FDA Shuts Down OTC Drug Manufacturer with Longstanding and Pervasive cGMP and Labeling Issues

On Tuesday, FDA announced the entry of a consent decree of permanent injunction against Keystone Laboratories, Inc. of Memphis, Tennessee for manufacturing OTC hair care and skin care products in violation of Current Good Manufacturing Practice (cGMP) requirements and for failing to include required labeling.  Under the 24-page decree, a federal court enjoined the defendants, including the company’s owner and president, from manufacturing or distributing any drug until the terms of the decree are met.

The enforcement action demonstrates that, even for relatively lower-risk OTC drug products, FDA will sometimes take strong enforcement action to correct pervasive cGMP and labeling violations.  Although most FDA cGMP injunctions in the past have focused on prescription drug products, this action is consistent with FDA’s recent increase in attention to OTC drugs, over the last couple of years, including additional inspections and warning letters to both domestic and foreign OTC drug manufacturers.

Although the lengthy period of non-compliance is noteworthy, as is the pervasiveness of the violations, we take FDA’s action as a signal of increasing priority being placed on OTC drug compliance.  Last month FDA released CDER’s internal policy on prioritizing manufacturing sites for inspection based on risk.  Although the inherent risk of the drug products being manufactured is a risk factor in this policy, so too are the compliance history and patient exposure, which can be large for certain OTC drug products.  Consider further that legislation being considered in Congress, which has already passed the House, would give FDA additional user fee resources to regulate OTC drugs, some of which could be devoted to additional cGMP inspections.

Compliance History

After initially expressing concerns over cGMP violations found in inspections in 1993, 2005, 2006, 2009, and 2011, FDA issued a warning letter to Keystone in March 2013 for similar violations to those alleged in the complaint filed by the government in this case.  FDA had also issued a warning letter in Sept. 1993 and an untitled letter in Dec. 1999.  FDA inspected the facility in Feb. 2016 and Nov. 2017 and observed repeat violations, including Keystone’s failure to adequately investigate sources of contamination, such as condensate leaking into a bucket and peeling paint.  Among the many other repeat violations observed during the 2016 and 2017 inspections included the failure to ensure that the water system is protected from microbial contamination and the failure to adequately investigate consumer complaints.

FDA held a regulatory meeting with the company in Jan. 2014, and discussed violations the FDA found that could result in a seizure or an injunction.  FDA said that although Keystone routinely promised to make corrections, its cGMP violations persisted.

Allegations against Keystone

Specifically, the complaint filed in the case, dated September 25, 2018, alleged that in FDA’s November 2017 inspection of the defendant’s facilities, Keystone:

  • Failed to conduct microbiological testing of hair care products or water; specifically, FDA found products that tested positive for Staphylococcus aureus;
  • Failed to validate drug manufacturing processes to ensure that drug product quality was consistent, and that previously contaminated products would not contaminate new products;
  • Tested only a single sample of finished products that was not representative of the batch;
  • Neglected to perform any analytical testing on finished drug products prior to release;
  • Failed to validate test methods that were stability-indicating and specific, such that drug product contents could be measured without interference; and
  • Did not keep an adequate written record of customer complaints that included findings of any investigation and follow-up.

In addition, FDA found that Keystone misbranded products using labels that omitted labeling required by the applicable monograph, 21 CFR 358.750, such as:

  • An accurate statement of the general principal intended actions of those drugs, e.g., “anti-dandruff shampoo”; and
  • Instructions for the frequency and duration of use.

Furthermore, Keystone failed to list with FDA all the drugs the company manufactured at its facility for commercial distribution.

As a result, under the terms of the consent decree, Keystone must now:

  • Cease operations until corrective actions are taken;
  • Hire a qualified independent expert to inspect its facility and ensure FDCA compliance; Establish and implement a comprehensive Quality Assurance and Quality Control (QA/QC) program and receive FDA authorization to resume operations; and
  • Cover the costs associated with FDA inspections and oversight.

In the event Keystone or the named individual defendants violate the terms of the consent decree in the future, FDA can take a broad range of actions against the company and the individual defendants, including requiring the company to:

  • Cease manufacturing;
  • Recall product;
  • Pay liquidated damages; or
  • Take any other corrective actions as FDA, in its discretion, deems necessary.


Authored by David Horowitz and Jim Johnson


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