By James McNair
Enquirer staff writer

RxBazaar, a Forest Park pharmaceuticals distributor, said Tuesday it has laid off more than half its workforce and suspended purchases as a result of a federal investigation of its drug sales practices.

Shares of RxBazaar, whose stock is quoted on the OTC Bulletin Board, plunged 75 percent in value Tuesday. The stock closed at 10 cents, down 30 cents. Just two months ago, on June 7, the stock had hit a 52-week high of $3.25.

In a release by C. Robert Cusick, its chief executive, RxBazaar said the U.S. Attorney's office and the U.S. Food & Drug Administration are investigating alleged violations of a federal statute that requires drug distributors to deliver a product pedigree, or statement of origin, to retail pharmacies that buy their drugs. The law is part of the 1987 Prescription Drug Marketing Act.

A spokesman for the U.S. Attorney's office would not comment on the revelation Tuesday.

The matter has crippled RxBazaar, which said it had been finalizing an offering to raise working capital for operations. The company said it was forced to hire crisis managers to begin an "orderly wind down of operations."

It said it laid off 40 of its 70 employees, ceased buying products and is selling off inventory.

RxBazaar said "management thinks the company has complied" with the law. But it goes on to say it has had "extensive discussions" with prosecutors and is negotiating a plea to one misdemeanor charge.

According to its Web site, www.rxbazaar.com, the company posted $49 million in sales in 2003, of which $28.7 million originated on the Internet. But it reported a net loss of $4.7 million.

E-mail jmcnair@enquirer.com.