KV Pharmaceutical Co. said Marc Hermelin resigned as a director and will sell his controlling interest after being banned from doing business with the U.S. government for two decades. KV rose in New York trading.
Hermelin left the board on Nov. 10 and will sell his shares, said Catherine Biffignani, vice president of investor relations, in a telephone interview today. Hermelin, 68, had been fired as chairman and chief executive officer of Bridgeton, Missouri-based KV in December 2008. He held about a 52 percent voting stake, either in his own name or through trusts, according to a company filing on May 7. KV didn’t specify the timing of the stock sales.
The ban takes effect tomorrow. Hermelin will become the first drug-company owner or executive barred from doing business with the government in an antifraud push involving Medicare, the insurance program for seniors and the disabled, and Medicaid, the health program for the poor, according to the Health and Human Services Office of Inspector General’s website. A KV subsidiary, Ethex Corp., pleaded guilty to two felonies and paid a $23.4 million fine in March, the Justice Department said.
“The company believes it has resolved its remaining issues with respect to HHS OIG and is positioned to continue to participate in federal health care programs now and in the future,” KV said in a statement. The company also said it agreed with lenders on a financing package that may total as much as $120 million, and named Greg Divis, who had been interim CEO, as permanent chief.
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