Cape Cod Hospital has reported that a drug wholesaler approached it trying to sell purported flu vaccine for 8x the normal price. But in addition to profiteering during a vaccine shortage came this notable news: The wholesaler refused to say where the drugs came from.

The article in yesterdays Cape Cod Times (for which I was interviewed and quoted) should sound the liability alarms throughout the pharmacy community. For if the wholesaler won't say where the drugs come from then they cannot be authenticated. A pharmacy that buys such product is therefore merely buying mystery medicine. Perhaps it came from a bona fide manufacturer, or perhaps the "drugs" originated in a Chinese factory that makes counterfeits, and the "medicine" has already changed hands a dozen or more times.

The sad truth is that we do a lousy job tracking pharmaceuticals and have a large gray market of secondary wholesalers. The pedigree of a drug -- its chain of ownership from the time of its manufacture -- is critical to determining the drug's authenticity. But if the pedigree is hidden, as with the case of the flu vaccine offered to Cape Cod Hospital, there is no real way to know what is within the packaging thereby opening the door wide to injury and death from the product.

So make no mistake about it: Any pharmacy that buys such mystery medicine will be responsible if the drug isn't the real deal. And I don't think it would be a situation of just being responsible for the injury or death that occurs, but that a good case could be made for punitive damages for conduct that I view as clearly reckless. The problem of counterfeits within the pharmaceutical chain has been widely documented, and all pharmacies are duty-bound to be on high alert for suspicious activity.

I was interviewed for the piece last week as a result of my prior representation of Tim Fagan, a Long Island teen who had been injected in 2002 with counterfeit Epogen after an emergency liver transplant. Representative Steve Israel introduced Tim Fagan's Law as a result, to toughen penalties against counterfeiters, and the FDA broader power to investigate, conduct recalls and spot check the market for counterfeits. (You can read more on it at the counterfeit drugs resource page at my web site, or by clicking the counterfeit drugs tag here.)

Cape Cod Hospital, to its considerable credit, refused to deal with the wholesaler. My only regret is that the company was not named so that others would know to be on the lookout for them.

Updated 11/12/09: See also Gray Market: I'm Not Dead Yet (Adam Fein @ Drug Channels)

Labels: counterfeit drugs

It's been awhile since I've written on this subject, but the appearance this month in Smithsonian Magazine of a long article on the subject pulls the topic out of hibernation. That counterfeit drugs make up a stunning 50% of the drugs in some places in the world boggles the mind, and speaks to the dangers in the US of infiltration of our markets.

It also speaks to the miserable state of our law with respect to investigating and tracking fakes. It was over 20 years ago that Congress passed the Prescription Drug Marketing Act that was designed, in large part, to track the pedigree of our nation's pharmaceuticals so that we could tell where they came from, much the way blood products or airplane parts are tracked. It still has not been fully implemented.

And it was six years ago that a Florida grand jury concluded that "an alarming percentage of the drugs flowing through the wholesale market have been illegally acquired. That is, they have been stolen from shipments, pharmacies, clinics, and hospitals; purchased on the black market from recipients and health care professionals who are defrauding insurance companies or Medicaid with bogus prescriptions; or illegally imported from overseas."

And now this week Time has an article on How to Stop the Counterfeit Drug Trade.

My interest in the subject dates back to 2002, when I started representing Tim Fagan, who had been injected with counterfeit Epogen after an emergency liver transplant at the age of 16. I put up a counterfeit drug resource page at my website to give some of the background on the problem, and continue to write about it in this blog. That lawsuit contributed in large part to significant changes in how drugs are distributed in the country, and it shined a spotlight on a large gray market of secondary wholesalers that pedaled prescription drugs in this country with little oversight. As a result of the suit, and the press, much of that gray market has been eviscerated.

Unmentioned in the Smithsonian and Time articles, however, is pending legislation by Representative Steve Israel named after my client (and his constituent): Tim Fagan's Law. Passage of the law would be a good way to bring safe prescription drugs to our pharmacies.

With such spectacular quantities of counterfeits being sold throughout the world, there is little doubt that they will be sold on our shores. (Tim's fakes were home-grown, not imported.) And since some fakes are nearly impossible to detect by the average consumer, and even by many pharmacists, sophisticated law enforcement is a key element in protecting the nation.

As Willy Sutton may have said about robbing banks, he did it because that was where the money is. Given the vast profits to be made in counterfeit drugs, we must assume that criminals will pry open any window they can to get into the pharmaceutical distribution system. And we need vastly better law enforcement and FDA oversight to combat those dangers.

Labels: counterfeit drugs

When I went up to Albany on May 19-20 to lobby the legislature on civil justice issues, I also sat down with Assemblywoman Amy Paulin for 15 minutes on Assembly TV. The purpose was to discuss her legislation on counterfeit drugs.

The issue had come to her attention due to media coverage of New York teen Timothy Fagan, who I had represented. Tim had been injected back in 2002 with counterfeit Epogen after an emergency liver transplant at the age of 16. Tim's drugs, it had ultimately been discovered, had been low dose 2,000 u/ml Epogen that was sold out the back door of a Florida pharmacy, "uplabeled" at a trailer park to 40,000 u/ml, a dose 20 times stronger, and sold back into the mainstream distribution system. His medication had been owned by at least 10 different companies around the country as they were traded through a vast secondary market of wholesalers before finding their way into his drugstore on Long Island and then his home. This was the source of a 60 Minutes story, among other national coverage, as well as a book. (See, Counterfeit Drugs Resource Page at my website, for background. And more on this blog at the counterfeit drugs label.)

The bill Assemblywoman Paulin now sponsors would force electronic pedigree labels on drugs from the point of manufacture through the distribution system. With the distribution system locked down, it would make it exceptionally difficult for counterfeiters to penetrate. I had first discussed this with her back in 2006 and was at her side for her first press conference on the subject.

While I hesitate to let readers see the too-serious side of me from an audio-visual perspective, the issue is, frankly, too important not to discuss. If counterfeits could make it into Tim's house, they could make it into your house, my house or the White House. So here is the clip:

Labels: Amy Paulin, counterfeit drugs, Tim Fagan's Law

The FDA revealed yesterday that the death toll from counterfeit heparin rose from 19 to 62 over the last 15 months starting in January 2007. I had previously discussed this issue in the context of Baxter's potential liability for distributing counterfeit drugs (see, Counterfeit Heparin and Baxter Liability).

The 66 deaths come from a total of 103 deaths of patients taking the blood thinner. The 62 deaths resulted from allergic reactions or hypotensive (low blood pressure) events related to the counterfeits. The others would have been due to underlying medical conditions.

The FDA released a table of data showing that in 2006 there were 55 deaths from heparin users, but that only three were due to allergic reactions or hypotension as a medical event, similar events to the cases that prompted the heparin recall in 2008.

According to Baxter, however, only 38 deaths are attributable to their contaminated product and that four of those deaths were from unexplained allergic reactions.

The FDA is continuing to receive information on adverse events related to heparin, so this total is not expected to be final. As a result of all the publicity surrounding the recall, as well as the high-profile overdose of heparin to Dennis Quaid's twins, one would reasonably expect an increase in healthcare providers submitting adverse event reports to the FDA.

See also:

• FDA Triples Count of Heparin-Related Deaths (WSJ Health Blog)
• Reports of deaths linked to blood-thinner heparin triple (Chicago Tribune)
• FDA Raises Estimate of Deaths Linked to Blood Thinner (Washington Post)
• Why you can't tell where your medication was made (Nat'l Center for Policy Analysis)
  

Labels: counterfeit drugs

Bad news for prescription drug users out of California. The pharmaceutical industry has once again beaten back attempts at greater consumer safety.

The state had put together a bill to electronically track prescription drugs from the manufacturer all the way to the consumer, to insure that the supply chain was not infiltrated by counterfeit drugs. Every bottle of pills sold to consumers would be tagged. The plan was to go into effect on January 1, 2009, but according to today's New York Times, the drug companies have been given a two year reprieve. The electronic pedigrees were first supposed to have been in place on January 1, 2007, so this is the second delay that they have won.

Drug manufacturers and wholesalers complained that such safety would cost them money.

But if you think the battle for increased safety is over with the new date in place, you would be wrong. Pfizer is claiming they need another five to seven years, though they have somehow managed to put such practices in place for their high revenue drug Viagra.

And for those looking at the big picture of trying to determine when drugs will finally have documented pedigrees from manufacturer down to consumer, the first legislation on the subject was the Prescription Drug Marketing Act of 1987. That dealt with paper pedigrees and was never put into place.

So the industry has thus far succeeded in delaying for 21 years. And I'm guessing that 21 years from now we still won't have it. As Stan Goldenberg, a Los Angeles pharmacist and member of the state's Board of Pharmacy said in today's Los Angeles Times, "In 2011, they'll want 2013. In 2013, they'll want 2015. They'll keep the ball in the air until something bad happens."

And when something bad does happen (as it did to Tim Fagan), you can be sure, as sure as the lord made little green apples, that the drug companies will find ways to ask for immunity from the inevitable lawsuits. And they will try to blame "greedy plaintiffs' lawyers" for the fall out.

For more info:

• California Delays Law For Tracking Drugs (Pharmalot)
• Can CA's e-pedigree law be Implemented? (Drug Channels)
  
• Counterfeit Drugs Update - Trying to Track The Good (this blog, 4/24/07)
• Counterfeit Drug Trade is Roaring Ahead (this blog, 1/11/07)
• FDA Counterfeit Drug Website
• Counterfeit Drug Resource Page (@ my firm's website)
• Counterfeit Drugs (2003 cover story in Chemical and Engineering News, in which I was interviewed)
  

Labels: counterfeit drugs

Counterfeit heparin may be responsible for at least 19 deaths in the United States and hundreds of allergic reactions. The news came from federal regulators yesterday that part of the anti-clotting drug made by Baxter was an unapproved ingredient from China that was altered to mimic the real thing. Baxter has pulled the drug from the market.

In exploring the potential liability of Baxter below, I first offer up this personal background: I previously represented Timothy Fagan, a 16 year-old New Yorker who had been injected with counterfeit Epogen after an emergency liver transplant. It was one of the few counterfeit drugs cases ever brought in this country, which gives me a unique perspective on the issues that may be encountered should suit be brought against Baxter. His experience was part of a 60 Minutes segment (as well as many other news reports) and featured in a book by Katherine Eban, Dangerous Doses. Legislation named for him, Tim Fagan's Law, is pending in Congress. I have a page at my web site devoted to the subject (Counterfeit Drug Resource Page), have written on the subject here a number of times (though not in the last nine months), and spoken at pharmaceutical conferences on the subject.

Tim's experience, like the one with Baxter's heparin, resulted from problems in the pharmaceutical supply chain. For Tim, the counterfeiting took place after the drugs left the hands of drugmaker Amgen, and low dose vials were "uplabled" with counterfeit labels to appear to be 20x the strength, reportedly by a criminal gang in Florida. The vials were also mishandled, leading to apparent adulteration. Tracing how the drugs moved through a web of secondary wholesalers was a critical part of the investigation.

Baxter now faces a similar problem of supply chain management, though the problems exist upstream instead of downstream. The problems result from outsourcing critical manufacturing to others while also failing to verify the integrity of the product. Any investigation as to Baxter liability will no doubt turn on whether the company turned a blind eye to the product's sourcing, perhaps because the price was so good.

Litigants will also face a critical set of problems that will arise in any drug counterfeiting case:

1. The evidence was destroyed at the time it was injected or ingested and the packaging discarded.
2. Doctors will generally assume that a failure to get better is the result of the underlying condition, not a counterfeit drug.
   
3. Since the patient was already sick (or they wouldn't be getting the drug), proving that death or further disability came from the counterfeit, as opposed to an underlying cardiac condition that they were perhaps being treated for, will represent a real causation issue even if you know the counterfeit was injected/ingested.
4. The drug may not be trackable back to Baxter due to shoddy record keeping regarding the supply chain, which still contains loopholes that allow the "pedigree" of a drug to be washed by "authorized distributors of record" so that prior owners of the drug are unknown.

Litigants will start with an essential fact: It is a prohibited act to sell counterfeit drugs and Baxter appears to have done just that. Most lawyers refer to that as negligence per se.

Since Baxter appears to have committed that prohibited act (assuming the accuracy of press reports), it must therefore try to defend itself with a claim that the company owed no duty of care to the end-user, as there was no direct relationship between the two.

A savvy litigant will respond, however that the since the Food, Drug and Cosmetic Act prohibits introducing defective drugs into interstate commerce, it is not enough to say that Baxter simply didn't know that this is what their sourcing companies were doing. The United States Supreme Court, in the little known 1975 case of US v. Park, has already stated that the Act "imposes not only a positive duty to seek out and remedy violations when they occur but also, and primarily, a duty to implement measures that will insure that violations will not occur." The Act, according to the Court, punishes "neglect where the law requires care, or inaction where it imposes a duty."

Since the measure of Baxter's duty to the end-user will be measured by the foreseeable risk, and counterfeiting is not only a clearly foreseeable risk (see the links back at my resource page), but one that has received much attention lately due to counterfeits coming out of China in particular, the foreseeability issue is easily approached.

Thus, a plaintiff would argue that it is not whether Baxter owes its customers a duty of care, which has existed for decades, but rather, the scope of that duty.

The legal issues of whether a duty of care exists between manufacturer and consumer also might be addressed from the breach of warranty angle. In that respect, relief may exist (among other places) in its uniform commercial code. New York's UCC 2-318, for example, provides that: "A seller's warranty whether express or implied extends to any natural person if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty. "

Baxter counsel will argue, in essence, that the company deserves immunity, and will scratch around for any argument that fits that bill. Since any case will likely be faced with a motion to dismiss right away, it is critical that each of the potential issues be addressed in the complaint with proper allegations. There are no cookie cutter forms for this type of complaint, and each of the allegations and potential responses must be thought through and specifically tailored.

Update:

• Baltimore Sun says 21 deaths and 700 injured)
• Senator Edward Kennedy released a statement that said, in part:

  "It is unacceptable that Americans have died and been seriously injured by what appears to be deliberate tampering. Whether this contaminant was introduced intentionally or by accident, the full force of the law must be brought to bear to bring those responsible to justice. To guard against future abuses, every drug manufacturer needs to inform FDA of where it sources its ingredients and what it is doing to ensure that these ingredients are pure and potent."

General counterfeit drug links:

• Counterfeit Drugs and the American Enterprise Institute
• FDA Counterfeit Drugs Website

Counterfeit heparin links:

• Fake Heparin, then Sick and Dead Patients (Healthcare Renewal)
• Heparin Contaminant Identified (PharmExecBlog)
• Behind The Heparin Mystery: A Counterfeit Substance (Pharmalot)
• Heparin Likely Cut With Cheap Counterfeit Ingredient (WSJ Health Blog)
• heparin contaminant? check. lawsuit? coming. (China Esquire) (added 3/21)

Update 3/27/08:

• Baxter And Heparin Liability: Foreseeable Risk (My interview with Ed Silverman at Pharmalot)
  
• Contaminated Heparin: Where is the Outrage? (Womenhealth)
• Heparin scandal reporting ignores corruption (Nancy Reyes @ Blogger News Network)
• Congress Investigates Tainted Heparin (Glenn Hess @ Chemical and Engineering News, which interviewed me back in 2003 in this cover story on counterfeit drugs)

Labels: counterfeit drugs

Counterfeit Drugs is the subject of a paper released today by the conservative American Enterprise Institute, entitled Bad Medicine In the Market.

The authors, Roger Bate and Kathryn Boateng, do a nice job of summarizing the problem of the dangers of fake drugs, which can find their way into anyone's home if there are weaknesses in the drug distribution system. The authors stop short, however, in suggesting any solution other than curtailing the use of generic drugs that had not been tested.

So with that, I'd like to remind readers of Tim Fagan's Law, first introduced by Rep. Steve Israel in 2005, and currently pending. Named for one of my teenage clients, who was injected in 2002 with counterfeit Epogen after an emergency liver transplant, it provides for the following to help plug up a porous supply chain through which counterfeits enter the mainstream distribution system:

• Increases criminal penalties. The current federal law is three years in prison. Israel’s bill increases penalties and includes up to life in prison.

• Mandates that a manufacturer must alert the FDA of a counterfeited drug in 2 days. Currently, there is no mandate. The pharmaceutical industry has said that it would voluntarily tell the FDA about counterfeited drugs within 5 business days.

• Provides the FDA with the authority to require companies to use anti-counterfeiting technology, as the technology becomes feasible and available.

• Mandates that the FDA implement the paper pedigree rule that was mandated in 1988 and has been postponed for 17 years. It also closes the "authorized wholesaler" loophole and includes manufacturers as needed to start the pedigree.

• Authorizes $60 million for spot-checking for counterfeits for each year between fiscal years 2006 and 2010.

• Authorizes $5 million for each year between fiscal years 2006 and 2010 for educating the public and health care professionals on how to identify counterfeit drugs.

• Provides recall authority to the FDA for prescription drugs. Currently, the FDA can only recall equipment and can only encourage private companies to recall their drugs.

• Authorizes the FDA to issue subpoenas with respect to preventing threats to public health.

The law is spear-headed by Tim's congressman, Steve Israel. It would be nice to see the AEI get on board with this legislation, given its concerns over the issue.

Related links:

• Counterfeit Drug Resource Page (at my firm's website)
• FDA Counterfeit Drugs Website;
• Dangerous Doses: Kathereine Eban's investigative look into the world of counterfeit prescription drugs, released May 9, 2005;
• On The Loose: Protect Yourself From Counterfeit Drugs (National Consumers League)
• Counterfeit Drugs label (from this blog, for continuing commentary)
• Drug Channels blog (Dr. Adam Fein's continuing coverage and commentary regarding holes in the drug distribution channel)
• Juvan's Health Law Update (Another blog with continuing coverage, focusing on litigation by secondary market wholesalers)
  

Labels: counterfeit drugs

The issue of counterfeit drugs and the push for radio frequency identity tags is raised in the cover story of FedTech Magazine.

The article, which features my client Tim Fagan and his injection with counterfeit Epogen back in 2002, can be found here: Tag & Release.

This is the lede:

The Fagan family of Long Island, N.Y., thought they were out of the woods when their 16-year-old son, Tim, came through a lifesaving liver transplant in 2002. Yes, he would need to take immune-suppressing drugs for the rest of his life, but his prognosis was good.

Among the drugs in Tim's regimen was Epogen, an anti-anemia medication prescribed to help boost his production of red blood cells. Tim's mother administered a weekly injection of the drug, bought from the local branch of a national pharmacy. But hours after the shot, Tim would wake up screaming in excruciating pain. His doctors had no explanation, and no one would have guessed the cause was fake pharmaceuticals.

"The first night I thought someone had broken into his room and was attacking him," says Tim's father, Kevin Fagan. "It was a very emotional and very painful thing to watch our son suffer. To find out two months later that he was taking counterfeit drugs just blew us out of the water. We couldn't believe counterfeit drugs even existed."

For more on the subject, click on the counterfeit drugs label at this blog or visit my firm's Counterfeit Drugs Resource Page.

Labels: counterfeit drugs

The FDA issued a warning today that 24 apparently related Web sites may be involved in the distribution of counterfeit prescription drugs. The drug is Xenical, a weight loss medication made by Hoffmann-La Roche.

The warning was relayed via a release at the FDA web site here, and contains the names of the sites. The FDA has provided pictures of the counterfeit Xenical, but unfortunately didn't think to put pictures of bona fide product side-by-side with the counterfeits. Modern technology is such that many counterfeits are virtually indistinguishable from the legitimate drug.

Distribution of counterfeit drugs raises liability concerns for any pharmacy or distributor that sells them, and potentially for any manufacturer that turns a blind eye to the distribution practices for its own drugs so that they trade on the gray market in pharmaceuticals.

More on counterfeit drugs, including commentary on pending legislation, can be found on this blog by clicking on the label in the sidebar or this link: Counterfeit Drugs.

Labels: counterfeit drugs

A few other blogs have noted developments on the continuing story of how counterfeit drugs enter our pharmaceutical supply chain that are worth noting:

Adam Fein at Drug Channels in RFID Un-Hype covers the failure of the drug industry to embrace radio frequency identity tags as a means of tracking drugs as they wind their way through an often extended supply chain. The extended supply chain is safety weakness as it increases the chances for counterfeit infiltration. The subject is also covered by Ed Silverman at Pharmalot as he notes that the much ballyhooed RFID as a solution to tracking drugs in the supply chain appears dead in the water.

The failure of RFID comes as no surprise to me. When I previously spoke before the FDA's Counterfeit Drug Task Force a few years back, I urged non-technology solutions. The remedy for a weak supply chain is to actually limit the number of hands the drugs pass through, not try to document a dozen different owners of the drugs. The more people that touch the drug, the greater the chance for infiltration of counterfeits (or destruction of the drug through negligent handling). Counterfeiters will always be around to try and corrupt the supply chain, for as Willy Sutton might have said, that's where the money is. One day, some distributor that bought mystery medicine out of the gray market will be looking at dead bodies and trying to feign ignorance of the problem.

And on a related note, Jayne Juvan (Juvan's Health Law Update), reports on an appeal to the Second Circuit Court of Appeals in Rx USA Wholesale v. Department of Health and Human Services, Food and Drug Administration. This dealt with an injunction against the FDA forcing compliance with the rules regarding the drug pedigrees (that's the track of the actual drugs, discussed above). The FDA has now filed its brief, and Jayne has a copy of it along with a synopsis.

See also from this blog (with yet more links) :

• Does Congress Understand the Counterfeit Drug Problem?
  
• Counterfeit Drug Legislation Stalls in Court
  

Labels: counterfeit drugs

Two articles worth noting. The first is a December recap of how laws are changing in the 50 states over the last couple of years (thanks to Juvan's Health Law Update). The second is a general article this past weekend on the subject of fake drugs geared more for members of the general public that may not have been exposed to the issue in the past (thanks to Adam Fein's Drug Channels):

• Red State, Blue State -- and Green, Yellow and Orange, Too (Pharmaceutical Commerce, Dec. 2006)
  
• Is Your Medicine Dangerous to Your Health? (Parade Magazine, 2/18/07)

I last discussed counterfeit drug legislation in New York and on the federal level at these links:

• Does Congress Understand the Counterfeit Drug Problem? (1/18/07)
• New York Counterfeit Drug Bill Affected by Election? (11/27/06)
  
  

Labels: counterfeit drugs

Since I write a bit on the subject of counterfeit drugs, as a result of a matter I handled...

FDA Alerts Consumers to Unsafe, Misrepresented Drugs Purchased Over the Internet

The Food and Drug Administration (FDA) has become aware that a number of Americans who placed orders for specific drug products over the Internet (Ambien, Xanax, Lexapro, and Ativan), instead received a product that, according to preliminary analysis, contains haloperidol, a powerful anti-psychotic drug.

Reports show several consumers in the United States have sought emergency medical treatment for symptoms such as difficulty in breathing, muscle spasms and muscle stiffness after ingesting the suspect product. Haloperidol can cause muscle stiffness and spasms, agitation, and sedation.

Therefore, the agency is reissuing its warning to consumers about the possible dangers of buying prescription drugs online. FDA urges consumers to review the FDA Web site for information before buying medication over the Internet.

FDA laboratory analysis of the misrepresented tablets is ongoing, but preliminary analysis indicates they contain haloperidol, the active ingredient in a prescription drug used primarily to treat schizophrenia. FDA learned about these mislabeled and potentially dangerous products after their recipients complained to a U.S. pharmaceutical manufacturer.

The origin of these tablets is unknown but the packages were postmarked in Greece. Photographs of the tablets in question and the shipping packages can be seen at [this link]. If the tablets received from an Internet seller resemble those in the photos and haloperidol was not specifically ordered, do not take these tablets. Instead, consumers should notify their health care provider and report the suspected products to FDA by submitting a product quality problem report at [this link].

Although the involved consumers have named several Internet Web sites where the products were purchased, identifying the vendors is difficult because of the deceptive practices of many commercial outlets on the Internet. FDA is investigating this illicit trade and plans to release appropriate information when it is available.

Taking medication that contains an active ingredient other than what was prescribed by a qualified health care professional is generally unsafe. FDA continuously warns U.S. consumers of the possible dangers of buying prescription drugs online and urges them to review the FDA Web site for additional information prior to making purchases of medication over the Internet (at this link).

For more on the problem of Counterfeit Drugs:

• FDA Counterfeit Drug Page
• The Dangers of Counterfeit Drugs (Rep. Steve Israel)
• Counterfeit Drug Resource Page (Turkewitz Law website)
• Protect Yourself From Counterfeit Drugs (National Consumers League)
• Posts in this blog on counterfeit drugs
  

Labels: counterfeit drugs

Last week bipartisan legislation was introduced, ostensibly aimed at drug safety, called the Pharmaceutical Market Access and Drug Safety Act of 2007. Does it really deal with drug safety? Nope. It is almost entirely about the importation of drugs from Canada and other countries.

The bill does nothing to plug the leaky supply chain that we have here that allows drugs to be swapped among the thousands of secondary wholesalers like pork belly futures. Indeed, the requirements of pedigrees for pharmaceuticals (a list of prior owners) has still not been fully implemented despite being authorized by Congress in 1987.

There is nothing in the bill about the most basic of safety issues, such as increased criminal penalties for counterfeiters, mandating pedigrees back to the manufacturer, and funding for the F.D.A. so that they can actually do random testing of drugs in the marketplace, recall them when needed, and do proper investigations.

Before Congress tries to deal with foreign drug supply systems, it should get a grip on our own, and enact Tim Fagan's Law, which came about as a result of domestic counterfeiting.

More on the subject can be found at:

• Jane Jarvan's Health Law Update;
• Adam Fein's Drug Channels; and
• My own Counterfeit Drug Resource Page (for background information on counterfeiting).
  

Labels: counterfeit drugs, Political Action, Tim Fagan's Law

Since drug counterfeiting is such an insidious crime -- with the evidence being destroyed at ingestion or injection and treatment failure usually chalked up to the underlying disease -- I am going to do something I generally don't do. Reprint a press release almost in its entirety. This came out from the National Association of Boards of Pharmacy a few hours ago, and is chock full of unsettling facts and figures. Counterfeit drugs, a subject I discuss often, affects everyone in the country, for if counterfeits slip into the pharmaceutical distribution system (and with a big profit motive, this is inevitable), they can end out in anyone's home:

2006 Unprecedented Year of Increased Fake Drug Production, Introduction
into U.S. Drug Supply

WASHINGTON, Jan. 11 /PRNewswire-USNewswire/ -- Amid increased concern
over the growing epidemic of counterfeit drugs, the National Association of
Boards of Pharmacy (NABP) issued the following information concerning
worldwide counterfeiting activity. Much of this increased activity is aimed
at pharmacy outlets in the United States. According to a 2006 World Health
Organization report, the current prevalence of counterfeit medicines can
range to over 10 percent of the drug supply globally.
NABP notes that in 2006:

* United States
Nineteen people were indicted in Detroit, Michigan, for importing and
distributing counterfeit products, to include pharmaceuticals. A
portion of the proceeds were used to fund the terrorist organization
Hezbollah.

Eleven people in Georgia, North Carolina, South Dakota and the Central
American nation of Belize were indicted on charges of selling
counterfeit prescription drugs over the Internet. Investigators believe
many of the drugs had little or no medicinal value, and that those
behind the scam netted more than $19 million.

* Canada
One of Canada's largest Internet pharmacies is selling counterfeit
versions of Lipitor, Crestor, Celebrex and seven other drugs, according
to the Food and Drug Administration (FDA). These counterfeits were
seized en route to American patients.

* Mexico
Eleven tons of counterfeit, expired, stolen, or illegally imported
medicines were reported seized by Mexican authorities in Mexico City,
Guadalajara, Jalisco, and Morelia in November 2006. Six individuals
were arrested and fourteen more are under investigation according to
Mexican news sources.

* South America
It is reported that in underdeveloped countries such as Argentina,
Colombia, and Mexico, up to 40 percent of manufactured pharmaceuticals
are believed to be counterfeit.

* United Kingdom
In July 2005, 70 packs of counterfeit Lipitor, marked with genuine batch
numbers, were found in two separate licensed wholesalers in the UK.
Dutch customs intercepted a consignment of counterfeit Lipitor bound for
Canada and found 10,000 packs in UK packaging. The British Medicines and
Healthcare Products Regulatory Agency (MHRA) recalled the suspect batch
numbers and more than half the 520 packs returned were found to be
counterfeit. Around 2,500 counterfeit packs had already been consumed or
discarded by the National Health Service patients. Days after that
incident came to light a second batch of counterfeit Lipitor was found.

* China
In China, authorities believe that for some drugs, the estimated average
of counterfeit copies can be as high as 50 percent. Chinese police
dealt with more than 4,600 cases involving counterfeit and inferior
goods from January to November 2006, according to the Ministry of Public
Security. One of the most serious cases was the use of tainted drugs
manufactured by Qiqihar No. 2 Pharmaceutical Co., which left 11 people
dead.

* India
20% of medicines sold across India are fake or counterfeit, according to
the Associated Chambers of Commerce of India. Of the 20% fake
medicines, 60% are without active ingredients, 19% have wrong
ingredients while 16% have harmful and inappropriate ingredients, such
as talcum powder.

...
Also in 2006, NABP introduced a web site to help educate the public
about the dangers of counterfeits and steps they can take to protect
themselves. For more information, visit http://www.dangerouspill.com.

Labels: counterfeit drugs

The counterfeit Lipitor investigation from 2003 is apparently still red hot (that is a fake bottle on the right, courtesy of the FDA). An estimated 200,000 bottles were counterfeited.

From the Kansas City Star yesterday:

More defendants were indicted Friday on charges of selling fake Lipitor, bringing to 24 the number charged locally since 2003 for allegedly participating in a wide-ranging counterfeit-drug distribution scheme.

A second superseding indictment handed up by a federal grand jury named six individuals, amending previous indictments by adding four defendants.

The six were allegedly involved in buying and selling prescription drugs in the secondary wholesale market -- outfits that buy and sell drugs among themselves and sell drugs to hospitals, clinics, doctors and pharmacies.

The six are accused of selling counterfeit or illicitly imported Lipitor and other prescription drugs in the secondary market. Lipitor, a cholesterol-lowering drug made by Pfizer Inc., is the best-selling prescription drug in the world.

Readers of this space know it is a subject I have covered, and will continue to cover. You can read more about the problems of fake drugs at this link back to my firm's website.

Labels: counterfeit drugs

When New York Attorney General Eliot Spitzer settled two days ago with wholesale drug giant Cardinal Health regarding its trading of drugs with the secondary market, he published what I think is a devastating indictment of the company and how it risked the lives of consumers across the country. Why did Cardinal do this? Fom the AG's press release is this:

The investigation determined that Cardinal purchased drugs from certain alternate source vendors, despite risks associated with buying from those vendors, to take advantage of higher available profit margins. Cardinal also sold pharmaceuticals to certain customers even in the face of evidence that those customers may have been illegally diverting the drugs outside their intended channels of distribution. (emphasis added)

For those new to the story, this is my post from yesterday on the announcement. While the press release was covered in the newspapers, most (all?) overlooked the specific findings that the AG's office made regarding Cardinal's sins. What follows are some of those findings, which give the very distinct appearance to me that Cardinal was being deceptive and/or turning a blind eye to the problem of counterfeits at the time. While problems have now been rectified, it doesn't excuse the conduct that occurred when it happened.

In reading the AG's comments below, I noted that when Cardinal employees discuss the risk-benefit issues involved when dealing with the secondary market and suspect medications, they apparently refer to their own risk -- as opposed to the risk of patients who may need to take the life saving medications that they are busy trading around.

7. One employee in 2002 wrote an e-mail discussing a newspaper article on a spate of recent counterfeit drug cases. The article quoted one commentator's view that criminals are bright, rational people "doing the risk-benefit analysis," and shifting their activities to diverting and counterfeiting prescription drugs. The Cardinal employee wrote, apparently referring to that observation regarding counterfeiters,, "The article mentioned the risk reward ratio of price to penalty when caught." He concluded: "We obviously need to earn money in this area, but have to manage risk."

...

9. At times, Cardinal purchased from sources despite indications that the vendors may have been unsuitable. For example, in January 2004, one employee examined the pedigrees that Cardinal was receiving, and noted suspicious sources in the chain of custody -- in his words -- firms "which could be bad." The employee asked that a plan be put together to review those entities. A Cardinal compliance employee indicated that he had already verified that those entities were licensed as wholesalers. That verification was one appropriate step but insufficient. It does not appear that there was any further response to the request for review, nor that the suspect vendors were excluded. The Investigation has shown that some of the entities the employee identified were, as he suspected, engaging in diversion....

10. In March 2004, Cardinal realized that it possessed an anabolic steroid product that customers might perceive as high-risk, although in fact there was no specific evidence of any product integrity issues. It sought to avoid such customer concerns by transferring this product from its trading company, which was known for buying from [alternate source vendors], to its "divisions," which customers perceived as selling pharmaceuticals purchased from manufacturers. A Cardinal employee sent an e-mail to the head of the Trading Company, noting a substantial inventory in "an anabolic steroid that is on the restricted list due to potential counterfeit. There is plenty of room to pass our inventory to the divisions. What are your thoughts on moving this product to the divisions?' The reply e-mail instructed simply: "Go ahead and move it."

11. Cardinal repeatedly sold pharmaceuticals to customers that it knew or should have known were diverting pharmaceuticals. Prior to March 2005, Cardinal made numerous sales of pharmaceuticals to a Nevada company which purported to be a "closed-door" pharmacy that served only nursing homes. In a routine pattern, the Nevada company placed two orders at the same time. One was for products likely to be needed by its stated patient population of nursing home residents, typically in quantities of ones or twos, as would be expected for its needs. The other was for much higher quantities and included products unlikely to be needed by the nursing home residents. Despite this pattern, Cardinal continued to fill the company's dual orders as described above. Investigation has shown that the company dispensed the products on the small-quantity orders to nursing home residents, and it transferred the products on the large-quantity orders to an affiliated wholesaler for resale on the Secondary Market....

12. Similarly, starting in January 2003, Cardinal was alerted that its customers in the Carrington network of closed-door pharmacies were diverting drugs. One warning came from a Cardinal sales representative who reported visiting the Carrington pharmacies and finding the doors locked, an "Administrative Assistant" on site but no pharmacist, about thirty large boxes awaiting pickup by UPS and delivery to a wholesaler in Kentucky, and purchase orders from a Florida wholesaler with directions to ship to the Kentucky wholesaler. One of the Administrative Assistants explained in detail the process by which the closed-door pharmacy received drugs and sold them to the wholesalers. Cardinal took steps to determine whether the Carrington pharmacies were engaged in diversion, but continued its sales, though at a reduced level, until September 2003. The steps taken by Cardinal, such as seeking assurances from Carrington executives and accepting those assurances, were, in light of other evidence known to Cardinal, inadequate. In December 2003, Cardinal finally severed its business relationship with Carrington after learning from law enforcement that Carrington was under criminal investigation...

13. Cardinal also sold pharmaceuticals to wholesalers who were at the same time on Cardinal's excluded vendor list -- in other words, wholesalers that Cardinal itself deemed sufficiently high-risk that it adopted the policy of never buying product that had passed through their hands. The Trading Company president noted as to one wholesaler in June 2003 that "several things that have happened in the past are making us feel we need to very closely examine our buying" from the wholesaler, while simultaneously noting that "we are fine" with selling to that same wholesaler. In another example from December 2003, the president reported that "we now have been asked by compliance" to add a certain wholesaler to the excluded vendor list, but "We can still sell to them."

14. Cardinal made "third party" returns to manufacturers on behalf of other wholesalers regardless of where the wholesaler had purchased the product. As a former Cardinal employee testified: "[I]t wasn't worth our while to research whether we had [originally] sold it to the alternate source or to this third party or not." Such practices can support the Diversion Market by giving unscrupulous customers an incentive to divert drugs and then "return" them for full credit....

One can only hope that the folks responsible have long since been fired. If not, then I think top management must have been complicit in the conduct.

Labels: counterfeit drugs, Eliot Spitzer

Cardinal Health, one of the "Big Three" of the drug wholesaling business, has settled New York's investigation against it for $11M and agreed to reforms of its business practices. Cardinal is ranked 19th on the Fortune 500 list of America's largest corporations.

The underlying problem dealt with the company's purchase and sale of drugs out of the "secondary market," instead of buying them directly from manufacturers. This gray market in drugs involved some 6,000+ wholesalers as of 2005 when New York's investigation began, and before changes started to sweep through the industry. Many of those changes I had previously documented on my Counterfeit Drug Resource Page.

The existence of so many secondary wholesalers -- who are licensed by a hodgepodge of regulations that vary from state to state -- led some to buy and sell pharmaceuticals without knowing exactly where they had been and who had owned them in the past. This opened a gaping hole for counterfeit medications to leak into the legitimate drug supply system. The purchase of such mystery medicines was widely condemned and led to changes by major wholesalers in 2005.

From the press release out of the office of New York Attorney General Eliot Spitzer:

Secondary market trading is not illegal on its face, but can create opportunities for the introduction of unreliable drugs, including counterfeits, into the marketplace. In recent years, there has been an increase in the number of cases of counterfeit drugs in the American supply chain. Secondary market trading also can create an opportunity for companies to divert drugs from their intended distribution channels. Diversion into the secondary market, often to take improper advantage of manufacturer discounts, can begin a series of trades from wholesaler to wholesaler that makes it difficult to trace the origin of a drug and impossible to ascertain its authenticity.

The investigation determined that Cardinal purchased drugs from certain alternate source vendors, despite risks associated with buying from those vendors, to take advantage of higher available profit margins. Cardinal also sold pharmaceuticals to certain customers even in the face of evidence that those customers may have been illegally diverting the drugs outside their intended channels of distribution.

A review of the AG's findings, which does not seem to appear in newspaper accounts of this settlement, represents in my view a devastating indictment of the conduct of Cardinal Health, which appeared to act in a reckless disregard for the safety of consumers. This will be the subject of a follow-up post.

As per the AG's office, Cardinal will pay $3 million to New York State, $7 million to a non-profit health research corporation called Health Research, and $1 million to the attorney general's office to cover costs of the investigation. But wait... there's much more...it appears it isn't just about money but about forcing better business practices:

In addition to adopting the Wholesaler Safe Product Practices, Cardinal has agreed that in the regular course of its business it will:

-- Buy pharmaceuticals directly from manufacturers and not on the secondary market from alternate source vendors;
-- Sell pharmaceuticals only to wholesalers who have certified their compliance with the Wholesaler Safe Product Practices, and have agreed to allow audits of those certifications;
-- Adopt "know your customer" provisions and monitor for customer diversion; and
-- Hire an external auditor to conduct periodic reviews of its compliance with the settlement.

As I wrote on November 27th, I was one of the people the attorney general had dropped a subpoena on, for the records I had obtained and created in my own investigation regarding the counterfeit drugs taken by a Long Island teenager, Tim Fagan, after he had undergone an emergency liver transplant. It's nice to see the investigation has paid dividends for New Yorkers, not just in financial recovery, but in a safer pharmaceutical supply chain.

Labels: counterfeit drugs, Eliot Spitzer, Tim Fagan's Law

Passed by Congress in 1987 and signed into law in 1988, critical portions of the Prescription Drug Marketing Act are still not in effect. Specifically, those parts that deal with certain drug wholesalers maintaining a "pedigree" for the drugs they trade. But the FDA had finally decided after all these years that December 1st of this year would be the magic day.

I discussed some of this back on December 1st when some secondary wholesalers -- those that are not "authorized" wholesalers, for whom the strict pedigree provisions don't apply --had obtained temporary relief in court preventing the PDMA from finally being implemented . This is important because accurately tracking the pedigree (or chain of custody) of a drug is a major way to keep control of the supply chain. This is critical to making sure counterfeit drugs don't leak into our regular drug channels, and thereby into your local pharmacy.

Now a federal judge has ruled on this in favor of the secondary wholesalers, thereby staying the provisions of the law. Since two blogs have already covered this, I won't re-invent the wheel and will direct you to them:

Both Juvan's Health Law Update and Adam Fein's Drug Channels had long discussions on the issues in their blogs on December 10th.

--ET

Labels: counterfeit drugs

The New York Times today jumps into the fray regarding the dangers of counterfeit drugs in an editorial. They do so from the perspective of those buying drugs over the Internet:

Tempted to buy cheap medicines from a pharmacy Web site? Think twice. If the Web site shows no verifiable street address for the pharmacy, there is a 50 percent chance the drugs are counterfeit.

In rich countries, fake medicines mainly come from virtual stores. Elsewhere, they are on the pharmacy shelves. In much of the former Soviet Union, 20 percent of the drugs on sale are fakes. In parts of Africa, Asia and Latin America, 30 percent are counterfeit. The culprits range from mom-and-pop operations processing chalk in their garages to organized-crime networks that buy the complicity of regulators, customs officials and pharmacists.

The editorial goes on to the deaths from counterfeits and the ways developing countries have been fighting it, and otherwise serves to further sound the alarm of buying medication when you don't know its origins.

As those in the pharmaceutical drug trade know, the issue of counterfeits has been a hot topic before the FDA in recent years. It is also, most certainly, not confined to foreign counterfeits as we have purely domestic counterfeiting going on.

After identifying the problem, the Times makes its pitch for action, writing:

An international convention is also needed to establish stiffer penalties for counterfeiting drugs, and marshal more funds and support to fight this deadly crime.

That's a great idea. And we can start right here at home with legislation currently stuck in congressional committees. The pending legislation before both the House and the Senate comes in the form of Tim Fagan's Law, named for one of my clients.

For more on the issues, you can visit my own Counterfeit Drug Resource Page, and read more about the problem by clicking on the Counterfeit Crugs label on your left and seeing other posts on the subject.

Labels: counterfeit drugs, Political Action, Tim Fagan's Law

I speculated last week that the Democratic victory in the House and Senate bodes well for counterfeit drug legislation moving forward. The mover behind Tim Fagan's Law is Tim's congressman, Steve Israel. Tim, who I represent, was injected with counterfeit drugs after a liver transplant in 2002.

So I spoke this week to Rep. Israel's new communications director and former health policy aide. She tells me that Rep. Israel will push for hearings in the Energy and Commerce Committee, where the bill is stalled. Significantly, the new chairman will be Rep. John Dingell, who was a champion of the Prescription Drug Marketing Act of 1987.

The PDMA, for those who follow the counterfeit drug issue, is the major piece of legislation that was designed to safeguard our pharmaceutical supply chain by forcing these companies to track the "pedigree" of the drugs -- that is, who the prior owners of the drug were. It has never been fully implemented, and some companies continue to fight it today. From today's WSJ Law Blog comes this story from Heather Won Tesorieo, who has been covering this subject for several years:

A federal magistrate recommended yesterday that a long-stalled provision of a drug law aimed at curtailing counterfeit drugs be stayed, giving a surprising upper hand to a group of small drug wholesalers that filed for an injunction to keep the law from going into effect. The plaintiffs and the government have until noon today to present further information to a federal judge, who is then expected to issue a ruling.

The drug law provision would require some drug wholesalers to supply a record, or pedigree, to track every middleman that handles a drug. It's the latest regulatory measure aimed at improving transparency in the nation's drug supply chain and stave off the growing number of incidents of counterfeit drugs.

With the continued obstinace of some wholesalers, who apparently refuse to make their industry safer so that they can continue to wheel and deal pharmaceuticals on the gray market, the passage of Tim Fagan's Law becomes more important.

Change seems to be sweeping the industry -- notwithstanding those who would like to keep it all secret -- as light is shed on the loopholes in the system. So while some wholesalers continue to fight against the trend of greater safety, there is still good news out there for anyone who takes prescription drugs, which is to say, almost all of us at one time or another.

Labels: counterfeit drugs, Steve Israel, Tim Fagan's Law

The recent election seems destined to play a role in the counterfeit drug bill pending in New York. While last week I wrote about Tim Fagan's Law pending in Washington, that is not the only proposed legislation designed to bring greater safety to our drug distribution system. In Albany, Assemblywoman Amy Paulin (D-Scarsdale) introduced her own bill to track drugs and increase pharmaceutical safety. From the press release:

This legislation requires drug manufacturers to establish a pedigree for each prescription drug, requires every wholesaler to submit a bond of $100,000, punishes manufacturers and wholesalers who intentionally package, sell, transfer, distribute or deliver a counterfeit drug with a class D Felony, establishes a fine of up to two thousand dollars per violation for offending drug manufacturers, and authorizes criminal background checks for manufacturers and wholesalers.

But two things happened in the election. First on the negative side, Paulin's Republican co-sponsor lost his Senate seat. Nick Spano (R-Yonkers) had hung on to re-election by a mere 18 votes in 2004, but this time lost. Paulin was bold to reach across the aisle to ask Spano to co-sponsor this bill -- both pictured with me here after the press conference annoucing the legislation -- especially given the vulnerability of his seat. But sound public policy comes first for this bill she cares passionately about. She now needs a new sponsor on the Senate side.

And second, on the far more positive side, Eliot Spitzer blew away his opponent to win the governorship. Since Spitzer as Attorney General started an investigation into drug distribution practices in New York, it is presumably a matter he knows and cares much about. One of the subpoenas he dropped in this investigation was on my firm, for the records that I have for representing Tim Fagan and investigating the problem of counterfeit drugs.

This bill is one of many in state legislatures across the country that have popped up give the extraordinary risks from counterfeit drugs that exists due to our leaky drug supply chain. Hopefully the holes can be plugged before more people are injured.

Labels: Amy Paulin, counterfeit drugs, Eliot Spitzer, Nick Spano, Political Action, Tim Fagan's Law

Counterfeit drugs fly beneath the usual political radar of war, deficits, gay rights, and other issues that Washington often deals with. But to Kevin Fagan, the problem of pharmaceutical fakery is a real problem: Tim, his then 16 year old son, had been injected with counterfeits after a life-saving liver transplant in 2002.

Kevin's crusade to help clean up our leaky drug distribution system -- which all too often allows fake drugs to slip into the legitimate supply chain through shady secondary wholesalers -- brought him to Washington, where Representative Steve Israel introduced Tim Fagan's Law in 2005. The bill, and the significant problems with the distribution system that allows this to happen, are detailed more fully on my Counterfeit Drug Resource Page. Since I represent the Fagan family, it is a matter of some interest to me.

The problem with the proposed law doesn't seem to be self-evident since it is non-partisan legislation that does the following:

• Increases criminal penalties. The current federal law is three years in prison. Israel's bill increases penalties and includes up to life in prison.

• Mandates that a manufacturer must alert the FDA of a counterfeited drug in 2 days. Currently, there is no mandate. The pharmaceutical industry has said that it would voluntarily tell the FDA about counterfeited drugs within 5 business days.

• Provides the FDA with the authority to require companies to use anti-counterfeiting technology, as the technology becomes feasible and available.

• Mandates that the FDA implement the paper pedigree rule that was mandated in 1988 and has been postponed for 17 years. It also closes the "authorized wholesaler" loophole and includes manufacturers as needed to start the pedigree.

• Authorizes $60 million for spot-checking for counterfeits for each year between fiscal years 2006 and 2010.

• Authorizes $5 million for each year between fiscal years 2006 and 2010 for educating the public and health care professionals on how to identify counterfeit drugs.

• Provides recall authority to the FDA for prescription drugs. Currently, the FDA can only recall equipment and can only encourage private companies to recall their drugs.

• Authorizes the FDA to issue subpoenas with respect to preventing threats to public health.

So why would a bill that has no partisan agenda languish in a committee despite it being sound public policy? The answer, I'm afraid, is that it languishes simply because it came from the minority party. Israel, who is the Fagans' congressman, happens to be a Democrat. So too is New York Senator Chuck Schumer, who introduced a counterfeit drug bill in the Senate.

With the Democrats taking control of Congress, it is hoped that this bill can now move out of the committees where it is stuck and out on to the floor for debate and voting.

Labels: Charles Schumer, counterfeit drugs, Political Action, Steve Israel, Tim Fagan's Law