ABH recall debacle holds stern lessons for industry, experts say

The company, which has done business under the names ABH Nature’s Products, Inc., ABH Pharma Inc. and Stocknutra.com Inc. announced a nationwide recall earlier this year​​ of thousands of products manufactured under hundreds of brand names as part of a consent decree entered in the  US District Court for the Eastern District of New York.

There are 859 businesses and brands mentioned in the recall​​. Each of the impacted businesses was supposed to have been contacted by ABH to recall any products they had had manufactured in their facilities.

Dealing with the Amazon fallout

Many of these brands sold their products online.  In some cases, brand holders have reported that they have had products delisted by Amazon because of the ABH decree, even though some they claim they had never actually had products manufactured by the company​​. Apparently having merely solicited a quote from ABH at some time in the past was enough to land some brands on the list.

“It’s almost like a Madoff thing where they said they were manufacturing for hundreds of companies,”​ said Marc Ullman, a New York-based attorney of counsel in the firm Rivkin Radler.

Ullman said few of his firm’s clients were involved in the recall.  For those who were caught in the snare, clear, consistent and forthright communications about the scope of the problem is the best course, he said.

“Preemptive communications with customers in cases like this is a good idea,”​ he said. “With the right help, companies should be able to draft a sufficient response to Amazon and get their products relisted.”​

GMPs are a burden, but a safety net, too

Ullman said the episode is a reminder for all companies using contract manufacturers that they have a responsibility under GMP rules to understand in detail how the products that bear their labels are manufactured, even if they are not doing the physical work themselves.  This includes having copies of all documents in house, having done on site audits and other measures. In the case the ABH, the company and its principal, Mohammed Jahirul Islam, had a long history of noncompliance​​ with FDA regulations. 

“Companies that are rigorously following the GMPs as an own label distributor should have been able to avoid this situation.  The first warning letter was more than seven years ago, after all,” ​Ullman said.

Just getting a warning letter might not be the death knell for doing business with a contract manufacturer, Ullman said.  But if a brand holder were to decide to go forward with such a contract, they should have delved into detail into how the contract manufacturer responded to the warning letter and should have verified for themselves that the necessary changes were made in how the manufacturer does business.  

Doing that kind of work, including conducting on site audits, is time consuming and expensive.  It’s something small brand holders often complain about.  In Ullman’s view, if a company can’t afford to comply with those requirements, the question becomes whether it is really well enough capitalized to be in the industry at all.

“Companies complain about the burden the regulations place on them. I think that every company that did an onsite audit and followed that up and really understood how ABH did business are probably pretty happy now that they made that investment,”​ Ullman said.

Catching problems with a contract

Abhishek Gurnani, an attorney in the firm Amin Talati Wasserman, said any contract with a contract manufacturer should be structured in a way to catch issues like those that developed at ABH before they become existential threats to the brand holder.

“The main lesson is that companies, no matter how small, should have a comprehensive Manufacturing Agreement in place that dictates responsibilities including for when a recall occurs.  There should be a recall clause that discusses who covers costs (and what types of costs are covered),”​ he said.

“There should also be language in the Agreement that requires the CMO to notify the brand owner of ANY 483, warning letter, or other regulatory action that could impact the products or facility as soon as it happens.  I’ve heard from brands that they didn’t actually know how bad it was at ABH until it was too late.  A requirement in a contract to notify that brand owner of regulatory action when it is first initiated could help the brands better plan for their own business,”​ he added.

“ Lastly, the expression ‘don’t put all your eggs in one basket’ also comes to mind.  Manufacturing Agreements should be non-exclusive to the extent possible, so that you can have a backup CMO ready to go as soon as the need arises.  I’ve had clients use a 90-10 model, where 90% of their manufacturing is done with a primary CMO to achieve best pricing, but 10% occurs at a backup CMO to keep familiarity with the product and processes in case a rapid scale up is required,”​ Gurnani concluded.