BALTIMORE, OCT. 3 -- A former key Food and Drug Administration supervisor was sentenced to one year's incarceration on racketeering and bribery-related charges today in the federal government's probe of fraud and corruption in the generic drug industry. Charles Y. Chang, 47, weeping as he begged for mercy, was ordered jailed in a work-release facility, fined $10,000 and told to undergo 1,000 hours of community service. The sentence was the heaviest imposed so far by U.S. District Judge John R. Hargrove against six FDA chemists and generic drug company executives who have pleaded guilty in the widening investigation. Chang, as a former branch chief in the generic drug division of the FDA, was the highest ranking government official to be caught up in parallel investigations by the Justice Department, the FDA and the House Energy and Commerce oversight and investigations subcommittee. Investigators are looking at allegations of bribery as well as product substitution, falsified documents and other fraud by generic companies submitting applications to the FDA for new products in the lucrative generic drug market. Generic drugs are discount versions of brand-name products whose exclusive marketing patents have expired, making them available for copying. The rush by generic firms to get first approvals from the FDA for their cheaper products has generated a competitive market susceptible to fraud and corruption, investigators said. Hinting that he might have given Chang a tough sentence, Hargrove said he balanced Chang's delicate health and his cooperation with investigators against prosecutors' evidence that Chang accepted more than $75,000 in cash and other gifts from several generic drug firms while expediting approval of their drug applications. Chang suffered a heart attack in mid-1988 and is undergoing both medical and psychiatric treatment, according to his attorney, Barry L. Leibowitz. He is separated from his wife and lives with his parents in Montgomery County. He is a pharmacist's assistant in a drug store. Echoing prosecutors' assertions that additional charges are expected soon in the investigation, Hargrove said, "There's a lot to come up . . . . The full story has not been told." Disclosed for the first time today was Chang's role in a Keystone Kops-style scene in which federal investigators wired him for a covertly recorded conversation with a generic drug executive after Chang began cooperating with authorities. Wearing a hidden transmitter and tape recorder in August 1988, authorities said, he drove around Indianapolis with Dilip Shah, former president of the Indiana-based generic drug firm Quad Pharmaceuticals, attempting to get him to acknowledge giving Chang some $22,000 in illegal gratuities. A car filled with investigators from Inspector General's Office of the Department of Health and Human Services followed the car driven by Shah, but lost it in traffic. Prosecutor Gary P. Jordan told reporters Shah apparently suspected he was being tailed, patted Chang down, discovered the hidden wire and drove hastily to the Indianapolis airport, where Chang jumped out of the car as it was still moving and fled into the terminal. Chang nevertheless obtained the necessary incriminating statements, Jordan said. Shah subsequently pleaded guilty to one count of giving a $1,000 illegal gratuity to Chang and was sentenced to 60 days in jail and fined $250,000. Chang, a $55,345-a-year chemist before he resigned from the FDA in 1988, pleaded guilty to two counts of interstate travel in aid of racketeering by accepting two bribes with a total value of $25,000 given by an unidentified executive of American Therapeutics, of Bohemia, N.Y. In addition to this and the $22,000 from Shah, Jordan said, Chang accepted $2,900 from Ashok Patel, former senior vice president of Par Pharmaceutical, of Spring Valley, N.Y., parent firm of Quad, and $2,000 from Raj Matkari, former vice president of Pharmaceutical Basics, of Denver. Patel and Matkari also pleaded guilty to giving illegal gratuities. Two FDA chemists who worked under Chang also have pleaded guilty to accepting illegal gratuities.
