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DIVERTED Rx DRUGS FOUND IN PHARMACIES "IN EVERY CITY"

Executive Summary

DIVERTED Rx DRUGS FOUND IN PHARMACIES "IN EVERY CITY" investigated by the FBI, U.S. District Attorney from Georgia Larry Thompson testified at an Oct. 31 hearing on drug diversion before the House Commerce/Oversight Subcmte. "The presence of diverted adulterated and misbranded drugs in the Rx drug distribution system is a natl. problem," Thompson said. "At least one drug store in every city, town, and village involved in the FBI investigation was found to be dispensing such medications." FBI White-Collar Crimes Section Chief Hal Helterhoff maintained that pharmacists who wish to steer clear of diverted products can recognize bogus or adulterated goods when they see them. "It's pretty hard for a bona fide pharmacist not to know where the material is coming from," Helterhoff said. The pharmacist, "in our experience anyway, would know in most instances whether it's diverted or whether it's legitimate." The govt. witnesses were testifying at the fourth drug diversion hearing held by Rep. Dingell's (D-Mich.) subcmte. The pervasiveness of diverted drugs uncovered in the Atlanta "Pharmoney" case was a theme repeated throughout the hearing. Thompson was the key speaker at the Atlanta press conference this summer, at which he announced that 48 individuals and three companies were charged in criminal informations with violating federal fraud, conspiracy, transportation and adulternation and misbranding statutes ("The Pink Sheet" Aug. 12, p. 4). Providing an update at the hearing, he said "most of these defendants have pleaded guilty," more than "half have received periods of incarceration, some as much as five years in jail," and "significant amounts of community service were made a condition of those sentences that were probated." The "investigation is continuing on approximately 40 subjects" not yet charged, he added. The Revco "gray market" testing program was mentioned at the hearing. In response, FBI's Helterhoff declared there is no such thing as legitimate diversion. The subcmte.'s Minority Counsel Russell Smith asked whether Helterhoff could imagine procedures by which a large chain can "legally and safely" purchase drugs -- contained in the mfr.'s packaging and not expired -- at unusual discounts without knowing whether the distributor acquired them through a hospital. Helterhoff responded: "I can't see in any way how that would work legitimately." Even if the drugs are safely stored, properly labeled, and unexpired, "you're still manipulating the market; you're still going to have an overall effect on the whole drug market affecting commerce in some aspect, either lowering prices or raising prices. From our investigative experience I can't see any way where there really could be 'good diversion.'"
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