How PBM Practices Lead to Counterfeit Drugs | Shabbir Imber Safdar, The Partnership for Safe Medicines

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Mike Koelzer: Shabir, for those who haven't come across you online, introduce yourself and tell our listeners what we're talking about today.

Shabbir: So I'm Shabbir Imber Safdar. I'm the Executive Director of the Partnership for Safe Medicines. We're a non profit coalition that focuses on the safety of the drug supply. And our coalition is made up of manufacturers, wholesalers, pharmacists, and patients. 

Today, we're going to talk about the connection that we have seen as a safety organization between [00:13:00] PBMs under reimbursing pharmacies for medicine that they dispense and crime and how, that practice, that business practice is actually opening up an entry for crime in the supply chain.

Mike Koelzer: Shabir, I've got to start off by reading this quote in your LinkedIn profile. I found this amusing. It says let's see, I steer a coalition of members on the pharmaceutical supply chain that typically don't agree on anything and outright fight each other over on many public policy issues.

Shabbir: I mean, in any supply chain, you have everybody along the supply chain trying to shift responsibility and cost to somebody else in the supply chain. Especially like when you have these big healthcare policy debates in Congress. The manufacturers don't agree always with the wholesalers, they don't agree with the banks.

Pharmacies don't agree with the patients. And so I have this tiny narrow lane I operate in, which is supply chain safety. And everybody who's in the coalition agrees on that. But if I were to ever talk [00:14:00] about something else like they would all start throwing food at each other.

Mike Koelzer: Yeah, and that's something like baseball and apple pie, if you come out somehow and say you're against drug safety , well, number one, who would be? But number two, nobody's going to admit to saying, , we don't give a darn about safety. So, it's an automatic buy in of that movement.

Shabbir: Yeah, and I have done this a long time. I've been working on this issue for over a decade. I've run. PSM itself since 2017, and most of the PSM coalition is made up of pharmacy organizations, and while no profession is crime free, I don't read a lot of indictments of pharmacists. It still happens, but they're not the ones breaking the supply chain.

They're actually being pretty careful, and it's not the wholesalers or the manufacturers either.

Mike Koelzer: What's the genesis of the organization?

Shabbir: Back in 2003 Three men were focused on the concern about [00:15:00] breaking the supply chain. And the one who was one of the founders who I love very dearly and who has since retired is Marv Shepard. He was a professor of pharmacy at UT Austin. And before that he was a pharmacist.

And he was going over the Mexico border. The US Mexico border following Americans looking for cheaper medicine, there were things that they wanted to get for less money, and he was following them. And he was buying the same medicines they were buying, and bringing it back to his lab, and testing them, because he's a chemist.

And he was like, these things don't have any active ingredient, or they don't have enough active ingredient. That's super dangerous. And so, when people in Congress started talking about, well, the answer to drug prices is just to buy it from other countries that have price controls, Marv was there to say, oh, hold up.

That's not the answer. That's not super safe. We have a highly regulated supply chain and it comes with benefits, And that's really important. Don't break the supply chain. And [00:16:00] so he and a retired FBI agent and a physician attorney started PSM back then, and it's done a lot of different work.

I started working for it in the mid 20 teens. And, at some point in 2017, it was, we all decided that I needed to be the executive director. And I asked for the job and they gave it to me.

Mike Koelzer: Thinking about the supply chain and you're saying the word break, sounds to me like. None of the big manufacturers themselves are putting this out to Make a buck. This is all counterfeiters that are way below the surface, but coming out with counterfeit drugs that are looking like the name brand of all of the decent companies out there in the U S

Shabbir: Yeah, and they're basically looking to make money off a ineffective, dangerous, fake version of the real thing that you don't realize that you've bought. [00:17:00] was probably a counterfeit medicine about ten minutes after the first medicine was invented and packaged. And in the U. S. there are people who have, for decades now, made fake versions. of real drugs because that was a way to make money. And they love therapeutic non controlled substances because the criminal penalties are lower.

You make a fake oxy with fentanyl, you get busted for distribution, you're easily going away for 10 plus years. You make a fake oncology drug if it's a infused drug with nothing but saline in the vial. , there's no controlled substance to prosecute you for, and the penalty for that is a lot lower than for dealing fentanyl.

 I don't know if you've ever noticed this, but there's actually a big market for counterfeit airbags online. And I've spent some time on Capitol Hill about two weeks ago with folks who chase these counterfeits off of places like [00:18:00] Amazon and eBay which they're not being supposed to be sold there.

Shabbir: But it It's a counterfeit version of something very important, and there have been, in situations, there have been at least five accidents in which someone has installed a counterfeit airbag in a car, it's been in an accident, the airbag didn't deploy like it was supposed to, and people were hurt, including at least one death, so it's sort of the same idea that there's always someone out there who does not really care about your well being, but loves the amount of money they make. 

Mike Koelzer: I think people have described me as the Podcast hose as a counterfeit airbag. So I'm trying to, I'm trying to get rid of that image of myself.

Shabbir: implying that you're the inflated or the not deflated version? That's the important question.

Mike Koelzer: Yeah, right. Yeah, that's exactly right. I'm sure everybody has a story when you talk to them Shabir, but I'm just going to throw this one out about 10 years ago in our pharmacy.

I got a call from one of my pharmacists and they said, Mike We've got a counterfeit drug here and he said I [00:19:00] poured out a hundred of these tablets and there was a five milligram one in there and these were supposed to be two milligram or something like that. And of course the cynical guy that I am, I'm 99 percent sure that, one of them got in there somehow or whatever, I don't trust that would happen But I go in there. Sure enough, I go back into the pharmacy and I open these up and pour them out in there, there was one mixed in there too, or maybe there wasn't mixed, but it was obviously counterfeit when you look, because the package wasn't as sharp and all this kind of stuff.

And so we personally have been stung by it. And it's really sad what you said about how. Yes, you don't want the narcotics to be out there and you don't want drug addicts and all that kind of stuff. But that's like its own little world. And it's like, Hey, you guys go over there and do this thing.

But now grandma's involved. And she died of cancer because she got water instead of this drug three years ago, something like that. That's really sad.

Shabbir: Yeah, it's really terrifying. And [00:20:00] actually, people who counterfeit things like oncology medication, there must be a special part of hell reserved for them. Because I've seen people's families struggle with the question of, would my family member have lived? If they got in real medicine, and they don't even actually know in many cases what they really got.

The doctors who do this crime and primarily counterfeit oncology medicines are bought by doctors who break the supply chain and buy from an unlicensed entity. When those doctors do that, they don't keep track of exactly which counterfeit vial went to which patient. And so after the fact, the family member's like, okay, so my wife died.

You I want to know which vial you gave her and they can't answer it. And then the question that no one can answer is, would my wife have made it? There's no do over. For an oncology protocol, like if it doesn't work, sometimes the cancer advances such that no treatment will fix it.

And, that's why we [00:21:00] have what's called this regulatory regime we have in the US is called a prophylactic regime. It's about making sure that everybody has to do the right thing first because it can be so hard to assign harm after the fact. And the harm is serious. 

Mike Koelzer: Let's take, for example, those doctors I got to think most likely the doctors aren't out to do something counterfeit, but then I've got to guess sometimes that maybe they turn the blind eye because some things are too good to be true. Where do you think most of the doctors like in that example would fall on that spectrum of a chart?

Shabbir: The doctors that I have spoken to or whose trials I've attended or whose, trial transcripts I've read are generally all doing it for personal financial gain. there's a vendor out there that is not the vendor that is licensed in their state and is selling the [00:22:00] medicine that they buy and bill for a lot less.

So if it's supposed to be 1, 000 a vial, they will find someone who will sell it to them for 500, but they'll still bill back insurance 1, 000 plus whatever percentage they have to put on top of it. And they make an extra 500 instead of just the 4 percent or 8 percent they would have normally made. 

Mike Koelzer: And this was a generalized question, Shabir, but on those doctors, do you think that they know that this is counterfeiter, they know it's not up to par, or do you think in their head, they're thinking, boy, somehow this is the correct product, but my guy somehow got it through different means, but it's still legit.

And I know you can't get into their minds, but if you could take a guess at that, what would it be?

Shabbir: So I actually can tell you that we do know in many cases that they knew because one of the standard investigating techniques is that the Office of Criminal Investigation at the FDA will go to them [00:23:00] and say, we have records from this unlicensed wholesaler that we busted that you were buying product from them.

And then many of those physicians. Not all of them, but some of them will continue purchasing and then they'll get prosecuted for those purchases. So they knew when they were

doing it, they've been warned in person by a federal agent that what they were doing was wrong. In other cases, we've seen doctors who have hidden With their business managers or with their office assistants, they've hidden the medication.

We just had a trial here in San Francisco that wound up with a cosmetic physician who was buying Juvederm and Botox from unlicensed sources, some of them with lot numbers that don't exist, and she was warned and she actively worked and had instructions that were part of the trial to hide the vials that came from the unlicensed sellers so that when the Botox salesman came through, they wouldn't see them.

Or the patients,

 They definitely knew what was [00:24:00] happening.

Mike Koelzer: all right. So we can probably only guess what goes on in someone's head either it's greed It's trying to get back at somebody, whatever the reason.

But when we started out, you mentioned that the PBMs are, somewhat to blame in this because of their downward pressure. 

Shabbir: so I'll say this from the outset, it happens in every profession, but pharmacists don't go bad like we see with physicians here. But what happens, and this is a pretty typical story pharmacists have told me, is they are They have a patient and they have to dispense for them, let's say, an HIV medication.

And it's being reimbursed like 100 or 125 below what they have to buy it for. Even with all their rebates. And so, they're like, okay, can I find it somewhere cheaper? And they go looking, not for illegal sources, but they go looking for Wholesales. Wholesalers with licenses, state Board of Pharmacy issued licenses, [00:25:00] and they will sometimes find these folks who will say, Okay, I've got that HIV med, where you go, for this much money, and they go, Okay, so I'll only lose 20, right?

Or I'll only lose 10, something at least more palatable. And they'll buy it. And they're doing, they're doing the right thing, they're not buying something that's too cheap to be true in many cases because it's not that cheap. If it was half price off, they would know.

No pharmacist worth their salt would even, their Spidey sensor go off. 

Shabbir: And they're buying from someone who has a license. Right. They've made sure to buy from someone who's a licensed. And what's happening is that if you're a modern counterfeiting or diverting criminal, you set up a shell company and you get a wholesale license from the state board of pharmacy.

And that is the price of admission to do the crime. And that's what your pharmacist is going to check for. But you've you're a step ahead of them because you're a good criminal. And then after six or seven months when people start asking questions that you can't answer, like where exactly did the medicine come from?

I tried to do a trace and it [00:26:00] didn't work out. You discard that shell, get a new one, and get another wholesale license. And that's pretty typically how they've been doing it. They have a culpable criminal wholesale license holder. Sometimes it's them. Sometimes it's a third party.

Mike Koelzer: It's usually an official license. So somehow they duped the state by probably giving a false certificate of this or that. But it is an official license from the state.

Shabbir: Yeah. And most states have thousands and thousands of licensed wholesalers. I cannot tell you that boards of pharmacy or departments of business and professional regulation around the country are giving away wholesale licenses too easily. That's not in my expertise.

All I know is that there's a lot of criminals who get caught with them.

Mike Koelzer: Wow. You know, I got to laugh at that court hearing. I can just see a pharmacist getting pulled in front of the judge and jury. And they're saying Mr. Smith in your pharmacy, you bought this counterfeit [00:27:00] medicine and we're going to beat you down. How much did make on this counterfeit medicine?

Nothing.

in fact, I lost 30 bucks, and like all the jurors would just like look at each other and the judge would scratch his head. No one would know what the hell was going on. I think they'd call a mistrial just because they knew they weren't going to go anywhere with this.

The juries wouldn't even know how to begin deliberation on that. 

Shabbir: I've looked at the invoices from previous trials of the criminals selling counterfeit medicine. In many cases, medicines where they just put Excedrin into an HIV bottle. And the amount that they charge the pharmacist is not enough to raise your concern.

Right, they're super careful to price it up really close to, to where, you would get it. So they're not doing it because the pharmacist is like, Aha! I can make a thousand dollars that I normally would only make five dollars on. No, it's like, I would like to lose ten dollars and not a hundred dollars.

Mike Koelzer: Well, that's how ours was ten years ago. It was some [00:28:00] licensed, wholesaler and it was, Enough to pique your interest and to do it, but not so much that you thought it was a misprint or something, illegal going on. don't know what it might've been. It might've been, instead of X, it was X minus 4 percent or something like that.

Just enough to say, Hey, that's possible. Maybe they got a big shipment or whatever. You don't know, but pharmacists are smart enough. And like you say, normally not looking to get into these illegal things, but it's just on that brink where it's enough to make that choice.

Shabbir: And these pharmacists would not be looking. This is the thing that caused us to do our recent report on this phenomenon. These pharmacists would not even be looking for a secondary wholesaler because these medicines are not in shortage. It's only because it's either this or existential bankruptcy.

These are the two choices they have. And so if they can find someone who's got it, that causes them to be able to keep the doors open and it's from a [00:29:00] licensed wholesaler, then why would you not do that?

Mike Koelzer: Sad times. My listeners know that. Our pharmacies in a situation where about three or four years ago, I was faced with some of that stuff. And there was one more decision I had. It was to just not sell any brand names because we were facing that. It's like, okay, I gotta find a way tonight to borrow $10,000.

So I can get 9, 000 back on it in four weeks. And then that's going to happen again and again. And I'm like, I got to do something tonight. So I said that's it, but it was either going to be losing it all closing the door forever It causes drastic measures,

Shabbir: Yeah. And I, I would not say that the pharmacists are doing anything drastic here. They're working inside the supply chain. Like the doctors I describe are intentionally buying from unlicensed folks, but you know, the pharmacists are 

buying from licensed wholesalers. 

 Really the only drastic thing they're doing basically is going. [00:30:00] Outside of the big three or someone that comes in and shakes her hand, the drastic measure is maybe feeling a little bit guilty that you're not getting it from your chummy sales rep 

Shabbir: Well, and it's not necessarily in their interest, for people who know a little bit outside the pharmacy world about how your prime, your contract with your prime works, like the more you buy from them, the better your discount. So if you're having to peel off buying some, a higher priced brand medication from a secondary wholesaler, you're kind of costing yourself money in a different way.

 For me, this crystallized not being a pharmacist myself or owning a pharmacy. For me, this crystallized when a pharmacist that I met at an APHA conference sent me a major PBM contract for, I think, Medicare Part D for this year. And he showed it to me and he said, look at this thing. It's, AWP, it's average wholesale price minus like 23 and a half percent.

I cannot make money. I will lose money on every dispense [00:31:00] I do and if it's 90 days, which they sometimes require, I'll lose even more money. And now I see pharmacists talking about how they can't make money dispensing generics because of that severity as well of the required discount. I get it.

I get it. they're being backed into a corner and the criminals know it. And the criminals are picking these medicines to sell which are being under reimbursed. 

Mike Koelzer: Shabir playing devil's advocate. The PBM is going to sit back and say, well, look, just because we're cutting prices, doesn't force anybody into criminality. I mean, why is it on the PBM? And. I know, of course they're the devil themselves, the PBMs.

But what do you say to that? The PBMs, they probably don't line up to take these comments with open arms, what are their replies and what would you imagine their replies gonna be?[00:32:00] 

Shabbir: I have to imagine it because no PBM has reached out to me to comment on our report about this.

Um, 

Mike Koelzer: Right.

Shabbir: It's obviously all your listeners know that it's a little bit fishy that the major PBMs also happen to own pharmacy chains that have a different reimbursement schedule. Than this.

But, Ultimately, I don't think the PBMs went into this thinking, aha, we're going to create opportunities for criminals to enter the supply chain and victimize independent pharmacies until we're the only ones left.

I don't think that's how they thought. But they have to own it now. They have to own the fact that they've created the economic conditions for crime. And as long as they continue to do that, there will be crime. 

Mike Koelzer: My argument against the devil's advocate is that, when someone's losing money on something there's obviously something really messed up and somebody's hands are kind of dirty.

Shabbir: Yeah, I think at this point there have [00:33:00] been enough cases of crime in the supply chain for it to be obvious to the people at the pharmacy benefit manager companies that they're a factor here. and it's not surprising when you pay back somebody less than they had to buy the medicine at, and you know that, and I think they know that now, you have to understand that you're part of the economic conditions for crime.

Mike Koelzer: Well, all right. So. Shabir, what's next then? What's the next step that we say, all right, the PBMs are partly responsible for this. Is that the end of it? And I imagine it's not, I imagine there's places that your organization would like to lead everybody. And so what are some of those answers that come out of this, or is it just pretty much awareness that this is going on and the government can fight it out some other way?

Shabbir: Well, at the end of the day, this drug supply chain safety issue is secondary to the survival of pharmacies, that [00:34:00] is the issue that's driving it. It created this criminal issue. And so I'm rooting for, obviously I'm rooting for pharmacies because I like having a pharmacy in my neighborhood. But, I'm rooting for them to fix this problem, not just for survivability of pharmacies, but for the safety of the medicine that I and my family take .

And I think that 

there's probably another aspect to this coming. So I'm just rooting. When I go into a meeting with A staffer from a U. S. Senator's office. I explained this factor and then I explained that the debate that pharmacy, independent pharmacy, is having, with Congress over how PBMs should be regulated is all above my pay grade.

That I'm not an expert in that and I'm not advocating for something specific. But what I do say is until you fix the under reimbursement problem, you will have. Entree into the supply chain for crime. And that's just a reality of economic physics. 

Mike Koelzer: [00:35:00] Pharmacists all know that if you're making like, I don't know three or four bucks or something on a prescription, you're losing money because the dispense per prescription should be, I don't know, 10, 12, you're losing money, 

Shabbir: It's like 1275. Yeah. 

Mike Koelzer: Yes, exactly. But when they actually put that red ink on there and you see actually a negative reimbursement right up front, especially now with the DIRs up front and stuff, and At that point, that's when it really hits you and you start to panic a little bit and start to look at these other things like we're talking about.

 And so that is the PBM thing where they can say, well, Everything's competitive. It's like, yeah, but you're throwing this right in pharmacist's face, showing this red ink of what they've lost on the, and that's a psychological edge that people are basically forced to have their mind open up more and say, what do we do with this?

Shabbir: Yeah. I think [00:36:00] it's, there's a whole nother problem which your audience knows about, which is that pharmacists could make or even break even on, on medicine that they buy and then dispense, even if they got a good dose. A dispensing fee, which they don't and then could be put into the red through audits and DIR fees, things like that.

I think it's this very unhealthy. Economic condition that the PBMs have created, like whether or not it's regulating DIR fees, which I know I've seen some action in the last six months, or audits, or the below cost reimbursement, the economic conditions have to change or we will continue to have more crime. 

Mike Koelzer: A lot of the pharmacists, we're always focused on ourselves and we know for real change to happen, we've got to show both for the optics and also to work with the government, we have to show mainly how it's affecting [00:37:00] the general population.

And so. That's exactly right. This whole thing is putting the consumers at risk.

Shabbir: Yeah, I mean, not just the risk of loss of a health care provider in their neighborhood. or in some cases within an hour's drive, but also the safety of the drug supply. You both lose a provider that you actually can talk to on a regular basis, as well as you then risk, some criminal sneaking fake HIV medicine.

I mean, the most recent and the largest crime that I've, I will ever work on probably this decade, if not in my career, was this quarter billion dollars. of counterfeit HIV meds and that they seized about 88, 000 bottles out of the supply chain. And in many cases, they would just take an empty bottle that they bought back from a patient, they would fill it in some cases with Excedrin, and then repackaged up, and then sell it through their criminal wholesaler to an [00:38:00] unsuspecting pharmacy.

And, because it's dispensed sealed, Pharmacists couldn't even check the pills without breaking the sterility, which is not allowed. So the pharmacists were uniquely vulnerable to that particular crime. And it's even more so with any kind of sterile injectable, there's no way to check. I don't know if you've looked at it, but many oncology drugs look like water in a vial.

many injectables look like water in a vial. There's no way for the pharmacist to even look at anything except packaging and be able to protect their patients. do have some new opportunities for safety that pharmacists can do with the Drug Supply Chain Security Act and they can do some serial number tracing which will show pretty convincingly that those drugs came from outside the supply chain but you can't trace everything in your shop. It's just not time in a day.

Mike Koelzer: When you say a pharmacist can't track everything, do you [00:39:00] mean that they might have the correct codes on them, correct in quotes, like they might have everything that looks good, but you're saying, I think you might be saying that it might look good up front, but. For the pharmacist to actually look at each one of these four or five or eight companies that's in the supply chain.

It's like, you'd have to be a private eye to, to come up with some of these answers to know that something was going on.

Shabbir: Yeah, to do a trace, which is how you check and see if a medicine is valid under the Drug Supply Chain Security Act, you can either guess at the right part of the supply chain and ask them, where did you buy it from and where did you sell it? Which has happened. 

 HIV counterfeits was caught by an attentive pharmacist in Texas.

who is mostly concerned about someone getting a better price than he was because he was supposed to be getting the [00:40:00] better best 

price and he just happened to ask the right prime wholesaler who said no that was never in our warehouse whatever you're holding is a fraud the longer process which is made easier by some new tools but the longer process is you take that serial number you call the manufacturer Ask them where it went, and then you call the next entity in the chain and ask them where it went, and if it was sold through five people before it got to you, you're doing five inquiries.

And the NABP, the National Association of Boards of Pharmacy, has a tool that makes it easier called Pulse, but again, it's still time out of your day to chase this stuff down. You've got to quarantine the medicine while you do it, it's still quite a, it's a labor intensive process, and pharmacists are pulled.

Especially since the pandemic, more ways than ever. And so it's really difficult to find the ability to take that time to do that for more than a few medicines.

Mike Koelzer: I always think like if I were a criminal [00:41:00] that I'm thinking of things I would do, and I realized that my total haul would be about maybe a hundred dollars a month. I'd write a check and then do a little bit of uh, slight of hand and stuff like that. But I guess for these big operations.

To make a lot of money. They're not going to make it on passing a bad check at a quick and easy store, they're going to make it on some of these elaborate schemes. And I guess they have to get pretty elaborate to bring in a ton of money.

Shabbir: I mean, the first thing you do is you do your fraud with higher priced medicine, right? Three, four, five thousand dollar bottles of 

medicine. And then you Just like anything else, you buy either the packaging or you make the packaging for as cheap as possible, I've seen they bought an empty bottle back from a [00:42:00] patient for like 300, and they sold it to a pharmacist for 3, 000, right?

Making 2, 700 a bottle. It's a good profit, , it's a good profit, so that's what they're trying to do. And then you do it with as many bottles as possible, which is how in the recent case, over the past three years, that's been unsealed by Gilead. They discovered that these guys moved about, or had about 88,000 bottles of black market medicine. 

Mike Koelzer: This is the nitty gritty, but. Shabir, you're not saying all of them just do these secondhand bottles. I imagine they have their own printing presses and stuff, as they start doing big numbers. Yeah 

Shabbir: have. They have their own pill presses, actually, as well as their own printing presses. They buy medicine bottles. If they're making a counterfeit injectable that comes in a vial, they have vial capping machines and label makers, printers that go on the vial.

They do [00:43:00] everything. Like, when you don't have to actually make real medicine, you can spend all your money on packaging.

Mike Koelzer: yeah, right. Boy. And it's sad because as I said earlier you're picking on. Grandma's cancer medicine, but it seems like a lot of these things like AIDS medicine and some of these are going to really sick people and Sometimes you don't know if Even with the medicine some of these people would not have gotten better and so it's not a real easy awareness that they gave water to somebody.

They might think they're doing poorly for some other reasons.

Shabbir: Yeah, it's a real problem for physicians to try and spot counterfeit in the supply chain. It's not the first thing they think of. If the patient comes back in and they're like, they're not getting better, you don't know why it is. The thing that's so, the thing that's so criminal, I think, and evil about people that [00:44:00] do it with HIV medicine is that, we have medicine that lets you live a normal life. That was not always true. I was alive when that infection was a death sentence. And now there are people who live so long that they've confessed to me that they actually didn't think they lived this long. They have no retirement plan. But the modern anti retrovirals, Let them live a completely normal life.

And so to take that away from someone, that they have benefited from the, honestly, the medical miracles that we've developed, and to take that away so you can make, 3, 000, like I said, I think there's a special place in hell for people.

Mike Koelzer: When I think of the people that would do some of these counterfeit things, I'm thinking of, uh, some little shack in some foreign country and guys walking around with machine guns and things like that. But in your opinion, [00:45:00] Do you think any of these things are maybe your neighbor who's in it somehow with just online being able to work out with people on kind of the dark web and stuff like that?

Is there any rhyme or reason to who these people are? Or it could it be across the board who's involved in this kind of counterfeit schemes?

Shabbir: At least in the U. S., and I can talk about foreign counterfeiters later, but at least in the U. S. it can be anyone, it can be someone who just thinks that they're selling their empty bottles and there's no harm done. they may go to church every weekend, and they're making an extra 20 bucks selling their empty bottle to someone who doesn't explain to them that it becomes a counterfeit down the line, and maybe doesn't ask any questions about it.

Ultimately, there's always someone who truly knows what they're doing, and they're often making so much money that their conscience has been screaming, but they don't hear it. 

and then I think [00:46:00] that,

they're pretty divorced from the patients hurt, they sell it to a pharmacist to dispense it to a patient, and they never see the patient. They have no idea who the patient is. There's no awareness of the human being that they're harming. And when you have counterfeiters in other countries, it's even worse.

It's not even clear that they're necessarily committing a crime in that country when they mail that medicine to the U. S. There's certainly countries where they make fake cancer meds, sell them to Americans through the small package mail, and they're not committing a crime in that country.

They're committing a crime in the U. S., but they don't live here. 

Mike Koelzer: So this could be. One guy or a few buddies living in my city that maybe put an ad out somehow that says we want these empty bottles. And then somehow these guys apply to a state and they might say that we've got a such and such thousand [00:47:00] feet warehouse and all this, and it might be baloney, but it could be your next door neighbor that's doing this fraud.

Shabbir: It could be. And sometimes the criminal rings are enormous, in the Gilead case they unraveled over 150 people who had different jobs in that criminal ring, many of whom didn't know each other, and almost none of them knew. The ring leaders. The ring leaders

actually were careful never to meet anyone in person to only use burner phones.

Identifying them was. Part of what the outside law firm Patterson Belknap and their PI did, and it was a real great piece of mystery that they unraveled. It was, they were the scooby doos of this case. But yeah, there can be a lot of people involved, and if everybody does a little piece, and the piece doesn't seem so bad, you can forget about the moral problem.

Mike Koelzer: Well, exactly. That's what they say about, you know, PBMs around any corporation. If everybody just does a little part of it [00:48:00] you're part of the body, but you can't move forward by yourself. And. Again, I'm picturing, Bruce Willis or someone tied up in a chair in one of these Riverside warehouses, but these might just be people poking away at their computer at home that are part of this 120 people,

Shabbir: Yeah, I've seen footage of a group of people in an apartment who are just using fingernail polish and paint thinner to remove prescribing labels from bottles that they bought back from patients.

Mike Koelzer: really? 

Shabbir: Yeah, and that was their job. That was their whole job, is they just cleaned the bottles and then gave them back to somebody that got paid per bottle, and they had no idea where they came from, and they had no idea where they went, but they made some money cleaning up these bottles, and if they didn't think too hard, they could just forget that they were part of a larger crime.

Right.

Mike Koelzer: So I'm thinking Shabir that there's goodness in some people. And so if you look at the pharmacists [00:49:00] what can we be looking for? And then for the people that aren't right in the mix, but maybe have some power, maybe it's government officials and things like that, what kind of stuff are you finding that they can be doing?

Shabbir: Well, let's start with the pharmacist, the pharmacists, I would argue, are the strongest point in the supply chain once the medicine's left the factory. And I just got a call from a pharmacist in Wisconsin who was telling me stories about medicine that his patients were refusing to accept the dispense for if the box was too big. He said he had an insulin that he dispensed to a patient and a little, like, a little bit of condensation from the refrigerator discolored the box. And the patient wouldn't accept it, said, I need a different box. I need one that hasn't been harmed. Don't put the label on it, just don't fully push down the whole label.

Just put the little corner of the label. [00:50:00] On that bottle, these are all warning signs of a patient who's going to sell that medicine

back into the supply chain. And so we had a long talk about it. He has some ideas and he's going to work for the Wisconsin Pharmacist Society of Wisconsin to see if they can deal with some of this issue.

Because ultimately, patients and pharmacists will be re harmed. by that medicine when it reenters the supply chain, it's especially something that needs to be refrigerated, like insulin. Like you don't know how it's been cared for or handled once it leaves, the your pharmacy.

And for, obviously for medicine bottles, we have seen criminals take real medicine out of the bottle. Put it in generic, dispense it, get paid, and then put fake medicine back in the real bottle, and then dispense that and get paid again, where you basically sell the same bottle of medicine twice. Criminals doing that will also endanger pharmacists and patients.

And so pharmacists should, keep an eye out, try and figure out if they're seeing suspicious behavior. And [00:51:00] then our website has some places where you can, alert the authorities.

Mike Koelzer: We've got some people, just a few, there's some old ladies that they're on some of these cough medicines and you don't know, but they're on other asthma stuff and that, but just in your head, you're like, what's going on?

And so we always, take them out of the original bottles and put them into, the brown ovals and things like that. Just trying to make them not as valuable if they are doing something sneaky with them. Sure.

Shabbir: that was actually, one of the topics that the Wisconsin pharmacists were talking about is, can we, should we make a rule about dispensing in a generic bottle? Should we put a sticker that's hard to remove? Again, these are, some of these things will have an impact on pharmacy logistics.

Thanks. Thanks. and pharmacy cost. And, I can't be in the business of doing things that cost pharmacies more money and make their life harder. 

Shabbir: But if pharmacists want to get together and talk about ways [00:52:00] to do that, that's certainly possible. Obviously, at the end of the day, if it prevents people from selling medicine illegally back into the supply chain, it both saves the whole system money and it keeps patients and pharmacies safe.

 Generally, we find that if patients are being defrauded, Pharmacies are being defrauded. It's rare. It does happen, but it's rare that we see pharmacists who are not also victims in these scams.

Mike Koelzer: I alluded to that about maybe people seeing advertisements and stuff like this, but how does word get out that people are looking for these bottles and so on? I've seen signs on the telephone poles about wanting, diabetes strips and things like that. But I, I've never seen one that says we want, good looking empty bottles.

Is it online? They're getting, or is it by word of mouth? How is this stuff happening? Oh,

Shabbir: message boards. We see it on on dating apps. We see, like you saw, I buy test strips. You see it on Craigslist. People basically offering to buy [00:53:00] medicine. Sometimes they'll tell A story about how they're an unofficial buyers club to make medicine available to people without as much money.

 So there is a case, a really terrible case of of PrEP, pre exposure protection against HIV. And Literally what was happening was someone was going to a Greyhound bus station, standing in a crowd and saying, Who wants to make 25? All you have to do is go with me to this pharmacy, sign some paperwork saying that you are at risk of exposure to HIV, and we can get you state funded PrEP drugs, which you will then sell back to me.

in that case, the person didn't even know that they needed the medicine. Maybe they needed it, but they didn't know they needed it until the guy put him in a van, drove him to a pharmacy, had him fill out paperwork, gave him a $25 gift card for getting the dispense and handing it back to him.

They never got any medicine at the end of the day, and the state paid for [00:54:00] that. And then some pharmacy somewhere then bought that medicine, which, who knows how he kept it? I've seen collection points for these patient buyback schemes in the back of pizzerias. That is not a temperature controlled environment.

Mike Koelzer: I've got a friend of mine who is in tool and die, and he's Actually making the gas pedal for Elon's semis.

Electric semis. And when I'm picturing like Elon Musk stuff Tesla, I'm picturing like Willy Wonka, factories where everybody's got.

Hair nets and, suction of the air and all this stuff. Clean labs and my buddy's shop, it's just big old factory building, greasy, and hotter than hell in there and the fans running, and this and that.

And I always picture that. And so as you're talking here again, I'm picturing something more elaborate, but like you say, it's just people, in the [00:55:00] back of a pizza place. they don't care. I mean, they're not going to show it to anybody.

Shabbir: Nope. Nope. They're never going to be inspected and they'll 

never see the patient they're going to harm. We actually had a scenario a couple of years ago where a counterfeiter was selling counterfeit oncology drug that was supposed to be infused and they made it and they just stuck water, right?

Hopefully they stuck saline, but the environment they made it in was not sterile. And so mold grew in the vial and then it got sold to an oncology center who infused it into a patient who had a reaction to getting mold infused into her bloodstream, not surprisingly, and had, the oncology nurse there saved her life, disconnected her, sent her to the ER, called 911, everything else.

But, these people just don't care, they're making money and they never see their victims and they just don't care. 

Mike Koelzer: Go into the governmental side then 

Shabbir: so, I mean, I think we're [00:56:00] seeing some really great prosecutions of these counterfeiters. And we're also seeing the anti counterfeiting teams from the manufacturers also go after these folks civilly. We'll often see nowadays the anti counterfeiting team for the manufacturer and their outside counsel sue for trademark infringement because selling a counterfeit brand of medicine is a trademark infringement and really completely deplete them financially and gather all the evidence.

And settle with them. I haven't seen one go through trial, but it would not be good for the defendant, the counterfeiter. Because it's very expensive when you lose. And then, after they're done with that civil litigation, the Department of Justice shows up and says, we'll just take all that evidence and charge you with some form of counterfeiting, and if you've been hiding the money with money laundering, Wire fraud, [00:57:00] mail fraud, etc. And so we're seeing some really good deterrents coming from both the anti counterfeiting teams with civil litigation. The most famous of which is the Gilead case run by Patterson Belknap, which is a law firm out of New York. And and with the DOJ falling behind them with criminal charges.

one of the great things about the Drug Supply Chain Security Act is that you kind of need to forge that paperwork nowadays in order to be a good counterfeiter to sell to pharmacies. Well, it turns out that brings a whole nother charge. There's a whole nother criminal charge for forging that paperwork that didn't used to exist.

So, the prosecutors have more and more tools to put these guys behind bars. And because they're making big money, they usually have to hide the big money and they're committing a form of money laundering at some point.

Mike Koelzer: Do they come in with a civil lawsuit pretending like that's all they're gonna be, then they come in with the big guns [00:58:00] later? Or is that not the purpose.

Shabbir: No, 

typically a company that makes a medicine that's being counterfeited mostly just wants it to stop. In investigations, criminal investigations take time because the good guys have to follow rules 

that the bad guys don't have to. But it's much faster sometimes. to bring a civil trademark infringement lawsuit for the counterfeit that person's selling.

And all the evidence you gather during that civil litigation, apart from making sure that you don't have any money left at the end of it, all that evidence can be turned over to the DOJ for a criminal prosecution. And

I've seen this once happen already where someone got sued civilly for trademark infringement for selling a fake HIV med And then had no money left for a criminal defense attorney when the DOJ came after them. And they ended up needing a public defender. For people who only care about money, a civil litigation that takes [00:59:00] all their money is not an ill fitting consequence, even if it's the only thing. But the DOJ knows 

how 

to reuse the evidence. 

Mike Koelzer: With OJ's Simpson's recent death, I had to watch all of the the documentary again, to catch my memory up, but he didn't care about the civil thing because he was gonna, go off and do his thing anyways, but that makes a lot of sense that if you take the money from somebody who was doing it for the money, that's a big loss for them.

Shabbir: Yeah, I mean, that may be the only consequence that they understand, and I just saw one settlement from a from civil litigation from from the counterfeit HIV case with one of the defendants, and they took all their money. All their retirement accounts, they even took the cash value of the life insurance that the guys had.

They took every last dollar that they had. And I think, they'll, I'm, I don't know if they'll get charged by the DOJ eventually. There's [01:00:00] probably some evidence there that I would suspect that the Department of Justice is looking at. But if they did harm people through their counterfeits I believe that they probably are You

Mike Koelzer: So they're not able to have a corporate veil for these shenanigans, huh?

Shabbir: know it is a bad thing to sell counterfeit trademarked items if you get caught. It is extremely expensive for you.

Mike Koelzer: My grandma used to say, she had this same punishment for everybody. She was like I don't know, 90 years old and she would say they ought to string them up by their toes and let everybody take a shot at them. But it seems. legitimate for these drugs, because as we've talked about, you're dealing with people's quality of life or death.

And it seems like there should be like automatic death penalty or something like that, because you maybe can't prove everything that happened from them, but to mess with somebody's [01:01:00] medicine, it's just a, it's just so terrible. It seems. Yeah.

Shabbir: It's, it's really an awful, awful crime because there's no ability. In many cases, there's no ability to do a do over. 

If you've had a family member with cancer, everything you think about is to catch it early enough. And the idea that you would waste six months on a treatment that turns out to be counterfeit, that's probably your only chance to catch it early enough so that you can save your life.

And if you lost that chance because the doctor or some counterfeiter made a fake version, and that's what you were taking, There's no do over. There's absolutely no do over. It's just a really awful crime. And I would say that we don't see penalties many times that are high enough.

For many people, especially physicians, it's maybe a first offense. And they are unlikely to be convicted. compared to you or [01:02:00] me to get jail time or to lose their license, maybe a suspended sentence and a suspended license for a year or two. But it's very rare for them to actually go to jail and the seriousness and the breach of trust is incredibly high.

 You look at the current crime that we're watching, the age, the counterfeit HIV medicine, your quality of life is degraded. One of the things that happens is that your virus may mutate and become immune to the treatment regimen you're on, and you have to change the cocktail of drugs that you're taking, And there's not an infinite number of those, so they could actually cost you a very, very important medicine by robbing you of its therapeutic effectiveness, and could become If your viral count spikes, you could actually become contagious without realizing it and endanger other people who are close to you, your romantic partners.

 that's just really an awful outcome. what is the penalty? What is the appropriate penalty for causing someone who [01:03:00] has a controlled chronic condition like HIV to no longer have that and infect somebody else? What number of years or dollars is actually enough to punish the criminal who did that?

I don't think that there is a number. 

Mike Koelzer: Shabir where are things going with this? We always know that the bad guys are always trying to stay one step ahead of the good guys. And so what do you have to be watching? And where are the, shenanigans happening down the road?

Shabbir: this is not specifically about a criminal making a fake version, but we're seeing reports that pharmacies can't afford to dispense Naloxone because they're being under reimbursed by PBMs for it. And Given the fact that we lose tens of thousands of Americans a year to the opioid crisis, not having naloxone make it that last mile from a pharmacy to a patient is a really terrible thing.

But we cannot expect pharmacists to lose money to solve the opioid crisis, to [01:04:00] dispense naloxone for less than they pay for it. I think it's really awful. And I think the PBMs probably should immediately. Change that policy. They should change it for all drugs, but there's absolutely no reason

that, that you should have to lose money to dispense naloxone in the middle of a 

crisis of opioids. 

The other one is these upper price limits that are happening in Colorado. They're trying to set an upper price limit on drugs, and I'm worried

that it's only an upper limit on reimbursement and wholesale purchases. I'm very worried that, the PBMs will lower their reimbursement to pharmacies to make a profit, and that'll also create an opportunity for criminals 

Mike Koelzer: Tell me more on that one, Shabir, with the upper level. What do you mean by that? Someone can only get so much. And so they're going to try to get a bigger part of the pie. What is that? I'm not familiar with that one.

Shabbir: So, as it is today, a pharmacist in Colorado that's dispensing A medicine like let's say [01:05:00] Stelara, which has indications for both psoriasis and Crohn's disease gets reimbursed by the PBM. And I talked to some pharmacists and sometimes they make money, but often they don't make money on dispensing that. The Colorado Prescription Drug Affordability Board has. Milenkovic announced that they think that it might be considered unaffordable, and if they do decide it's unaffordable, they will set an upper price limit that applies to the pharmacy reimbursement from the PBM, and that will almost certainly be lower than what the reimbursement is now, which will cause the pharmacies to lose more

money. That is going to drive demand for pharmacies to look for alternative sources of cheaper medicine. And the criminals will walk right into that. And that is a great case of policy going awry.

Mike Koelzer: Shabir, How can pharmacists [01:06:00] learn more about what you're talking about here? 

Shabbir: You can find pretty much all of this information, free courses on DSCSA and information about current counterfeit crime at our website at www. safemedicines. org or on social media channel. 

Mike Koelzer: and I saw a lot of associations on your website and what does that mean when an association joins? I assume that means that they're. They're trying to help with this. Is that what they're doing on there?

Shabbir: Yeah, all of our members are either non profits or associations. We don't have any for profit entities that belong to the partnership. And it's all people who handle medicine in the supply chain, and who we believe have a commitment to ridding the supply chain of counterfeits. And we are funded by their dues, which we greatly appreciate.

Mike Koelzer: Shabir, boy, thanks for joining us today. It seems to me that your organization is so important [01:07:00] because I don't think a lot of people. want to talk about this. So let's say if I'm a corporation, I maybe support it, but you don't need really me going on there as the leader of some big company.

And all of a sudden I'm talking about counterfeit stuff it's not always a good look and so some people maybe don't, Talk about this as much as they should. And so, it's great to have an association like yours come and really put some big weight behind this with not only not trying to hush it up, but actually trying to bring it forward.

So thanks for what you do. And I appreciate you being here. I know you have a lot of other stuff that you could be doing right now, and I appreciate you spending time with me and our listeners.

Shabbir: Thank you for having me. And, I just love, I love my job. I love teaching people about how the criminal's trying to fraud them. And [01:08:00] I have a lot of faith. In the pharmacy step of the supply chain. And so it pleases me greatly to talk to pharmacists, talk to the pharmacy communities. It's the allies that I spend most of my time with.

Mike Koelzer: Shabir, thank you. I look forward to talking again soon.

Shabbir: Thank you. 

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