The Department of Justice announced theguilty plea and sentencing of Easley, S.C.-based Altec Medical for engaging ina multi-million dollar prescription drug scheme. Altec Medical pleaded guilty in U.S. DistrictCourt in Miami to one count of conspiring to defraud the U.S. Food and DrugAdministration (FDA) and to commit federal offenses in connection with adrug-diversion scheme that lasted from 2007 to 2009.In the sentencing, U.S. District Judge RobertN. 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 thecourt, the government charged that Altec paid its supplier and co-conspiratorWilliam D. Rodriguez, approximately $55 million for prescription drugs that itknew had been diverted from lawful channels of drug wholesaledistribution. “Drug Diversion” refersto various ways in which prescription drugs are removed from lawful channels ofdistribution and then reintroduced into the marketplace for sale to consumers.In drug diversion schemes, prescription drugs at issue are often stolen fromwarehouses or cargo trucks; torn from boxes of free samples, repackaged andresold; or bought from individual patients looking to make extra money.
“Drug diversion undermines the safety andeffectiveness of our prescription drug system,” said Stuart F. Delery, ActingAssistant Attorney General for the Justice Department’s Civil Division. “When individuals divert drugs from lawfulchannels, we cannot be sure that the drugs are properly handled andstored. As a result, diverted drugscould be expired, become contaminated, or have their mechanisms of actionaltered. Diversion is a serious crimethat puts consumers at risk; we will continue to prosecute those who engage init aggressively.”
The Justice Department advises consumers whohave concerns about a drug to check the lot numbers on the manufacturer’s website to see if there are any warnings about it.
Accordingto a plea agreement that was filed with the court, Altec became aware thatRodriguez had bought these drugs from individuals who had acquired themillegally and who were not properly licensed to sell prescription drugs on awholesale basis. The government furthercharged that Altec and Rodriguez orchestrated the reentry of these drugs intothe lawful channels of distribution. According to the government, Rodriguezfirst sent the diverted drugs to companies he controlled in South Carolina. His companies, in turn, resold the drugs toAltec, which, in turn, resold the drugs to various purchasers throughout theUnited States, including drug distributors with valid drug distributionlicenses. This process caused reentryof the diverted drugs into the ordinary, lawful channels of distribution. Eventually, the diverted drugs were boughtby retail pharmacies, which dispensed the drugs by filling prescriptions forindividual consumers.
Finally, the government charged that Altec andRodriguez attempted to conceal their scheme by falsifying a variety of businessrecords. In particular, Altec andRodriguez falsified documents known as “drug pedigrees.” Drug pedigrees are statements required bythe FDA of all those who sell wholesale quantities of prescription drugs. Thedrug pedigrees are supposed to accurately identify all prior sales andtransactions so that it is clear that the drugs have been acquired lawfully,and properly stored and held along the way. Despite knowing that the lawrequired accurate pedigrees, Altec admitted that it created pedigrees thatfalsified prior transactions to make it appear as though the drugs hadoriginally been acquired lawfully.
Use of diverted drugs can cause unpredictableadverse side effects and may fail to treat the condition for which a consumeris taking the drugs. According to the government, neither purchasers who boughtfrom Altec nor consumers who later bought the drugs at retail pharmacies wouldhave purchased the drugs had they known that the drugs had been diverted.
In June 2012, in U.S. District Court inMiami, Rodriguez pleaded guilty to conspiracy and money laundering in aseparate case charging him with, among other things, his role in this drugdiversion 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 SouthernDistrict of Florida, and David A. Frank, of the Justice Department’s ConsumerProtection Branch. Additionalassistance was provided by Joshua Eizen, of the FDA’s Office of Chief Counselfor Enforcement. The case wasinvestigated by the FDA’s Office of Criminal Investigations.
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