Florida on April 28, at the request of the U.S. Food and Drug Administration (FDA). The complaint alleges, among other things, that the defendants shipped drugs that had not been approved by the FDA and failed to abide by current good manufacturing practices.

Products Inc. (Sonar), a New Jersey corporation, manufactures drugs for Stratus Pharmaceuticals Inc. (Stratus). Stratus, a Florida corporation, distributes prescription and non-prescription drugs and, according to the complaint, owned 80 percent of Sonar. The complaint also included Alberto Hoyo, who is president of Stratus and was a member of Sonar’s board of directors, and Juan Carlos Billoch, who is vice president of operations of Stratus and was a member of Sonar’s board of directors.

According to the complaint, Sonar and Stratus manufactured and/or distributed a number of dermatological products that were not approved by the FDA. The complaint further details that on April 13, 2015, the United States seized unapproved and misbranded drugs held at Stratus’s facility and manufactured by Sonar. They included X-Viate 40 percent Gel and X-Viate 40 percent Lotion.

“Compliance with the Food, Drug, and Cosmetic Act is necessary to ensure the safety and effectiveness of the medicines we all use,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department will continue to work closely with the FDA to protect the public from conduct, like that alleged in the complaint, which poses a potential risk to consumers.”

The consent decree entered today resolves the litigation and requires that defendants cease the production and distribution of unapproved and misbranded drugs. The decree further requires that defendants adhere to current good manufacturing practices for drugs, and requires Sonar to cease manufacturing until the company implements specified remedial measures. The measures include among other things, establishing a quality assurance and quality control program and retaining an expert to conduct a comprehensive evaluation of Sonar’s operations.

As noted in the complaint, FDA inspections of Sonar’s facility in 2014 and 2015, and Stratus’s facility in 2014, revealed violations of current good manufacturing practices that demonstrated a lack of quality oversight of the manufacturing, processing, and testing of drugs such that, if they continued, posed a threat to the public health. The complaint alleged, for example, that Sonar failed to reject drug products that did not meet established standards or specifications. Sonar also knew that some products were exceeding microbial limits and contained objectionable microorganisms, but did not thoroughly investigate the cause of such problems, and instead released the products to the market.

Also, according to the complaint, several products manufactured by Sonar were recalled in 2015 for microbial contamination, and an inspection concluded Stratus did not have the proper controls in place or possess adequate quality oversight to assure that finished drug products meet established specifications for identity, strength, quality, and purity prior to release.

This matter was handled by Trial Attorneys Jacqueline Blaesi-Freed and Monica Groat of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney James Weinkle of the U.S. Attorney’s Office for the Southern District of Florida, with the assistance of Associate Chief Counsel for Enforcement Joshua Davenport of the FDA’s Office of General Counsel, Department of Health and Human Services.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Southern District of Florida, visit its website at https://www.justice.gov/usao-sdfl.

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