Healthy Skepticism Library item: 17961

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Publication type: news

Thomas K
Grand Jury Charges 19 With Drug Fraud
The Associated Press 2003 July 22

Full text:

A Florida grand jury indicted 19 people for contaminating and diluting prescription drugs desperately needed by AIDS and cancer patients in a multimillion-dollar scheme, prosecutors said Monday.

Investigators said the drugs were sold to the wholesale market and eventually found their way into corner drug stores and common chains in Florida such as Walgreen’s and Eckerd drug stores.

“It’s hard to imagine a more heinous crime perpetrated upon an individual who’s counting on what they believe to be a legitimate drug to save their lives,” state Attorney General Charlie Crist said. “Somebody is literally willing to profit from the suffering of others.”

Michael Carlow, 50, of Weston, and 17 co-conspirators were indicted on a variety of charges including racketeering, conspiracy to commit racketeering and other charges associated with prescription drug fraud, investigators said.

The charges involve drugs such as Neupogen, which is used to treat cancer and HIV; Gammagard, used for HIV patients; and Epogen, which is used to treat cancer and AIDS.

The second indictment charges Jose Grillo, 46, of Miami, with one count of an unauthorized scheme to defraud and 18 felony counts involving the unauthorized receipt or sale of prescription drugs. Investigators said Grillo relabeled Epogen to show that it was 20 times stronger than its actual potency so he could sell it for a higher price.

“This isn’t just about drugs being diverted or rediverted. It’s also in some cases about empty bottles being filled with chalk and water and labeled with fake labels,” said state Department of Health Secretary John Agwunobi. “In some cases it’s about tap water being injected into bottles and sold as if it was a prescription drug.”

Investigators said 12 of the 19 were arrested Monday. Six others were expected to be arrested in Florida, and authorities were searching for one co-conspirator in Las Vegas or Houston. Each count carried penalties of between five and 30 years in prison. Investigators said the suspects had earned tens of millions of dollars in this scheme.

It could not be immediately learned whether the suspects have attorneys. Both Carlow and Grillo have unlisted telephone numbers.

Dozens of prescription-drug wholesalers in Florida were under investigation on suspicion that they had substituted genuine medications with weaker or bogus drugs. Authorities say the wholesalers put lives at risk because the tainted drugs are eventually sold to hospitals and pharmacies.

More than 50 under suspicion

About 55 of the state’s 1,458 wholesalers were under suspicion for selling fake drugs or buying drugs from patients, nursing homes and others for resale. Authorities said the 19 represented some of the most egregious cases, but they expected the grand jury to make additional indictments.

Also indicted in the case were Candace Carlow, 32, of Weston; Thomas Atkins Jr., 36, of Kissimmee; Marilyn Atkins, 58, of Lake Worth; Henry Garcia, 37, of Miami; Fabian Diaz, 56, of Miami; Joel De La Osa, 34, of Miami; David Ebanks, 44, of North Miami; Jose Benitez, 50, of Homestead; Dariel Tabares, 26, of Miami; Michael Burman, 35, of Boca Raton; Lazaro Vilarchao, 37, of Miramar; Ivan Vilarchao, 29, of Miami Lakes; Joseph Villanueva, 30, of Hialeah; Arturo Godinez, 44, of Hialeah; Tom Martino, 32, of Las Vegas; Julio Cesar Cruz, 40, of Miami; and Gisela Gonzalez, 38, of Hialeah.

Michael Mann, FDLE chief of investigations, said the 11/2-year investigation began with the 2001 arrest of a man who was stealing prescription drugs from Jackson Memorial Hospital in Miami.

Mann said the suspect “introduced us into this nefarious black market … where drugs just basically go in loops where Medicaid may pay for the drugs once, maybe twice.” Many of the drugs were never refrigerated or properly maintained, Mann said.

The grand jury issued a 47-page report earlier this year calling for stricter licensing, more inspections and tighter oversight of wholesalers. It also backed tougher penalties for violators – including the death penalty if a consumer dies as a result of ingesting an adulterated drug.

Immunity drugs popular

The report said drugs to boost the immune system of cancer and HIV patients have become a favorite of counterfeiters, and many of the prescription drugs distributed to Florida consumers by wholesalers – some with criminal records – are stolen, purchased on the black market or illegally imported and mislabeled.

In one case cited in the report, criminals realized a $28 million profit from a shipment of 11,000 boxes of counterfeit Epogen and Procrit, which also is often prescribed to cancer, AIDS and kidney-failure patients. The medications are among the country’s 10 best-selling drugs, earning their legitimate makers $3 billion a year nationally.

Florida’s Medicaid program spent $218 million last year on the 10 drugs that are most commonly diverted or counterfeited.

Florida has just nine field inspectors to keep tabs on the wholesalers doing business in the state.
Last month, Gov. Jeb Bush signed into law a bill creating stricter permitting rules for prescription-drug wholesalers and harsher penalties for people who mislabel or counterfeit medicines.

Prescription-drug counterfeiters can now face up to life in prison if the drugs they make or sell lead to an injury or death. Counterfeiting previously carried a maximum penalty of five years in prison.

The bill also requires drug wholesalers to carry “pedigree papers” to prove drugs are authentic and makes selling drugs without the documents a felony. Also, drug wholesalers are forced to undergo background checks, and the Department of Health has greater authority to shut them down.