The Department of Justice announced the
guilty plea and sentencing of Easley, S.C.-based Altec Medical for engaging in
a multi-million dollar prescription drug scheme. Altec Medical pleaded guilty in U.S. District
Court in Miami to one count of conspiring to defraud the U.S. Food and Drug
Administration (FDA) and to commit federal offenses in connection with a
drug-diversion scheme that lasted from 2007 to 2009.
In the sentencing, U.S. District Judge Robert
N. Scola, Jr. ordered Altec to pay a $2 million fine and to forfeit $1 million.
The judge also ordered the company to be on probation for one year.
In a criminal information filed with the
court, the government charged that Altec paid its supplier and co-conspirator
William D. Rodriguez, approximately $55 million for prescription drugs that it
knew had been diverted from lawful channels of drug wholesale
distribution. “Drug Diversion” refers
to various ways in which prescription drugs are removed from lawful channels of
distribution and then reintroduced into the marketplace for sale to consumers.
In drug diversion schemes, prescription drugs at issue are often stolen from
warehouses or cargo trucks; torn from boxes of free samples, repackaged and
resold; or bought from individual patients looking to make extra money.
“Drug diversion undermines the safety and
effectiveness of our prescription drug system,” said Stuart F. Delery, Acting
Assistant Attorney General for the Justice Department’s Civil Division. “When individuals divert drugs from lawful
channels, we cannot be sure that the drugs are properly handled and
stored. As a result, diverted drugs
could be expired, become contaminated, or have their mechanisms of action
altered. Diversion is a serious crime
that puts consumers at risk; we will continue to prosecute those who engage in
it aggressively.”
The Justice Department advises consumers who
have concerns about a drug to check the lot numbers on the manufacturer’s web
site to see if there are any warnings about it.
According
to a plea agreement that was filed with the court, Altec became aware that
Rodriguez had bought these drugs from individuals who had acquired them
illegally and who were not properly licensed to sell prescription drugs on a
wholesale basis. The government further
charged that Altec and Rodriguez orchestrated the reentry of these drugs into
the lawful channels of distribution. According to the government, Rodriguez
first sent the diverted drugs to companies he controlled in South Carolina. His companies, in turn, resold the drugs to
Altec, which, in turn, resold the drugs to various purchasers throughout the
United States, including drug distributors with valid drug distribution
licenses. This process caused reentry
of the diverted drugs into the ordinary, lawful channels of distribution. Eventually, the diverted drugs were bought
by retail pharmacies, which dispensed the drugs by filling prescriptions for
individual consumers.
Finally, the government charged that Altec and
Rodriguez attempted to conceal their scheme by falsifying a variety of business
records. In particular, Altec and
Rodriguez falsified documents known as “drug pedigrees.” Drug pedigrees are statements required by
the FDA of all those who sell wholesale quantities of prescription drugs. The
drug pedigrees are supposed to accurately identify all prior sales and
transactions so that it is clear that the drugs have been acquired lawfully,
and properly stored and held along the way. Despite knowing that the law
required accurate pedigrees, Altec admitted that it created pedigrees that
falsified prior transactions to make it appear as though the drugs had
originally been acquired lawfully.
Use of diverted drugs can cause unpredictable
adverse side effects and may fail to treat the condition for which a consumer
is taking the drugs. According to the government, neither purchasers who bought
from Altec nor consumers who later bought the drugs at retail pharmacies would
have purchased the drugs had they known that the drugs had been diverted.
In June 2012, in U.S. District Court in
Miami, Rodriguez pleaded guilty to conspiracy and money laundering in a
separate case charging him with, among other things, his role in this drug
diversion scheme. He has not yet been sentenced.
The case was prosecuted by Assistant U.S.
Attorney Jon M. Juenger, of the U.S. Attorney’s Office for the Southern
District of Florida, and David A. Frank, of the Justice Department’s Consumer
Protection Branch. Additional
assistance was provided by Joshua Eizen, of the FDA’s Office of Chief Counsel
for Enforcement. The case was
investigated by the FDA’s Office of Criminal Investigations.
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