KV Pharma Suing Former Glendale CEO

Glendale resident Marc Hermelin is being sued by KV Pharmaceutical in the St. Louis County courtroom of Judge David Vincent.

KV Pharmaceutical is a specialty pharmaceutical company that competes in the branded, generic/non-branded and specialty ingredient market.

The company was founded by Hermelin’s father Victor in 1942. Victor Hermelin was the inventor of the timed-release capsule and held more than 100 patents.

In 2007 Victor Hermelin sued Marc Hermelin to remove him as a trustee of a family trust to benefit Victor’s wife and children.

Marc Hermelin served as KV Pharmaceutical’s CEO from 1974 to 2006 when he became chairman of the board in addition to CEO.

According to court documents, KV Pharmaceuticals fired Hermelin in 2008 for misconduct including failure to take appropriate actions with respect to the FDA, multiple attempts to impede the work of those investigating matters at K-V’s facilities, and multiple efforts to conceal critical information with respect to K-V’s production facilities and processes from an internal audit.

KV further alleges in the court documents that the company and subsidiary ETHEX were shut down by federal agents in 2009 because of Hermelin’s conduct. The shut down of K-V’s manufacturing operations lasted more than a year and also resulted in the dissolution of ETHEX.

In 2010 Marc Hermelin became the first drug company executive to be banned from participating in federal health care programs by the Department of Health and Human Services.

The 20-year minimum ban bars Hermelin from employment by any drug company manufacturing a product paid for by Medicare, Medicaid or any other Federal healthcare program.

Hermelin plead guilty in March to two counts of introducing misbranded drugs into commerce.

Between 2008 and 2010, KV lost three-quarters of its workforce, down to 350 and saw earnings drop from $578 million in 2008 to $9 million in 2010 when the company was reapproved for manufacturing drugs.

Hermelin and his family control 62.3 percent of the total voting power of KV shareholders and 25.7 percent of the economic interest in the company.

KV Pharmaceutical is seeking a judgement declaring that Hermelin was properly terminated and is not entitled to any compensation or other payments.

The company is also seeking an order from Judge Vincent for Hermelin to repay compensation paid during the time he breached his fiduciary duty to KV and a directive to make restitution to KV for any enrichment he received as a result of the wrongs he committed.

KV Pharmaceutical is being represented by Stephen H. Rovak and Stephen J. O’Brien of SNR Denton. A call placed seeking comment went unreturned.

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