The drugs company Altec Medical has been fined a $2 million for taking part in an illegal re-selling of drugs designed to circumvent accepted routes of sale.
The South Carolina-based company Altec Medical has pleaded guilty to one count of conspiring to defraud the US Food and Duig Administration (FDA) in connection with a drug-diversion scheme, according to a notification from the US Justice Department.
As summarized by Fierce Pharma, the US government said that Altec paid its supplier and co-conspirator William D. Rodriguez approximately $55 million for prescription drugs that it knew had been diverted from lawful channels of drug wholesale distribution. The offense was that Rodriguez first sent the diverted drugs to companies he controlled in South Carolina. His companies, in turn, resold the drugs to Altec, which, in turn, resold the drugs to various purchasers throughout the US, including drug distributors with valid drug distribution licenses.
At the end of the chain, the diverted drugs were bought by retail pharmacies, which dispensed the drugs by filling prescriptions for individual consumers. This practice is known as ‘gray marketing’.
In court, as the FDA noted, Altec admitted to falsifying pedigrees for the drugs to make it appear that they had come through legal distribution channels.
According to Health System Review, US courts have ordered Altec Medical to pay a $2 million fine and to forfeit a further $1 million and the company has also been placed on probation for a year
The diversion scheme ran between 2007 to 2009. The risk to US consumers was that there were no controls over how the drugs had been distributed and stored, which means that drugs could have expired, been damaged, or become contaminated.