Drug Diversion Bust Shows DSCSA Is Effective

By January 6, 2016 February 21st, 2019 DSCSA

This was the headline from a DoJ Justice press release on October 14, 2015: “Two Drug Suppliers Plead Guilty in Nationwide Prescription Drug Diversion Scheme.” Before we detail the cases, let’s back up a bit.

When you fill a prescription, you’re probably thinking about improving your health – maybe recovering from an illness or lowering your cholesterol. You’re likely not thinking that the medicine your pharmacist just handed to you could take your life. But that’s what happened to 149 people in the U.S. who took contaminated Heparin from 2007 to 2008, and to 11 people in the Boston area who took tainted steroids in 2012. The cause was counterfeit drugs, and there are many more examples.

The Drug Supply Chain Security Act

In response, the Drug Supply Chain Security Act (DSCSA) was signed into law in 2013. The law lays out strict industry requirements designed to ensure a safe and secure drug supply chain. The changes it mandates will reduce and eventually eliminate counterfeit drugs from the American pharmaceutical supply chain. There are multiple phases to the law, each adding a layer of security around serialization and traceability, and will be fully implemented by 2023.

Importantly, each phase adds additional mandates around how companies transact with partners, and only companies that meet these requirements can do business in the U.S. The 2015 phase requires that:

  • All trading partners (suppliers, wholesalers, etc.) be authorized
  • Third-party logistic providers be licensed
  • Paper or electronic product-trace documentation accompany every shipment in each step of the supply chain

It was these requirements that allowed officials to quickly identify the drug diverters.

Diverters Undone by Documentation

One defendant, Fernando Galan, pleaded guilty to conspiring to distribute prescription drugs without a wholesale license. The other, David Konigsberg, pleaded guilty to conspiring to commit mail and wire fraud.

According to court documents, Galan and Konigsberg took part in selling illegally diverted prescription drugs to a company called Minnesota Independent Cooperative (MIC) and its owner, David Miller. As part of the scheme, Miller and MIC allegedly created fake pedigree documents that covered up the illegal sources of the drugs, including Konigsberg and others, then sold the prescription drugs to wholesale and retail customers throughout the U.S.

Miller and MIC, along with two other individuals, were consequently indicted and charged with conspiring to commit mail and wire fraud, conspiring to make false statements, and conspiring to distribute prescription drugs without a license.

Without the mandates implemented by DSCSA just this year, the perpetrators would have most likely gotten away with the crime, putting thousands of people in danger, and undermining the trust we have in the safety of our drug supply.

Next Steps

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