Fake drugs, real threat

The FDA, working to uncover fraud, encourages consumers to check carefully and note any changes in a drug’s label, taste or appearance.
(Photo illustration by Ricardo DeAratanha / LAT)
Special to The Times

Doctors couldn’t explain why the medicine they were giving Tim Fagan wasn’t working. The 16-year-old boy had been rushed to New York University Medical Center for an emergency liver transplant last February.

Fagan was given daily injections of a drug called Epogen to treat severe anemia. But his red blood cell count wasn’t improving. And there was another mystery: Shortly after each injection, the young patient was getting severe and painful muscle cramps.

After two months of treatments, Fagan and his family received shocking news. The version of the drug he had received was counterfeit. The small vials contained only one-twentieth the amount of active ingredient the label indicated.


“This wasn’t a drug someone bought on the street,” but rather from a major national pharmacy chain, said Eric Turkewitz, a New York lawyer who is representing the Fagans in a pending lawsuit. “The family never thought for a moment that it was anything but real.”

It wasn’t. Somewhere between the drug’s manufacture and its arrival at the pharmacy, counterfeiters had taken low-dose vials and relabeled them as high-dose versions. The weaker drug sells for $22 a bottle. The high-strength bottle fetches $445. An estimated 110,000 bogus bottles reached the market without raising suspicions. Investigators say the counterfeit scheme may have netted criminals a staggering $48 million.

The Food and Drug Administration insists that the country’s pharmaceutical drug supply is the safest in the world. But a growing number of counterfeit drug seizures and arrests has raised new worries that consumers can’t be so sure the pharmaceutical medicines they buy are safe or even genuine.

• In the spring of 2001, a pharmacist in Sunnyvale, Calif., noticed something amiss with bottles of the growth hormone Neupogen, which is prescribed to HIV and cancer patients. The bottles were fake, filled not with medicine but with salt water.

• In February 2002, Robert Courtney, a Kansas City, Mo., pharmacist pleaded guilty to diluting cancer drugs. He later admitted that he had diluted at least 98,000 prescriptions since 1992.

• In 2002, bottles of Zyprexa, a drug used to treat schizophrenia, were found to be bogus. The pills inside had been replaced with aspirin.


• In May 2003, the FDA issued an alert that nearly 200,000 counterfeit bottles of Lipitor, widely used to control cholesterol, had made their way onto the market, representing “a potentially significant risk to consumers.”

• Last month, a 31-year-old Glendale man was indicted by a federal grand jury in Los Angeles on charges of trafficking in tens of thousands of counterfeit Viagra tablets. The fake Viagra was manufactured in China to look like the real thing.

Officials acknowledge that they don’t know the full extent of the problem of counterfeit drugs. But many believe that it poses a growing danger. “There are two things that worry us,” said William Hubbard, senior associate commissioner for policy and planning at the FDA. “The number of criminal cases has tripled in the past few years. That tells us that counterfeiters are more active. And we’re seeing more organized elements getting involved.”

The experience in Florida, where a grand jury report last year helped spotlight the issue, offers a case in point. From 1985 to 2001, only five counterfeit drug cases were investigated in the state, contrasted with 10 such cases in the last two years. The FDA also has seen a surge in investigations of counterfeit drugs, from an average of about five a year in the 1990s to 20 last year. And those numbers almost certainly underestimate the extent of drug counterfeiting.

“The business of selling counterfeited and adulterated drugs is booming,” Robert Penezic, former assistant statewide prosecutor in Florida, told a congressional subcommittee in June. “In the case of buying and reselling adulterated prescription drugs, the money that can be made from illegal activity is staggering.”

The U.S. pharmaceutical industry generates $180 billion a year. Some genetically engineered drugs now go for several thousand dollars for a single vial, making counterfeiting a potentially attractive business. Consider Serostim, a drug often taken by AIDS patients to prevent debilitating weight loss. A 12-week course of Serostim costs about $21,000, which explains why counterfeiters have targeted the drug.


What’s more, counterfeiting pills, labels and packages is relatively simple. Most of the tools needed to produce authentic-looking but counterfeit drugs and packaging can be bought on the Internet. In December, federal officials in Florida charged Julio Cesar Cruz, 41, of Miami and others with selling more than $1 million worth of counterfeit Lipitor. The government’s affidavit cites testimony from a material witness who confirmed a scheme “to manufacture counterfeit Lipitor, including the purchase of punches, dies, plates and other items they used to create and manufacture a tablet that appeared to be genuine Lipitor.” A federal grand jury is expected to review the charges filed in the complaint and determine if the evidence warrants an indictment.

“With each new case we are shocked at the level of sophistication in the reproduction of labels, seals and containers,” Gregg Jones, an expert with Florida’s Bureau of Statewide Pharmaceutical Services, testified at a hearing in June before the oversight and investigations subcommittee of the House Energy and Commerce Committee in Washington, D.C.


Reaching the pharmacy

One avenue for the entry of counterfeit drugs is imported medications brought in by bargain hunters looking for cheaper versions on the Internet or in Mexico, Canada and other countries. To underscore the danger, the FDA and customs officials in July conducted a three-day search of suspicious international parcels passing through mail facilities in San Francisco and Carson. A hundred packages were examined at each location each day, netting investigators a total of 1,153 imported drugs.

Among the medications, 88% were in violation of U.S. drug laws. Some were unapproved versions of drugs sold in the U.S. Others were drugs that have been withdrawn from the market for safety reasons. Many were packaged without the original labeling and instructions for use. Some were sent in baggies, in envelopes or wrapped in tissue paper. “Although many drugs obtained from foreign sources purport, and may even appear to be, the same as FDA-approved medications,” the agency warned, “these examinations showed that many are of unknown quality and origin.”

The evidence from recent seizures of counterfeit drugs suggests that the more serious problem comes from inside U.S. borders. The problem: a lax drug distribution system that provides ample opportunities for counterfeit drugs to enter the supply chain.

Most Americans assume that medicines go directly from drug makers to pharmacy shelves. In reality, prescription drugs often pass through a tangle of wholesalers, ranging in size from major national companies to tiny operations that may consist of nothing more than a small office. An estimated 7,000 drug wholesalers do business in the U.S. Although most are legitimate, some are nothing more than fronts used to illicitly divert drugs and resell them at a profit. As many as 55 of the 1,458 licensed wholesalers in Florida are suspected of selling counterfeit drugs or medicines that were obtained fraudulently, according to a 2003 report released by the state. As drugs change hands — in some cases, half a dozen times between drug maker and patient — counterfeiters have plenty of opportunities to introduce bogus medicines.


In the case of the bogus Lipitor, for example, investigators traced drug shipments through a string of wholesalers, including two companies in Puerto Rico and one in Gatlinburg, Tenn. It’s not known at which point the fake pills were introduced.

On Jan. 16, the Nevada Board of Pharmacy revoked the licenses of two such wholesalers, Dutchess Business Services Inc. and Legend Pharmaceuticals Inc. The companies were found guilty of falsifying their records, as well as buying and selling drugs illegally obtained from companies not authorized to possess them — including bogus versions of Serostim, the drug used by AIDS patients.

“The number of small secondary-drug wholesalers who typically sell drugs among themselves is increasing,” Jones testified before the congressional subcommittee. “Many of the small secondary-drug wholesalers never handle products and only generate elaborate paper trails, their existence only serving to hide the original source of the drugs.”

Investigators say some diverted drugs are sold to unscrupulous wholesalers by Medicaid patients who go from doctor to doctor, getting prescriptions, filling them at a discount, and then selling them to street wholesalers. HIV clinics, which often get deeply discounted drugs, may buy more than they need and sell the remainder to wholesalers at a profit.

The same tactic is used by so-called “closed-door pharmacies,” or companies that buy drugs in bulk quantities from manufacturers, usually at a discount, and sell them to hospitals, nursing homes and other healthcare facilities. These companies may buy more than they need and sell the rest to wholesalers.

Drugs can also be diverted through garden-variety thievery. In one instance, a trailer truck containing $3 million worth of drugs was hijacked and diverted to wholesalers.


Even when outright counterfeiting doesn’t occur, diverted drugs may be stored improperly and lose their potency or effectiveness. In one case, Florida investigators traced more than $1 million worth of a drug sold by a small Fort Lauderdale, Fla., wholesaler to one of the largest wholesalers in the nation over a six-month period. All of it had come from the streets of Miami, where two unlicensed street brokers stored the temperature-sensitive injectable drug, which requires refrigeration, for hours at a time in the trunks of their cars.

As Cesar Arias, the investigator in that case, told congressional investigators, “No patient in the nation can know with 100% certainty that the drugs they are getting are what they are purported to be — or if they are, that they have not been in the trunk of someone’s car, or sitting in a hot warehouse or a crack house in South Florida.”

The shadowy wholesale market for prescription drugs, shot through with corruption, has provided ample opportunities for counterfeiters to introduce bogus versions of drugs. “In each instance in which counterfeits or diverted drugs have made their way into the mainstream distribution system, it has been through a dishonest wholesaler,” Arias testified. “Once the drugs enter the system, they can end up in any pharmacy in the nation.”

Another weak link in the system may be less dramatic but just as troubling. Many drugs are sold by pharmaceutical manufacturers in bulk. Along the way from drug maker to consumer, pills and other medicines are repackaged into the familiar 30-, 60- or 90-dose bottles that most people buy.

In the U.S., there are companies whose only business is repackaging drugs. (In Europe, by contrast, drugs are packaged by manufacturers in the amounts typically used in treatment, eliminating this step.) The FDA acknowledges that repackaging offers one more opportunity for counterfeiters to introduce bogus pills.


Stricter laws, vigilance

The interim report of the FDA’s task force on drug counterfeiting, released in October, describes a variety of strategies that could close loopholes in the country’s distribution system and increase security in other ways. The final report is expected in the next few weeks. One recommendation under consideration is strengthening so-called “pedigree” laws, which require drug wholesalers to document in writing each time a drug changes hands. Meantime, several states, including Florida and Nevada, have instituted their own strict pedigree-paper regulations, which proponents say will help quash counterfeiting. Critics worry that the documents themselves could be counterfeited.

Another approach under review is the use of anti-counterfeiting technologies, such as tamper-proof packaging, special watermarks and holograms that are difficult for criminals to duplicate.

The FDA is evaluating the use of radio-frequency identification (RFID), which uses tiny electromagnetic devices placed in drug packaging to track products as they move through the distribution system.


Seeking solutions

Critics say these high-tech fixes are nothing more than Band-Aids. “The FDA’s meeting in October was like a trade show, with manufacturers hawking all kinds of anti-counterfeiting technologies,” says Turkewitz, Tim Fagan’s lawyer. “But technology isn’t the solution. With thousands and thousands of wholesalers moving drugs, it’s a little like trying to put burglar alarms on a house with 10,000 windows. Someone’s going to find a way in.”

The only permanent solution, he says, is eliminating the gray market of drug wholesalers, which allows counterfeiting and illegal diversion to thrive.

At least one drug maker agrees. When counterfeit versions of its drug Serostim began to appear, the Swiss-based drug maker Serono decided to abandon the existing distribution system entirely. The firm eliminated all wholesalers and authorized just 100 pharmacies around the country to handle the drug.

Using printed bar codes, it now tracks every box from the time it leaves the manufacturing plant to the time it reaches a patient.


Despite the increasing number of reports of counterfeit drugs, the FDA says that the nation’s drugs are safe.

Yet even the agency recommends vigilance on the part of drug purchasers, advising online consumers to purchase only from state-licensed pharmacies or from Internet sites that have the Verified Internet Pharmacy Practice Sites seal. It also cautions consumers to check for “changes in packaging, labeling, color, taste or shape of a pill.”

Vigilance could help. In several instances, authorities have been alerted to bogus pills by consumers who noticed a strange taste or something suspicious about the packaging.

But many of the counterfeit drugs that have been seized are so genuine-looking that even pharmacists are fooled.

When Florida undercover investigators bought 100 boxes of Epogen, the drug used by Fagan, “the investigators had no clue, even after examining the boxes, that the injectable products were counterfeit,” according to congressional testimony. The boxes were identified as bogus only after being carefully examined by the FDA and the drug’s manufacturer.

Fagan still has to take Epogen to fight anemia, according to his lawyer. After what he’s been through, he scrupulously examines every box and vial label.


“But if a clever counterfeiter wants to pass off bogus vials as the real thing,” says Turkewitz, “there’s almost no way anyone would be able to tell the difference.”