Iowa Oncologist Pays $176,460 Fine in Illegally Imported Cancer Drugs Case

Dr. Magdy Elsawy has admitted to no wrongdoing in his settlement, however it was originally alleged he provided non-FDA approved cancer medications to his patients, defrauded Medicare, and provided treatments to patients that were more complex than needed or entirely medically unneeded.

North Iowa Today is reporting that the owner and lead physician at Hematology and Oncology Center of Iowa has agreed to pay $176,460 as a settlement of allegations that treated patients with illegally imported cancer medication purchased from disbanded drug importer Medical Device King.

According to North Iowa Today, Dr. Elsawy is alleged to have not only defrauded Medicare by submitting billing for oncology drugs that “were not approved, misbranded, or counterfeit,” but also submitted “office visit claims for visits that were either medically unnecessary or were upcoded to reflect more complex encounters than what actually happened.”

Dr. Elsawy’s Hematology and Oncology Center is listed in a spreadsheet provided by the FDA of medical offices that received a 2013 warning letter about purchases from Medical Device King.  A copy of the letter sent by the FDA states: “We are writing to alert you to a potential public health problem with certain prescription drugs. The U.S. Food and Drug Administration (FDA) has received information indicating that your medical practice may have received prescription drug(s) distributed by Medical Device King (MDK), a distributor that is not licensed in any state. FDA is very concerned these products may cause harm to patients, because they may be unsafe or ineffective.”

Medical Device King, the importer Dr. Elsawy bought his cancer medication from, was shuttered in 2014 by the U.S. Justice Department. The company was responsible for a 2013 Health Care Provider Alert by the FDA after counterfeit versions of the cancer medication Altuzan turned up amongst their supplies.

Medical Device King specialized in cold-chain oncology medication, and sold more than $17 million worth of misbranded and counterfeit cancer drugs to U.S. doctors before its owner, William Scully, was arrested. Scully was sentenced to five years in prison after being convicted on 64 charges that ranged from conspiracy, to violations of the Food, Drug & Cosmetic Act, mail fraud, and wire fraud, as noted by the Department of Justice (DOJ) On December 13, 2017, however, the U.S. Court of Appeals for the Second Circuit vacated William Scully's conviction because a lower court "declined to allow Scully to introduce evidence at his 2015 trial showing he sought legal advice about importing drugs with foreign labels from one of his lawyers." Ultimately, there was no second trial: Scully pleaded guilty to one charge of introducing misbranded drugs into interstate commerce, and received a sentence of 32 months. An August 17, 2016 forfeiture order of $889,875 remained the same.

Spencer E. Morrison, Special Agent in Charge, FDA Office of Criminal Investigations’ Kansas City Field Office was quoted in North Iowa Today: “U.S. consumers and patients rely on the FDA to ensure that the medicines they take are safe and effective; the public’s health is at risk when unapproved, misbranded or counterfeit drugs enter the marketplace. We will continue to direct our efforts to protecting the public’s health.”