MDNews - San Antonio

IN JUNE 2014, A Kentucky oncol- ogy center and its former office manager pled guilty to purchas- ing and selling unapproved and improperly labeled chemotherapy drugs and paid $2 million to reimburse the Centers for Medicare and Medicaid Services (CMS). The crime was purchasing drugs approved in foreign countries from an unregistered Canadian supplier, which constituted "false claims" under federal law. Similarly, in Texas, a physician pled guilty to providing drug products sourced from the European Union (EU), Turkey and India, resulting in a 6-month probation and a $1 million penalty. Even when a foreign-manufactured product is equivalent to a U.S.-manufactured drug and produced by a reputable foreign manufacturer, the supplier's lack of compliance with U.S. law can subject the purchaser to civil and criminal penalties. For example, Gallant Pharma illegally transported drugs approved in the EU and Turkey, falsely representing them to customs officers as personal items or other products. Once the drugs were in the U.S., they were marketed and distributed as Food and Drug Administration (FDA) approved products. When the Lowest Cost Is a Crime In each of these instances, the drugs had the active ingredients and labeled dosages, and there was no evidence that any patient suffered negative health effects. The lack of FDA approval, failure to register and failure to transport the drugs under FDA-approved conditions rendered the drugs misbranded and adulterated, under federal law. Violating the Food, Drug and Cosmetic Act (FD&C Act) is what is known as a "no-fault" crime, meaning the violator does not have to intend to break the law. Thus, irrespective of the therapeutic value of a foreign drug, if the drug is misbranded or adulterated, the purchaser is not entitled to seek payment or reimbursement and will be subject to reimbursing federal, state or private payers for the cost of the drugs. On Sept. 11, 2001, the world changed and Congress and government regula- tors responded, enacting aggressive new legislation, revolutionizing the supply and distribution of drugs in the United States. Even when the new law is fully implemented, between 20 million and 100 million parcels containing drugs will enter the U.S., and it is impossible for every parcel to be inspected. As a result, the government places greater responsibility on industry, dispensers and physicians to be on the lookout for suspect drugs to ensure that the drugs they administer are not "adulterated" or "misbranded." While the FDA does not regulate the practice of medicine and the new supply chain rules generally do not apply to licensed healthcare practitioners who dispense or administer products in the usual course of professional practice, the law does apply to a physician who uses or dispenses a drug not approved for use in the U.S. Recognizing Suspect and Illegitimate Drugs The new law defines a drug as a "suspect product" where there is reason to believe it is an "illegitimate product." The law defines "illegitimate products" as those that are counterfeit, diverted, stolen, intentionally adulterated, the subject of a fraudulent trans- action, improperly stored and transported, ineffective, or by appearance are unfit for distribution. How can physicians and other dispensers protect against civil and criminal liability while sourcing drugs? They should have written procedures for the following: + Training and responsibility: Know the law, train employees and routinely review for compliance. + Red flags: Watch for the following: + A price that is too good to be true + Prices routinely below all competitors + Foreign language labeling or packaging + No "Rx" indication + No National Drug Code (NDC) + Irregular packaging + Unusual payment instructions + "Blast fax" sale marketing + Know your supplier: Research new suppliers (registration, licensing and compliance history). + Product identification: Verify manufac- turer product identifiers on packaging, such as a NDC or bar code. + Product tracing: Periodically review drug supply chain information (i.e., who handled it each time it was sold in the U.S. market). + Detection and response: Quarantine and promptly investigate suspect drugs. + Notification: Determine if FDA, state officials or other federal agencies (includ- ing CMS) and possibly patients must be notified. A written compliance program that ensures physicians and other dispensers are watching for signs of illegitimate drugs may keep them in front of the issue by allowing them to notify the government about an illegitimate product — rather than finding themselves behind the curve and under threat of civil and criminal enforcement. Michael A. Walsh is a partner and member of Strasburger & Price, LLP's Health Law Practice Unit in Dallas. He can be contacted at 214-651-4459. ■ The FDA and the Practice of Medicine: The Hidden Price of Lowest-cost Drugs By Michael A. Walsh +++++++++++++ + +++ + +++ +++++++++++++ LEGAL ❯ 1 6 | San Antonio MD NEWS ■ M D N E W S . CO M

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