A physician and his wife were recently sentenced to pay fines of $7,500 and $3,000, respectively, for receiving in interstate commerce and delivering misbranded drugs, a misdemeanor. Read the Department of Justice’s summary of the case here.
The physician specialized in the treatment of cancer patients. His wife was managing the practice and was responsible for ordering the drugs that her husband prescribed. For a period of over two years, she had ordered various discounted oncology drugs from foreign sources. These drugs had not been approved by the FDA for distribution or use in the United States, and their labeling did not contain information required by law. As such, these prescription drugs were “misbranded” and illegal to receive and provide to patients in the United States.
Among the drugs purchased was a prescription drug labeled “Mabthera.” It contains rituximab, the same active ingredient found in the FDA-approved drug legally used and marketed in the United States as “Rituxan.” However, the drug ordered came from an unapproved, foreign source, and its label did not bear adequate directions for use and other information required by the FDA. As a result, the physician – who had no actual knowledge of where the drugs were coming from – and his office manager received misdemeanors.
But wait, there is more to the case… In February 2018, the couple agreed to pay $500,000 for violating the False Claims Act by knowingly submitting false claims to Medicare for unapproved chemotherapy drugs. The False Claims Act piggybacks on almost any violation of law by a healthcare provider if the provider was billing Medicare, Medicaid or any other federally-sponsored program.
Lessons to be learned from the case:
Know your wholesaler.
Searching for discounts and buying from small, relatively unknown wholesalers might cost more in the long run. For example, see a recent criminal case where a wholesaler falsified pedigrees and pharmacies failed to spot red flags. Our office represented pharmacies who were not able to account for drugs because a wholesaler disappeared, did not provide adequate 3Ts records, or provided misbranded drugs. This becomes especially relevant in PBM audits where a strong partnership with the wholesaler means a successful drug reconciliation audit.
Make sure your wholesaler is compliant with the Drug Supply Chain Security Act by reviewing all purchasing records.
Verify all applicable licensing and disciplinary records.
Review all invoices, acquisition records, pedigrees prior to accepting a delivery.
If you see any red flags, address them with the wholesaler and document the conversation.
It seems that the physician and his wife in the above case were not excersising due diligence in purchasing oncology drugs. However, it’s not always easy to spot a drug from a foreign source. For example, in 2005 three businesses and 11 individuals were charged in connection with a $42 million dollar conspiracy that involved the distribution of counterfeit Lipitor manufactured in Costa Rica and smuggled into the U.S. Misbranded Lipitor was virtually indistinguishable and the invoices showed a U.S. distributor and manufacturer.
Our firm was also involved in defending a physician in an Avastin case, where a clinic was purchasing a drug from a distributor located in the U.S. but who was selling counterfeit Avastin obtained from a foreign source. It was almost impossible to determine where Avastin was coming from.
When a distributor approaches you with a too-good-to-be-true deal, think twice, research the distributor and the source of the drug.