Hospira, Inc. (NYSE:HSP), which has the U.S. Food and Drug Administration on its case at its Rocky Mount plant, is now facing a class-action lawsuit that claims it failed to disclose it could not fix problems raised in FDA warning letters.
Harwood Feffer LLP, a New York law firm, said Wednesday that it had filed the suit in U.S. District Court for the Northern District of Illinois against Hospira, which is based in Lake Forest, Ill.
The suit claims Hospira failed to tell stockholders that it could not fix problems in Rocky Mount and that it “suffered from extensive quality control issues which undermined the viability of Project Fuel, a company program designed to optimize the company’s operations and increase shareholder value.”
Hospira has said it plans to spend up to $375 million over the next three years to bring its manufacturing facilities into regulatory compliance, the bulk of it going to the Rocky Mount plant, MedCity News reported last month. That facility has been saddled with heavy regulatory scrutiny for much of the last two years.
The Rocky Mount plant makes injectable drugs and supports Hospira’s contract manufacturing business for generic injectables. At full capacity, it employs more than 2,500 and accounts for 25 percent of Hospira’s nearly $4 billion in annual revenue.
The FDA sent Hospira an April 2010 warning letter that contained quality assurance and compliance concerns for the Rocky Mount plant. Hospira temporarily shut down the plant to deal with those concerns.
A June inspection resulted in a list of observations that outlined where the plant remained out of line with “current good manufacturing practices,” a document called a Form 483. An August inspection yielded another 483.
In an October conference call with financial analysts as the company announced disappointing results and lowered its guidance, CEO F. Michael Ball said Hospira planned to hire new site leadership and had brought on regulatory consulting help from Quintiles and IHL Consulting Group.
Those firms also consulted with Hospira on issues for its Clayton plant, which returned to compliance following a 2010 FDA warning letter.
The law firm said the suit covered all purchasers of Hospira securities between March 24, 2009, and Oct. 17, 2011.
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