The U.S. Department of Justice, according to Seeking Alpha, is investigating the sale and distribution of counterfeit drugs in the U.S. that may have amounted to a quarter-billion dollars. The investigation comes about two months after The Wall Street Journal reported on a lawsuit filed by Gilead Sciences alleging a massive breach in the U.S. drug supply chain consisting of $250 million in counterfeit HIV drugs that were sold throughout the U.S. from licensed pharmacies to American patients. The alleged counterfeit drug sales were traced back to August of 2020 and continued well into 2021. The Gilead HIV drugs Biktarvy and Descovy are at the center of the investigation, but other drugs were alleged to be counterfeited as well. [If you don’t have access to The Wall Street Journal, then The Star Democrat, a Maryland paper, published a story accessible for free: Cambridge-based Safe Chain Solutions implicated in massive counterfeit HIV drug scheme.]
Flaws in the Domestic Drug Supply Chain Don’t Implicate Safe Importation
This epic counterfeit drug debacle had nothing to do with the personal importation of less expensive prescription drugs or foreign online pharmacies. Instead, it had everything to do with licensed U.S. pharmacies and wholesalers allegedly flouting the rules. Even worse, it showed flaws in our domestic system of drug regulation, notably the Drug Supply Chain Security Act of 2013 (DSCSA). I know of no other counterfeit drug breach in Canada or the European Union of this magnitude.
The DSCSA was enacted into law to improve a flawed system of regulating prescription drug distribution throughout the United States. Protecting the imperatives of and the progress made under the DSCSA are used as a primary argument of the Pharmaceutical Researchers and Manufacturers of America (PhRMA) and the U.S. wholesale pharmacy industry against allowing the importation of more affordable medicine from Canada, which they insinuate means more counterfeit drugs. Instead, if those Americans who purchased fake HIV drugs at their local Walgreens or CVS had ordered from a pharmacy in Canada or the European Union, then they would have gotten the right product at a lower price.
Fake DSCSA Pedigrees
While full implementation is not mandated until 2023, DSCSA already requires companies in the pharmaceutical supply chain (manufacturers, repackagers, wholesalers, and dispensers) to maintain “T3 pedigrees,” which stands for transaction history, transaction information, and transaction statement. These are the building blocks of “track and trace.” A primary goal of DSCSA is to prevent counterfeit drugs from infiltrating the supply chain. However, to do that, the regulations must prevent the creation of fake DSCSA pedigrees. As alleged by Gilead’s complaint, filed in the Eastern District of New York, licensed U.S. wholesale pharmacies, in their distribution of the counterfeit drugs, falsified the T3 data to make it appear that the products came from a source that they did not come from. The complaint states:
“Counterfeit bottles of HIV and other medications cannot have valid pedigrees. In order to sell their counterfeit medications, the Defendants created and utilized fake pedigrees that fraudulently represented that the drugs could be traced back to an authentic sale from Gilead.” Emphasis added.
If the backbone of the DSCSA system can be manipulated this easily then we must question its merit, or at least not overstate its durability.
Gilead v. Safe Chain Pharmacy Solutions
According to Gilead, the lead defendant in the lawsuit is a Maryland wholesale pharmacy called Safe Chain Solutions, LLC, which until recently was certified by LegitScript, the leading online verification company in the healthcare sector, and remains licensed by the Maryland State Board of Pharmacy. Safe Chain Solutions and the other defendants are innocent until proven guilty. The Star Democrat published an op-ed written by the owners of Safe Chain, allowing them to respond to its hard-hitting coverage of the issue. Their words should be included here:
“…SafeChain was not involved in counterfeiting anything. To the extent that SafeChain sold any counterfeit medication, SafeChain was an unwitting participant and notified the FDA of customer complaints as required by law. Gilead’s claims and accusations go against all SafeChain values and proven track record. We purchased our products only from state-licensed suppliers who went through an extensive vendor vetting process.”
The pharmaceutical industry is known for viciously defending its commercial interests. Gilead is a large, multinational pharmaceutical corporation with its shareholder interests front and center. Safe Chain’s owners view this as a David and Goliath situation, implying that they are being treated unfairly. Time will tell.
Where’s the FDA?
Notably, while I just read yesterday that the DOJ is investigating this matter, to date, the FDA appears missing in action, and I’m not aware of any criminal charges against Safe Chain or the other defendants related to counterfeit Gilead drugs. Pharmaceutical Commerce noted this strange absence of the FDA in its reporting last month:
“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.” (Emphasis added).
The FDA OCI, however, may very well be working behind the scenes with DOJ.
According to Gilead’s complaint, there are lots of other counterfeit drugs implicated as well. Gilead’s complaint states:
“While Gilead’s review of the products and documentation seized is ongoing as of the date of this filing, Gilead has confirmed that in addition to counterfeit bottles of BIKTARVY® and DESCOVY®, Gilead seized from Safe Chain counterfeits of seven additional Gilead medications: TRUVADA®, GENVOYA®, ATRIPLA®, SOVALDI®, STRIBILD®, VOSEVI®, and RANEXA®.”
U.S. Pharmacy Counterfeit Drug Breach Dwarfs CanadaDrugs Case
The extent to which this counterfeit drug breach has hurt patients is unknown, but it’s known that some patients who inadvertently took antipsychotics believing it was their HIV medications got very sick. But its scale is breathtaking. Compare this domestic breach with the imported counterfeit Avastin breach from 2012, which the industry used to malign the importation of lower-cost prescription drugs. In 2018, CanadaDrugs, Ltd. and several co-defendants, pled guilty to the illegal importation of $78 million in misbranded, unapproved, and counterfeit drugs. What goes unstated is how much of the $78 million in drug products were legitimate and safe drugs, tagged as “unapproved” or “misbranded,” versus counterfeit drugs. The CanadaDrugs indictment stated that the counterfeit amount included 82 units of Altuzan, Roche’s name for Avastin in Turkey, and 167 packs of Avastin 400mg. I estimate the total value as $250,000, which is 1% of the alleged value of this recent domestic counterfeit drug case: $250,000,000.
I believe that the final implementation of DSCSA, which requires electronic interoperability of the transaction data will help protect the drug supply chain from exactly the shenanigans alleged here. Nonetheless, this matter is more evidence that the existence of the DSCSA does not militate against the safe importation of more affordable medicine.
For more on the pharmaceutical supply chain and how it relates to importation, see Not Made in the USA: The Global Pharmaceutical Supply Chain and Prospects for Safe Drug Importation.