A Tale of Smuggled Prescription Drugs

Courthouse News in its August 25th edition reports on the story of a Drug Wholesaler suing its former employee and several of his companies.

According to the report, the owner of AQ Pharmaceuticals claims his compliance officer who bought "illegally diverted" Lipitor and Celebrex, which had been smuggled into the United States, and sold the drugs to AQ, causing the company to resell them, unknowingly, to a network of independent pharmacies. Both men - plaintiff and defendant - faced felony conspiracy charges for the ruse, according to the federal complaint.

The owner of AQ Pharmaceuticals and the defendant where indicted on federal charges of felony conspiracy as a result of the diverted product.

Highlighted in the Courthouse News story:

· Trang Nguyen, owner of AQ Pharmaceuticals, sued his former compliance officer, James Floyd, and Floyd's companies, Pharmaceutical Medical Supply and Direct Pharmaceutical.

· Trang claims he "submitted purchase orders to defendants for lawful and compliant supply of Lipitor and Celebrex, for the purpose of lawful resale in the United States," and the defendants sent him "diverted Lipitor tablets and Celebrex capsules manufactured by Pfizer that were not intended or approved for sale in the United States due to its illegal importation and smuggling into the United States."

· Trang claims that Floyd "misrepresented the status of the Lipitor and Celebrex as legal for sale in the United States, despite his duty and responsibility as a compliance officer of AQP." Trang claims he had "no knowledge of the illegal nature of the diverted" drugs.

· He claims that Floyd and Stanley then made "false oral and written representation to True Care Pharmacy regarding the ownership of AQP" to facilitate the sale of the diverted drugs. True Care is a network of independent pharmacies, which bought "quantities" of the diverted drugs.

· As a result of all this, Trang says, he, Floyd and others were indicted on federal charges of felony conspiracy to defraud the United States, in 2007 in the Western District of Missouri. He claims that Floyd told him throughout that the charges were "erroneous," but pleaded guilty in 2008 and was sentenced in March 2009.

· Trang claims he and AQ were ignorant of the nature of the diversion until after Floyd was sentenced. He says felony charges against him were dismissed, but he had to plead guilty to misdemeanor misbranding, and had to pay $597,420 in restitution to Pfizer. The litigation cost him more than $1 million.

Clearly this incident and its circumstances are a cautionary tale. Pharmaceutical supply chain members need to understand that pedigrees of products within their inventories can be as fraudulent and counterfeited as the products that they represent.

Regulators and consumers must understand that track and trace solutions do not adequately protect the supply chain.

Members of the supply chain need to go beyond transactional records to verify their inventories. Fortunately in this incident, the material was genuine and its only victims suffered commercially and the perpetrators were jailed.

Authentication and verification are critical for the members of the supply chain to make certain that the products within their inventories are safe and efficacious for the consumer.


To read the Courthouse News story, visit: http://www.courthousenews.com/2010/08/25/29854.htm.

To learn more about pharmaceutical supply chain authentication technologies, visit: http://www.xstreamsystems.net/.