Crimes that Shape the Law: The Long Road to DSCSA
Part 1 of 3
By Martin Dennis, Pharmacist
Pharmacists are known for meticulous rule following, and when it comes to pharmacy compliance and DSCSA requirements, that attention to detail is critical.Every action we take is governed by clearly defined standards designed to protect public health and uphold the trust placed in our licensure. Every task, responsibility, operational standard, document, and detail of our daily work is spelled out in legal prose. Compliance is not optional; it’s the foundation of our profession. This rule-following mindset can make it difficult for a pharmacist to understand the many ways that crime can infiltrate their profession and trickle down to the very bottle of medicine they place on their shelves.
To understand the crimes that shape the law, let us leave the world you know and explore the criminal mind, considering the opportunities our profession offers to those who view it through a different lens. For a moment, let us step away from your familiar world. Enter the mind of a criminal and examine the opportunities available. Imagine entering a realm of fantasy and pretending to be the bad guy—leave rules, regulations, and narrow margins behind. Instead of building a legacy of hard work and trust, let’s create an Illegal business empire based on greed and hustle.
Criminal Master Business Plan
Create a Secondary Gray Market Drug Supply Company. Our criminal enterprise will execute the following three steps.
Step One: Collect Inventory
Buy Low and Sell High is the gold standard of a profitable business model, and there is no lower price than that of stolen, faked, forged, or adulterated goods. We will collect diluted, fake, stolen, or previously dispensed medications bought at marginal sums to build a warehouse inventory. We will make no investigation into the origin, content, storage, authenticity, or ownership of any product we purchase. Our sole purpose will be to ensure that the product can be resold as an original, high-priced, branded item. We will focus on the high market potential of branded drugs, especially in categories like cancer, pain, HIV, and erectile dysfunction.
To purchase inventory, we will employ collectors who will traverse the Medicaid community, identifying patients who receive brand-name medication in unit-of-use packaging and have not opened the prescription package. Specifically, we will find those with addictions who are willing to trade their prescriptions for cash. We will pay them a nominal cash fee in exchange for their unopened, unused unit of medications. The collectors will also solicit offers for pharmacy staff to pilfer unopened non-controlled medications like brand-name Lipitor or Viagra from their place of employment in exchange for cash. If the collectors are unable to provide sufficient product, we will establish trade relations with other business entities, such as cargo theft rings. These rings have the resources to breach drug storage facilities and remove semi-truck loads of pharmaceutical products. They also have downstream affiliate members who can acquire products that are in transit. These networks are especially effective at relieving products from couriers during the last mile of delivery, when delivery vans and unarmed drivers are transporting enormous quantities of our potential inventory.
Step Two: Aggregate the product
To keep costs down, we will rent storage units without climate control, and the collected inventory will be relocated to these sites for processing. Our primary concern is package presentation, not drug stability. At the storage unit site, all prescription labels will be removed, closures, and safety seals will be re-affixed. Any product that is short-dated will be sold to vendors who specialize in relabeling with longer beyond-use dating.
Step Three: Resell
Moving our product from the aggregate site into the pharmacy supply chain is based on the following: licensure of secondary suppliers is weak, oversight is minimal, penalties are low, jurisdictional boundaries are unclear, and state laws vary. We will relocate our aggregated product to one of our other entities, replacing it with products sourced from a similar out-of-state business that is now operating within our state. We will repeat this several times as needed. We only sell our product to other gray market vendors, and then they sell it to pharmacies and secondary buyers for major wholesalers.
The Profit Motive
Potential profit streams from the secondary gray markets can generate profits based on the net losses suffered by the victim.
- Warehouse theft: $60-80 million per job
- Annual last-mile cargo theft: $455 million
- Medicaid buy-back scheme in just one state: $500 million
- Diluted Epogen $46 million
So, there you have it. A Master Criminal Plan for massing wealth while stepping over the remains of anything that was once good about you. This may have been a mental exercise in being a bad guy, but it is a real business model that operates in the real world. For the last 30 years, this type of fraud, abuse, theft, and forgery has plagued our drug supply system. It constantly mutates and changes because there is no national oversight or track-and-trace system. It would take something big to make everything change. All this theft and graft is just the cost of doing business, right? But no one was being hurt, no one was dying, right? Not yet.
Case Study: The Diluted Epogen Tragedy
In 2002, over a period of time, a Miami-Dade pharmacist bought 110,000 vials of low-dose Epogen from a licensed wholesaler for about $25 each and sold them to a counterfeiter, Jose Grillo. Jose removed the labels and attached new labels showing they were of much higher strength and with a retail price of $470 each. This scheme netted nearly $46 million in profit. He sold these diluted vials to small criminal wholesalers’ networks, who resold the vials multiple times until they landed back on the original wholesalers’ shelves. The diluted medication was then sold to an infusion center in Deer Park, NY, where a 16-year-old liver transplant patient received a dose twenty times weaker than needed for eight weeks, leaving him in pain and misery.
This exercise may feel like a dark thought experiment, but it’s not fiction, it’s reality. For decades, schemes like these have threatened the safety of the nation’s drug supply, exploiting weak oversight and fragmented systems. While these crimes might seem like distant problems, they have real consequences for patients, pharmacists, and communities. The need for a reliable, traceable drug supply chain has never been more urgent.
The Drug Supply Chain Security Act (DSCSA) was designed to address these very risks. By creating a national track-and-trace system, DSCSA helps ensure that every medication reaching your pharmacy is legitimate, safe, and accounted for.
This is just the beginning of the story. The next chapter reveals the moment that changed everything — when these crimes led to real harm and triggered sweeping action to secure the drug supply chain.
Stay Tuned For Part 2: A Crisis That Changed Everything
Protecting the integrity of your pharmacy’s drug supply is critical. Liberty Software provides tools to help you stay compliant with DSCSA requirements and maintain patient safety.
Learn More About Compliance how Liberty Software can help!
For a great read on Secondary Gray Markets, I recommend the book “Dangerous Doses” by Kathy Eban.
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