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Meanwhile, a $274-million scandal is brewing over diverted HIV drugs in New York
When the most recent fake drug scandal broke in February, involving fake product labeled as Genentech’s Avastin (bevacizumab), FDA hinted that other cancer drugs were being evaluated as well. Now, one of those, branded as Altuzan, has also shown up at US distributors serving oncology practices. (Altuzan is Roche’s—Genentech’s parent—brandname for bevacizumab, but apparently for Turkey.) The drug was sold in the US by a company called Richards Pharma, which also operates as Richards Services, Warwick Healthcare Solutions and Ban Dune Marketing Inc. According to an AFP report, Ban Dune, based in La Jolla, CA, is out of business and its head has pleaded guilty in an earlier counterfeit-drug investigation. These companies, along with another UK supplier, River East Supplies then sold several dozen packages into US clinics (which were not named by FDA), according to a Wall Street Journal report. The WSJ also attempted to locate distributors in Turkey and Egypt who were said to the sources of the fake products, but without success.
Like the February scandal, the Altuzan is a sterile injectable purchased by oncology clinics and administered in the clinic; they are not sold to individual patients from retail pharmacies. Clinics making purchases of drugs from overseas sources are committing a crime, but no individual doctors have been indicted in the current, or previous episode.
‘Black market’ HIV drugs
At nearly the same time as the FDA announcement, the New York State Attorney General, Eric Schneiderman unsealed an indictment involving adulterated or mis-labeled HIV drugs, as well as a Medicaid fraud ring involving those drugs. The alleged ring has been running since late 2008, and Scheiderman says that as much as $274 million worth of drugs are involved, including $155 million in fraudulent state Medicaid reimbursements. Eleven individuals and over a dozen companies (some of them shell corporations owned by one of the defendants) were named in criminal and civil charges.
According to the indictment, a Florida resident, Stephen M. Costa, is alleged to have procured drugs “by various illegal means outside the legitimate stream of commerce, including unused medications which had been dispensed to individuals and medications stolen from manufacturers. They would repackage and relabel” the drugs, which Schneiderman characterizes as “black market” products. Expired product may also have been included. The drugs were sold to Allion Healthcare, a Melville, NY, specialty distributor which owns a national chain of pharmacies, mostly known as MOMS pharmacies. Glenn Schabel, supervising pharmacist at Allion, is alleged to have falsified the documentation, including pedigrees, to authorize the purchases. He, as well as several other individuals who acted as intermediaries, are alleged to have received multi-million-dollar, under-the-table payments for these transactions, and because some of that money was transferred to overseas banks, are also alleged to be involved in money laundering.
Medicaid fraud is a massive problem for CMS and states, and there have been many indictments of healthcare providers for false claims. The scale of this drug-diversion scheme, however, is breathtaking. Anthony Luna, president of MOMS Pharmacy, issued a statement saying the company “was a victim of this crime and will continue to cooperate fully with the New York State authorities,” and added that “As the alleged fraud was financial in nature, we have no evidence at this time indicating that the distribution of these products caused adverse health consequences to our patients.” The company has undertaken a series of corrective actions, but at this point it’s not clear that the drug distribution was limited to New York State, or that patients receiving the adulterated products as much as four years ago until February have been unharmed.
These scandals, breaking open just as legislators are reconsidering pedigree and track-and-trace laws, point to weaknesses in specialty drug distribution outside the retail pharmacy channel (and at the same time, retail pharmacy has been reluctant to engage in track-and-trace implementations). And while manufacturers can exert control, through their distribution agreements, with wholesalers and distributors receiving product from them, there is less they can do for fake or diverted product entering from other directions.
“Pharma companies need to be proactive,” says Tara Steketee, senior manager, brand protection, at OpSec Security (Boston). “The online pharma market is an ecosystem that can be monitored, and signals observed.” OpSec is one of a number of companies offering this online monitoring; according to Steketee, enough evidence can be gathered this way enable a brand owner to go to law-enforcement agencies to shut down illegal operations. “We’ve seen a significant impact” in industry interest in the service since the first Avastin scandal broke, she says.
In a mid-April blog about the Altuzan case on FDA’s website, Commissioner Margaret Hamburg noted that “we need stronger rules requiring importers to provide information at the border demonstrating their compliance with FDA product standards,” and that “We also need authority to require a robust system to track and trace all drugs throughout the supply chain. It would provide greater transparency and accountability in our nation’s drug supply, help to prevent the introduction and improve identification of counterfeit and other substandard drugs, and facilitate recall efforts.”