By Ed Silverman
Several months after counterfeit Avastin prompted fresh concern over the weaknesses in the pharmaceutical supply chain, a Tennessee cancer doctor has pleaded guilty to purchasing illegal foreign drugs. The physician, William Kincaid, who signed a plea agreement last week, is among the first to face charges in the probe, The Wall Street Journalwrites.
The investigation, which began last year, intensified this past February when more than a dozen medical practices were found to have purchased counterfeit Avastin – with cornstarch but without an active ingredient – from foreign distributors, in particular, an Internet pharmacy called Canada Drugs and another company, the paper writes.
So far 155 medical practices in 33 states have received warnings from the FDA saying they bought unapproved drugs. Kris Thorkelson, the Canada Drugs ceo, did not respond to requests for comment from the paper. Canada Drugs execs previously maintained they comply with laws in countries where they operate and their website,Canadadrugs.com, has never sold Avastin.
Two doctors who purchased drugs from a second distributor, and its owner, have already pleaded guilty to drug-importation crimes as part of the Avastin probe, and several companies owned by Canada Drugs are under investigation, the Journal writes, citing law enforcement sources. More doctors are expected to be charged in coming weeks, the paper adds.
The guilty pleas highlight underlying economic issues that drove some physicians to purchase counterfeit medicines, notably a change in Medicare pricing in 2005 that lowered margins for administering expensive cancer medicines. And so counterfeits became much more attractive when discounts are offered (back story).
To underscore the temptation, Kincaid and his office manager concealed purchases from nurses at his clinic who had earlier raised concerns about buying overseas drugs, according to court documents. The drugs were shipped the drugs to a self-storage facility co-owned by Kincaid and his employees would retrieve the drugs and mix these with legitimate medications in stock.
In this case, Kincaid purchased not only counterfeit Avastin, but also fake Herceptin, Rituxan, Alimta, Gemzar, Taxotere and Abraxane for his clinic, according to court documents. In all, he purchased approximately $2 million worth of phony drugs and billed $2.5 million to federal and state government healthcare programs (read court document here).
The labeling for Rituxan, for instance, indicated that the product came from an unregistered business in Switzerland that did not provide the FDA with a list of drugs that were made there and was distributed by another company located in New Delhi, India, after being manufactured there, court documents say.
Kincaid, by the way, could face up to three years in jail if his plea is accepted. He acknowledged earning $500,000 profit by billing insurers for the full list price for $2 million in discounted foreign drugs, the filings say (see the plea agreement here).
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