Aceto Wins Court Ruling for Foreign Sourcing of Pharma Ingredients in Gov’t Contracts

The US Court of Federal Claims has issued a ruling in favor of Acetris Health, a subsidiary of Aceto Corporation, a New York-headquartered distributor of human health products, that invalidates previous litigation that resulted in a termination of contracts Acetris held with the US Department of Veterans Affairs (VA) under which Acetris provided drug products containing ingredients sourced from abroad.

In March 2018, the US Court of Federal Claims issued a ruling against Acetris in the case of Acetris Health, LLC v. United States. In the case, Acetris asserted that the US Department of Veterans Affairs (VA) improperly interpreted the Trade Agreements Clause, which requires the contract awardee to “deliver…only U.S.-made or designated country end products”. This resulted in the termination of 11 VA contracts with Acetris because the products contained ingredients sourced from India. Acetris contended that under the VA’s interpretation of the clause, the VA would not accept entecavir tablets, a hepatitis B drug that the firm supplies to the VA under contract.

After Aceto lost this initial court ruling, which denied its motion for a temporary restraining order and preliminary injunction, the US Court of Federal Claims scheduled a hearing with the involved parties for final resolution of the litigation.

The most recent ruling established that, under the Buy America Act, federal agencies are permitted to buy domestic end products, including commercial off-the-shelf products such as generic drugs that are manufactured in the US even if all of their components are not manufactured in the US. Although the Department of Defense (DoD) contracts were not at issue in the case, the decision also impacts Acetris’ ability to supply DoD with its products. The government has 60 days to appeal the decision.

 “Assuming either the government does not appeal, or the decision holds on appeal, we will be able to pursue business opportunities to supply generic drug products to the US government as before, along with our domestic manufacturing partner, sourcing active pharmaceutical ingredients from India,” said William C. Kennally, III, Chief Executive Officer of Aceto, in a July 16, 2018 company statement.

Source: United States Court of Federal Claims (July ruling), United States Court of Federal Claims (March ruling), and Aceto


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