Gilead’s case against an alleged $250-million counterfeiting ring—what happens next?


In a civil action, Gilead alleges an extensive, transnational counterfeiting ring of HIV and other drugs

In a story that broke on The Wall Street Journal on Jan. 18,1 a newly released federal court document details an 18-month investigation and enforcement action by Gilead Sciences against a group of wholesalers and pharmacies allegedly engaged in an elaborate ring that crossed the US-Canada border and involved actors in 10 states. In most cases, authentic bottles of Gilead drugs branded as Biktarvy and Descovy were emptied and filled with other products including, dangerously, Seroquel (quetiapine, now divested from originator AstraZeneca), a powerful antipsychotic. Several wholesalers were involved in the scheme, according to the court filing, and multiple pharmacies purchased the fake products and dispensed them to patients between August 2020 and this year. Gilead issued a warning2 last August about the fake products and by then, most of the fakes had been seized under the Lanham Act, which allows brand owners to seize counterfeits prior to resolving legal actions.

More than 85,000 bottles were seized. According to press reports and online sources, Biktarvy retails for around $3,500 per bottle (a 30-day supply) and Descovy, $2,000. Together, the drugs represent over $10 billion in annual sales for Gilead, which has also stated the nominal value of the fakes was $250 million.

The court filing (Case No. 21-cv-04106-AMD-RER, filed in the Eastern District of New York) makes for shocking reading. According to Gilead, the counterfeiting ring involved what it calls “leader defendants” who orchestrated the sourcing, delivery and sale of the fakes; “distributor” and “supplier” defendants, who supplied the drugs; and “marketing” defendants, who solicited sales to pharmacies. Several of the distributors or suppliers are called “fly-by-night” companies, incorporated in the past couple years in various states, and some of whom operated from their homes. The court filing names 74 individuals and organizations, across 10 states.

Gilead states that the defendants created the fakes in a well-known counterfeiters’ practice: “The original foil on the bottles had been stripped away, the authentic medication removed and replaced with foreign medication, and then a replica of the tamper-evident seal was used to re-seal the bottle. Traces of the original tamperproof seal remained in the grooves of the counterfeit bottles and were visually distinguishable from the replica seal. Lab testing confirmed that both the replica seal and the adhesive used to affix it did not match the original, authentic foil and adhesive used on authentic Gilead product.”

DSCSA violations

Besides the physical evidence of the packaging—and analysis of the pills therein—the Gilead case is built on shoddy tracking of the bottles’ serial codes. Those codes, put in place under the 2013 Drug Supply Chain Security Act (DSCSA), and carried through the tracking history of transactions, showed that falsified codes or documentation was part of the scam. During the course of the investigation, Gilead challenged various actors in the counterfeiting ring to document their transactions, but responses were either not forthcoming, or were faked. This is one of the more prominent instances in the US where DSCSA compliance was a factor in a counterfeiting investigation.

In its August notice, Gilead stated that it “continues to work closely with the FDA, pharmacies, and legal authorities” to prohibit the distribution of the fakes; meanwhile, the WSJ article notes that Gilead “has taken an under-the-radar approach, by hiring its own private investigators” while seizing the fake products. This raises a number of questions: there are penalties for violating DSCSA rules (although most of them are on hold until 2023) as well as various mail- and other fraud violations to pursue; further, there is an Office of Criminal Investigation in FDA (FDA-OCI) that brings gun-toting law enforcement and handcuffs to effect arrests of counterfeiters. Where was FDA enforcement during this period, when patients were being dosed with dangerous counterfeits? FDA-OCI’s webpage3 lists a steady stream of arrests and convictions on various medical frauds, but none relating to the Gilead case.

In its civil suit, Gilead is seeking upwards of $25 million in penalties from each of the accused actors; resolution of this will be in the future.

- Nicholas Basta is Editor Emeritus and Founder, Pharmaceutical Commerce





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