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Executive Summary

The following examples have been taken from David Nelson's June 20 prepared testimony on FDA enforcement activities. These cases have been selected because they deal with enforcement of the 1988 Prescription Drug Marketing Act, the Drug Diversion Act. FLORIDA PDMA CASES There are three pharmacies and several individuals in South Florida, and at least one large interstate wholesaler, believed to be involved in the diversion of illegally-acquired physician samples and other prescription drugs. The Drug Enforcement Agency (DEA) was able to turn an informant, who pled guilty to either possession or sale of controlled substances and who was willing to reveal the full extent of the continuing diversion problem of pharmaceuticals in South Florida. The case went to the Orlando District Office of the Food and Drug Administration after the Inspector General was removed. The progress, to date, noted in the FDA file, which we reviewed, said "DO-Orlando [Orlando District Office] attempting to meet with informant." After we were shown the file, the Office of Enforcement called down to Florida and were told that FDA inspectors had met with the informant but they did not have any results of that interview. This case is particularly offensive because the Orlando District Office's chief compliance officer is well-known to this Subcommittee. He was forced to testify in 1986 because he and another compliance officer in the Orlando District Office were actively engaged in helping diverters get their merchandise out of Florida before it could be seized by the State. The diverted drugs were shipped to Canada and brought back into the United States through the Port of Boston. This was one of the most disgraceful episodes in FDA enforcement history. The same official is still on the job. The Chief Counsel's Office and the FDA argued that drug diversion was not necessarily a health problem and involving FDA resources in pursuit of people involved in wire and mail fraud, even to the extent of notifying other agencies, was contrary to their mission. COUNTERFEIT DRUGS -- PHILADELPHIA The three cases involved the Philadelphia District Office, also noted for its failure to take drug diversion seriously in the past. That office has recommended a counterfeiting case be closed because the Drug Enforcement Agency apparently has a plea agreement with at least one of the two individuals involved. These counterfeit drugs were Qualudes and if, they were, in fact, real Qualudes, the DEA does have the appropriate jurisdiction. There is at least one other case in Philadelphia where the DEA has an undercover buy going on that is probably actively being worked but the Philadelphia District Office of the FDA is not involved. This is being handled by the Postal Service and two U.S. Attorneys. There is also a major Prescription Drug Marketing Act case going on in the State of Pennsylvania. The files reflect that there are at least nine targets with indictments or criminal informations expected to be filed shortly. But again, this work was done by the HHS-IG and the FBI. The Assistant U.S. Attorney involved notes that while the FDA was involved with the initial contact, they did not do the investigative work and he is unimpressed with the FDA inspectors as criminal investigators. HHS-IG work and continued FBI presence have apparently made these cases. OREGON CASES The FDA files reveal four cases in Oregon. One of which is a major PDMA case involving a drug store and a pharmaceutical sales representative, who was not only diverting his product but those of other companies as well. At least, there were multiple sourced drugs involved. The Assistant U.S. Attorney believes that the principal problem with this transfer from the Inspector General to the FDA was the amount of delay while the FDA inspectors, whom he thought very highly of, had to relearn the whole case. Much of the work, including the search warrants and the like, had already been performed before the special agents of the Inspector General were removed from the case. Interestingly, he is particularly upset with the sentencing guidelines which treat PDMA violations like any other violation of the Food, Drug and Cosmetic Act, despite the fact that the penalties are, specifically, felonies, carrying a maximum of 10 years. Apparently, the sentencing guidelines provide zero to six months for the first offense with no complications. One of the exceptions is, of course, if a prosecutor can show that a wrongful death occurred as a result of the use of diverted drugs. He feels very strongly that while they are unlikely to be able to show to a court's satisfaction that a death occurred as a result of diverted pharmaceuticals, certainly an individual died who was taking an antihypertension medication that had been diverted. He expects some resolution of the PDMA cases within a month or two.

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