San Diego Union Tribune

May 17, 2005

EMD fined more than $900,000

By Joe Cantlupe
COPLEY NEWS SERVICE

WASHINGTON – A San Diego company has agreed to pay more than $900,000 to settle a civil complaint that it exported biological toxins without a license, Commerce Department officials said.

EMD Biosciences improperly exported the material to Canada between 2002 and 2003 without a required license, in violation of federal administration regulations.

Six years ago the company, then under a different name, agreed to pay a sizable fine for exporting biological toxins without a license, Commerce officials said.

The toxins, if released, could be damaging to the environment and pose a threat to humans. The material was properly sealed in transport, according to federal officials.

"Exports of biological toxins are closely controlled to prevent them from being used by hostile entities and terrorists to produce biological weapons," said Wendy Wysong, acting assistant secretary of commerce for export enforcement.

"The Commerce Department aggressively enforces these controls, and will impose significant penalties to companies like EMD that repeatedly fail to comply with regulatory requirements," she said.

Lisa Johnson, a vice president of legal operations for EMD, said the company simply made a mistake in not meeting the regulatory requirements.

"We missed a regulation," Johnson said. "We are negligent; we missed a Federal Register notice. The government came to us and said, 'Do you realize you are shipping (the material) without a license?' It was a human error, a mistake."

The Commerce Department's Bureau of Industry and Security charged that, between June 2002 and July 2003, EMD committed 134 violations of export regulations stemming from 67 exports of biological toxins without the proper licenses.

The toxins included microcystins, Botix and other enzymes used in medical research.

"All those items headed to medical research facilities are used for research related to vaccines," said Eugene Cottilli, a spokesman for the Bureau of Industry and Security.

EMD, which manufactures chemical reagents and other materials for biomedical and life-science research, is owned by the German drugmaker E. Merck. The German Merck is distinct from the New Jersey-based pharmaceutical company, Merck & Co. Inc.

EMD employs about 100 people in Sorrento Valley and 170 elsewhere.

In 1999, the company – then known as CD Biosciences – paid $700,000 to settle a civil complaint brought by the Commerce Department. That complaint also charged the company with exporting toxins without a license. In that instance, the company exported materials to Europe, officials said.

Until recently, however, no license was required for biological shipments to Canada, said EMD's Johnson. She said the company was unaware of new requirements that required such licensing.

After the latest tangle with the Commerce Department, the company has decided to stop making such transactions involving biological toxins, Johnson said.

"It's not worth the risk to our company. These quantities were very small," she said.

Commerce officials said the export controls on biological toxins are part of an international treaty designed to curb the proliferation of chemical and biological weapons.

Under the settlement terms, federal officials agreed to continue EMD's export privileges if no similar conduct occurs within the next two years.

Companies "generally know what the regulations are. These cases don't arise very often," said Wysong of the Commerce Department. "The fact (EMD) did it again is taken quite seriously."

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