Aceto to appeal Trade Agreement Act violation for 11 generic drugs
Aceto has been notified by the U.S. government that 11 generic drug products it acquired through its Acetris Health subsidiary in a product purchase agreement with an entity formerly known as Lucid Pharma are not in compliance with the federal Trade Agreement Act, or TAA, country-of-origin provisions of a clause contained in the government supply contracts. The 11 finished dosage form products purchased by the U.S. government are manufactured by Aurolife Pharma which is located in Dayton, New Jersey using APIs sourced from India. In conjunction with this finding, the U.S. Department of Veterans Affairs, or VA, has requested that Aceto supply new TAA-compliant sources for the referenced products by March 9 and supply new TAA-compliant drugs to the government purchasers under the contracts by March 26.Commenting on this matter, William Kennally, CEO of Aceto, said, "We are concerned about the VA's request since Acetris' U.S. manufacturing partner has sourced APIs from India for the 11 products in question at least since ACETO assumed its supply contracts with the VA. We have also heard from other suppliers to the VA who report that they too source APIs from India and have the finished dosage form manufactured in the United States. Finally, we do not believe that supplying the U.S. government with product containing an API originating in India is a deviation from industry practice." Under current longstanding law, the government, under the Buy America Act, is permitted to buy domestic end products, including commercial off-the-shelf, or COTS, products like generic drugs that are manufactured in the U.S. even if their components are not all manufactured in the US. Aceto thus believes that the government was and is permitted to buy Acetris' products, because they are COTS items manufactured in the U.S. As a result, Aceto disputes the determination that the 11 products sold pursuant to novated contracts with the VA originate in India rather than the United States and intends to appeal the decision that it is not currently compliant with contract sourcing requirements. To further pursue remedies, Aceto has asserted an indemnification claim against the sellers under the product purchase agreement dated December 21, 2016.