Demulen

Counterfeit Pills Buy Prison Time

* A pharmacist in Racine, Wis., noticed that the brand name on some Ovulen-21 tablets was spelled wrong. * A pharmaceutical purchasing agent in Clearwater, Fla., received complaints that Ovulen-21 birth control pills had caused breakthrough bleeding in some users. * A Chicago pharmacist wondered why the price of his latest order of Ovulen-21 was so much cheaper than previous batches.

These were the first clues in a two-year FDA investigation that led to exposure of an international drug counterfeiting ring, seizure of some 1.5 million bogus Ovulen-21 tablets, and the longest prison terms ever imposed for violation of the federal Food, Drug, and Cosmetic Act. The case culminated in convictions of seven individuals, including an 11-year prison term for a defendant who went to trial last March, after five postponements and a mistrial, and 24-year prison terms for two others.

After receiving reports of the initial problems, G.D. Searle and Company of Skokie, III., the registered manufacturer of Ovulen-21 oral contraceptives, notified FDA's Chicago district office on Oct. 16, 1984, that counterfeit Ovulen-21 tablets were on the market. Analyses of the two drug lots in question showed that the pills were not only counterfeit, but also subpotent, thus providing unreliable contraception.

On Oct. 17, the Tennessee and Kentucky State Boards of Pharmacy informed FDA's Nashville office that some complaints had been received from pharmacies in Kentucky and Tennessee. FDA traced sales of the tablets to Interstate Drug Exchange, Inc. (IDE), in Plainview, N.Y. Inspection of IDE by FDA's New York office revealed that the firm had bought the phony Ovulen-21 from Lantor Corp., Miami. IDE recalled the pills from its consignees on Oct. 25, and investigators from FDA's Orlando office inspected Lantor. They learned from Fermin Alfonso, the firm's president, that Lantor also had sold the counterfeit drugs to other New York distributors: Interstate Cigar Company in Westbury and Quality King Distributors, Inc., in Deer Park.

Alfonso, however, denied knowing anything about the origin of the pills, claiming a wholesaler in Panama had obtained them for him. He denied knowing about some shipments FDA already had documented.

On Nov. 1, Searle initiated a recall of the two suspect drug lots, including authentic tablets. The decision cost the company more than a million dollars but provided immediate notification of the problem to the public and removed the lots from the market.

In an interview on Nov. 12, Alfonso mentioned that he had borrowed money for his business from a friend, Beatriz Villalon.

FDA suspected Alfonso and Villalon were involved in counterfeiting the Ovulen-21 because, among other things, Alfonso persisted in trying -- unsuccessfully -- to sell the tablets, even after Searle's announced recall and after FDA had talked with him.

Visits to various drug distributors in November by investigators from FDA offices resulted in 13 seizures of the counterfeit drugs at locations in Alabama, California, Florida, Illinois, Kentucky, Mississippi, New York, Rhode Island, Tennessee, Texas, and Washington.

Investigation of some of the seized product led to Gulfcoast Drug Supply, Inc., Miami. From Gulfcoast's president, Robert Pollock, FDA learned about another suspect, Sheldon Harwin.

But here the trail cooled. As a result of previous, unrelated charges, Harwin was in prison and refused to talk to FDA.

To try to document the origin of the counterfeit Ovulen-21 and find out other facts, FDA in 1985 and 1986 extended its investigation to foreign countries, enlisted Interpol and the U.S. Customs Service, and visited additional drug distributors and other businesses, including airlines, telephone companies, banks, and printing and packaging firms. Agency investigators interviewed individuals repeatedly and pored over hundreds of documents.

Gradually, two conspiracies emerged: The first one began in 1981 and involved imported drugs from Spain; the second began in 1984 with drugs smuggled from Guatemala.

One of the leads in FDA's investigation pointed to involvement by Gilbert Yurubi, Alfonso's cousin. FDA questioned Yurubi during 1985 and early in 1986. He agreed to cooperate and provided information that confirmed the first conspiracy. Following other leads, agency investigators in June 1986 visited the manufacturer involved in the second conspiracy.

On July 7, 1986, after release from jail, Harwin provided some information, including the name of the Barcelona, Spain, manufacturer, whom FDA interviewed in August.

The First Conspiracy

In December 1981 at a bank office building in Coral Gables, Fla., Sheldon Harwin and Edward Peterson met with the owner of a Barcelona pharmaceutical company to arrange purchase of oral contraceptives. Within a few weeks, 10,000 cycles of the pills were shipped through Texas to Monterrey, Mexico, from where they could later be smuggled.

For help with the smuggling, Peterson contacted a person known as "J.J.," who Peterson believed was a smuggler but actually was an undercover agent for the U.S. Drug Enforcement Administration (DEA). Thinking Peterson was smuggling controlled drugs, the agent agreed to help Peterson, and the pills were smuggled back into Texas in January 1982. (The DEA tape recordings of the conversations between J.J. and Peterson provided early records for FDA's investigation.)

In July, Harwin, using the name "J. Black" and claiming to work for Searle, placed an order with a Hollywood, Fla., firm to print the Ovulen-21 trademark and logo in brown ink on 10,000 blue envelopes. These were outer envelopes; the pills were sealed in one-month cycle blister packs.

Harwin sold the drugs to Gulfcoast Drug Supply for $39,720, splitting the profits with Peterson. This was Peterson's last known participation in the conspiracy.

In September 1982, Harwin again met the Barcelona manufacturer in Coral Gables to discuss another shipment. A month later, Harwin asked Fermin Alfonso to help bring the pills into the United States. Alfonso agreed and introduced Harwin to a contact at a commercial airline who could smuggle pills into the United States when they came through the Miami airport en route to Haiti. The plan worked. Harwin received 50,000 cycles in December.

Harwin had more "Ovulen" packaging printed and in January 1983 made a deal to sell the entire shipment to Gulfcoast. The pills were delivered to Gulfcoast on Feb. 2. But Gulfcoast's Pollock noticed the pills weren't exactly like Searle's Ovulen-21 and decided they weren't authentic. He telephoned Harwin to cancel the deal and returned the shipment to Harwin at a warehouse in Hollywood, Fla. Pollock retained more than 3,000 cycles, however, which he later sold to a drug distributor--knowing they were counterfeit.

Meanwhile, a Florida judge revoked Harwin's previous probation and on March 30 sentenced him to five years in prison for an unrelated offense.

Shortly after Harwin was jailed, Alfonso and Beatriz Villalon delivered part of the stored pills to another buyer, a Florida agent for H.L. Moore Drug Exchange of Mellville, N.Y. But Searle was now using white envelopes instead of blue, and the agent noticed the envelopes were the wrong color and decided the pills were counterfeit. Like Pollock, the agent refused delivery but, also like Pollock, didn't notify FDA.

During the summer, Villalon and Alfonso approached Gilbert Yurubi and Jacques Behar, a business partner of Yurubi, and persuaded them to invest $40,000 to buy the Barcelona pills from Harwin for a share of the profits. Yurubi paid the $40,000 to Harwin's son, and the Barcelona pills were turned over to Alfonso, Villalon, Behar, and Yurubi.

About this same time, Alfonso made arrangements with a Miami printer to have envelopes printed in blue ink on white paper to resemble Searle's new packaging.

In October 1983, Alfonso and Villalon delivered 20,250 blister packs to Interstate Drug Exchange for $115,425. Payment was made by wire to bank accounts in Panama City, and on Nov. 28, they delivered another 25,350 packs for $107,000, also wired to a Panama account.

The Second Conspiracy

In March 1984, Alfonso and Villalon traveled to Guatemala City and met with the owner of a small pharmaceutical laboratory there. The owner refused to make tablets with the name "SEARLE" but did agree to make products imprinted "SEABLE."

The conspirators obtained the active ingredients and packaging materials and shipped them to the Guatemalan laboratory, usually using the name Vibe Export Corporation (Villalon's company). They ordered 50,000 cycles in unlabeled packets from the owner, reformulated to reduce by half the tablets' estrogen component and to substitute progesterone hormone for the tablets' other active ingredient, ethynodiol diacetate. In turn, the laboratory supplied 43,267 cycles to a Guatemala City exporter, who sent them to a Panama firm for labeling and subsequent shipment to the United States.

In August 1984, Alfonso and Villalon sold 12,000 cycles of the pills to Interstate Cigar Company. In September and early October, under the name Fenix World Trade Corporation, they sold some 22,000 cycles to Quality King Distributors, with delivery through a shipping company in Panama.

Over the summer and fall of 1984, Alfonso and Villalon had ordered approximately 319,000 more Ovulen envelopes, visited packaging-machine manufacturers in Florida and New Jersey to look into buying automated equipment (even after they knew FDA was aware of the counterfeiting), and ordered 250,000 envelopes for Demulen, another Searle contraceptive. The two were gearing up for large-scale counterfeiting of additional prescription drugs for U.S. distribution. This never happened.

Justice

On Feb. 11, 1987, six defendants were charged in a 29-count indictment in the U.S. District Court for the Southern District of Florida. Due to Harwin's complaints of poor health, his trial was delayed several times until March 1990.

A seventh defendant, Pollock, pleaded guilty to one count of distributing a counterfeit drug and cooperated with the government. He received six months' probation and a $7,500 fine.

Behar and Yurubi pleaded guilty to one count each of conspiracy and cooperated with the government. Peterson pleaded guilty to one count of conspiracy and a second count of distributing a counterfeit drug. Behar and Yurubi were each given jail terms of 10 months and Peterson, five years. All three have since been released on probation.

Alfonso and Villalon pleaded not guilty and waived a jury trial. On July 13, 1987, the judge found them guilty on all 21 counts charged, and they were sentenced the following September to 24 years in prison, which they are currently serving in the Federal Bureau of Prisons.

Harwin initially signed a plea bargain and cooperated but withdrew the plea on the eve of the Alfonso-Villalon trial. He was ultimately found guilty on the five counts charged and was sentenced on May 1, 1990, to 11 years in jail. He reported June 1 to prison and must serve at least 48 months before becoming eligible for parole.

The press has reported lawsuits over pregnancies allegedly resulting from use of the bogus drugs, but FDA is unaware of any final judgments.

As a result of these and other prescription drug smuggling schemes, FDA has stepped up efforts to prevent unauthorized reimportation of prescription drugs. In September 1985, the agency issued an import alert by which prescription drugs returned to the United States are automatically detained at the border until documents are produced to show they originated here. In addition, the U.S. Congress enacted the Prescription Drug Marketing Act of 1987, which bans the reimportation of drugs produced in the United States unless the drug is imported by the person who manufactured it.

Dixie Farley is a staff writer for FDA Consumer.

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