Counterfeit Drug Infiltration of the Legitimate Supply Chain: Dan Rather Reports on HDNet

September 14,2010 – In The Mysterious Case Kevin Xu Dan Rather investigates the fake prescription medication market and attempts of counterfeiters to infiltrate the US market. The broadcast was shown September 14, at 8pm ET on HDNet.

Dan Rather spoke to Andre Watson, US special agent in charge of immigration and customs enforcement about Mr. Kevin Xu, a counterfeit medication smuggler. Mr. Xu had access to extensive manufacturing and distribution capabilities in China to produce phony, chemically inaccurate version of influenza vaccines, prostate cancer treatment, blood thinners, Alzheimer’s medication and other vital drugs. U.S. Agents infiltrated Mr. Xu’s large-scale phony drug production line, which could produce 200,000 boxes of fake drugs in a week.

Mr. Xu started by selling fake erectile dysfunction medication with well-executed packaging and pill molding using the same machinery for the pill press and the box printing with replicated lot and batch numbers. However the ingredients were not the same as the real medications.

After six years of selling fake medications wholesale inside legitimate pharmacies in Europe, he began selling them in the U.S. Xu’s sophisticated smuggling routes through Malaysia, Singapore and then on the UK, combined with his convincing packaging allowed him to be undetected for years in Europe.

Eventually a pharmaceutical wholesaler noticed small inconsistencies in packaging and notified the British Authorities. Massive class-one recalls were issued for schizophrenia, stroke and cancer medications. Seventy thousand boxes of counterfeit medicine had been introduce into Britian’s health system, of which thirty thousand are still unaccounted for and are assumed to have been taken by patients.

John Clark, Pfizer’s Head of Global Security, said “We’ve seen talcum powder, boric acid, brick dust, highway paint to give it color, floor wax was used to give it a nice sheen, so it would look more authentic. Somebody is ingesting something with boric acid, brick dust, highway paint and floor wax thinking they’re getting medicine.”

U.S. Federal Customs and Immigration authorities, alerted to Xu’s role in the UK debacle, organized a sting operation and he sold large quantities of counterfeit medication to undercover agents. He was tried in Federal Court and found guilty of selling counterfeit goods, ordered pay $1.3 million in restitution and sentenced to over six years in prison.

HDNet has a full transcript of the story available here.