Over the years, I’ve written a number of postings about how pharmaceuticals are distributed in the United States, based on my interest after handling a counterfeit drug case from 2002. That case, involving 16-year-old liver transplant patient Timothy Fagan from Long Island who was injected with counterfeit Epogen, resulted in significant changes in the way pharmaceuticals are bought and sold in this country by multibillion dollar businesses, and supposed safeguards on who can buy and sell.

(You can read more on it at the counterfeit drugs resource page at my web site, which I haven’t updated in awhile but gives background, or by clicking the counterfeit drugs tag here.)

Now, an article in Fortune once again explores the dark side of the pharmaceutical drug trade, not from the standpoint of counterfeits, but from the standpoint of how stolen drugs can land in your pharmacy and be bought by you, completely unaware of the path they have taken:

This is the teaser and the lede:

Organized gangs are stealing prescription medicine in increasingly audacious heists. That’s a problem for Big Pharma and for patients, who can unknowingly buy stolen — and sometimes dangerous — medications.

By Katherine Eban, contributor

FORTUNE — A few years ago a security expert visited Eli Lilly’s vast warehouse in Enfield, Conn., one of the pharmaceutical giant’s three U.S. distribution sites, where hundreds of millions of dollars’ worth of prescription drugs are stored. The expert was surprised to see the facility lacked a perimeter fence. There wasn’t even a $10-an-hour guard stationed outside. But Lilly officials assured the consultant there was nothing to be concerned about. Recalls the expert: “They were very proud to show me. ‘We have four-foot-thick walls.'”

He then looked up at the ceiling. “I was like, ‘What’s up there?'” he says. “There” turned out to be a standard tar roof with no extra reinforcement or fortification….

The rest of the story is here: Drug Thefts Go Big

One of my old cases is on the op-ed page of today’s New York Times, dealing with 16 year old Timothy Fagan who had an emergency liver transplant and was then injected with counterfeit Epogen. Those drugs had followed a tortured route that included storage in a cooler in the back of a Florida strip club.

Cape Cod Hospital has reported that a drug wholesaler approached it trying to sell purported flu vaccine for 8x the normal price. But in addition to profiteering during a vaccine shortage came this notable news: The wholesaler refused to say where the drugs came from.

The article in yesterdays Cape Cod Times (for which I was interviewed and quoted) should sound the liability alarms throughout the pharmacy community. For if the wholesaler won’t say where the drugs come from then they cannot be authenticated. A pharmacy that buys such product is therefore merely buying mystery medicine. Perhaps it came from a bona fide manufacturer, or perhaps the “drugs” originated in a Chinese factory that makes counterfeits, and the “medicine” has already changed hands a dozen or more times.

The sad truth is that we do a lousy job tracking pharmaceuticals and have a large gray market of secondary wholesalers. The pedigree of a drug — its chain of ownership from the time of its manufacture — is critical to determining the drug’s authenticity. But if the pedigree is hidden, as with the case of the flu vaccine offered to Cape Cod Hospital, there is no real way to know what is within the packaging thereby opening the door wide to injury and death from the product.

So make no mistake about it: Any pharmacy that buys such mystery medicine will be responsible if the drug isn’t the real deal. And I don’t think it would be a situation of just being responsible for the injury or death that occurs, but that a good case could be made for punitive damages for conduct that I view as clearly reckless. The problem of counterfeits within the pharmaceutical chain has been widely documented, and all pharmacies are duty-bound to be on high alert for suspicious activity.

I was interviewed for the piece last week as a result of my prior representation of Tim Fagan, a Long Island teen who had been injected in 2002 with counterfeit Epogen after an emergency liver transplant. Representative Steve Israel introduced Tim Fagan’s Law as a result, to toughen penalties against counterfeiters, and the FDA broader power to investigate, conduct recalls and spot check the market for counterfeits. (You can read more on it at the counterfeit drugs resource page at my web site, or by clicking the counterfeit drugs tag here.)

Cape Cod Hospital, to its considerable credit, refused to deal with the wholesaler. My only regret is that the company was not named so that others would know to be on the lookout for them.

Updated 11/12/09: See also Gray Market: I’m Not Dead Yet (Adam Fein @ Drug Channels)

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It’s been awhile since I’ve written on this subject, but the appearance this month in Smithsonian Magazine of a long article on the subject pulls the topic out of hibernation. That counterfeit drugs make up a stunning 50% of the drugs in some places in the world boggles the mind, and speaks to the dangers in the US of infiltration of our markets.

It also speaks to the miserable state of our law with respect to investigating and tracking fakes. It was over 20 years ago that Congress passed the Prescription Drug Marketing Act that was designed, in large part, to track the pedigree of our nation’s pharmaceuticals so that we could tell where they came from, much the way blood products or airplane parts are tracked. It still has not been fully implemented.

And it was six years ago that a Florida grand jury concluded that “an alarming percentage of the drugs flowing through the wholesale market have been illegally acquired. That is, they have been stolen from shipments, pharmacies, clinics, and hospitals; purchased on the black market from recipients and health care professionals who are defrauding insurance companies or Medicaid with bogus prescriptions; or illegally imported from overseas.”

And now this week Time has an article on How to Stop the Counterfeit Drug Trade.

My interest in the subject dates back to 2002, when I started representing Tim Fagan, who had been injected with counterfeit Epogen after an emergency liver transplant at the age of 16. I put up a counterfeit drug resource page at my website to give some of the background on the problem, and continue to write about it in this blog. That lawsuit contributed in large part to significant changes in how drugs are distributed in the country, and it shined a spotlight on a large gray market of secondary wholesalers that pedaled prescription drugs in this country with little oversight. As a result of the suit, and the press, much of that gray market has been eviscerated.

Unmentioned in the Smithsonian and Time articles, however, is pending legislation by Representative Steve Israel named after my client (and his constituent): Tim Fagan’s Law. Passage of the law would be a good way to bring safe prescription drugs to our pharmacies.

With such spectacular quantities of counterfeits being sold throughout the world, there is little doubt that they will be sold on our shores. (Tim’s fakes were home-grown, not imported.) And since some fakes are nearly impossible to detect by the average consumer, and even by many pharmacists, sophisticated law enforcement is a key element in protecting the nation.

As Willy Sutton may have said about robbing banks, he did it because that was where the money is. Given the vast profits to be made in counterfeit drugs, we must assume that criminals will pry open any window they can to get into the pharmaceutical distribution system. And we need vastly better law enforcement and FDA oversight to combat those dangers.

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