Counterfeit Pharmaceuticals

A Federal grand jury in Missouri has indicted 11 people on charges related to a two-pronged conspiracy to sell $42 million worth of counterfeit, stolen, and illegally imported pharmaceuticals.^[1]

The first prong of the conspiracy consisted of what is known as “diversion”: genuine Lipitor and Celebrex tablets which were intended to be sold in South America were purchased and illegally imported into the United States.^[2] Then, chemicals and equipment—including punches, dies, and counterfeit drug labels—were purchased and sent to Costa Rica to manufacture Lipitor, which was then illegally imported into the United States.^[3] The legitimate Lipitor was commingled with the counterfeit Lipitor and sold throughout the US.^[4] The co-conspirators did this by making false representations to Customs officials, and creating false “pedigrees” for the drugs, which are written statements identifying the persons and entities from whom the drug was purchased.^[5]

According to the indictment, the defendants are charged with violating a number of transnational crimes: 18 U.S.C. §§ 371 & 2315, and 21 U.S.C. §§ 331(i)(3) & (d).

Conspiracy
18 U.S.C. § 371, the conspiracy statute, is the overarching statute at issue in this case. We have previously discussed conspiracy here.

Sale or Receipt of Stolen Goods
Under 18 U.S.C. § 2315, it is a crime for a person to receive, possess, or sell any goods which have crossed a United States border after being stolen, if that person knows the goods are stolen.
The punishment for violating section 2315 is a fine, imprisonment up to ten years, or both.

Introduction into Interstate Commerce of Certain Articles
Under 21 U.S.C. § 331(d), it is illegal to introduce into interstate commerce any article in violation of 21 U.S.C. § 355, which requires pharmaceuticals to meet certain packaging requirements.

Counterfeit Drugs
Under 21 U.S.C. § 331(i)(3), it is illegal for a person to do any act which causes a drug to be counterfeit, or to sell a counterfeit drug.

Punishment for Violating 21 U.S.C. § 331
Under 21 U.S.C. § 333, the violation of section 331 can be punished by a fine of up to $10,000, imprisonment up to three years, or both.^[6]

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[1] David Twiddy, Companies and Some Californians Indicted for Selling Fake Drugs, Associated Press, Aug. 31, 2005, available here. See also, US Attorney’s Office, Press Release: Pharmaceutical Distributors Indicted for $42 Million Lipitor Smuggling, Counterfeiting, Aug. 31, 2005, available here [hereinafter Press Release].
[2] Press Release at 2.
[3] Id. at 2-3.
[4] Id. at 3.
[5] Id.
[6] 21 U.S.C. § 333(a).