Sunday, May 31, 2009

Misbranded Drugs Case: Doctor Convicted By Jury Of Buying Non-FDA Approved Cancer Drugs From Foreign Countries And Using Them In His Oncology Practice

On May 8, 2009, a California physician, Vinod Chandrashekm Patwardhan, of Claremont, California was convicted by a jury in federal court in Riverside of conspiracy, two counts of introducing misbranded drugs into interstate commerce with intent to defraud or mislead, and three counts of smuggling foreign misbranded cancer drugs into the United States .

Dr. Patwardhan is an oncologist who maintained offices in Upland and Chino. The evidence presented during a seven-day trial showed that Patwardhan regularly purchased unapproved cancer drugs from foreign countries including India, Honduras, Panama and the Philippines.

From 2004 until his arrest last August, Patwardhan smuggled or caused to be smuggled more than $1.3 million worth of unapproved drugs from foreign countries. The investigation revealed that Patwardhan and his employees made at least 34 trips to foreign countries to obtain drugs that were smuggled into the United States. Most of Patwardhan’s patients were receiving the unapproved and misbranded foreign drugs, a fact Patwardhan concealed from his patients.

Dr. Patwardhan charged the patients, their insurance companies and Medicare for the unapproved drugs at the same rate that he would charge for FDA-approved drugs, even though he had paid significantly less for the unapproved foreign drugs.

For example, one invoice signed by the doctor, showed that he approved the $888,900 purchase of 100 vials of Docetax 80 mg and 300 vials of two other drugs, also illegible. Docetax is used in for the treatment of metastatic breast cancer. Other drugs included Pemnat 500 mg, Neupeg and Grafeel 1 ml, made in India and Farmorubicina manufactured in Italy. These medications are not FDA approved when purchased from other countries even if they are the same medications.
Authorities began investigating Patwardhan in March 2008 after one of his employees said the doctor was treating patients with cheaper cancer medications purchased from India and Honduras that were not approved for use in the U.S. by the Federal Drug Administration.
Two of Patwardhan’s former employees have pleaded guilty to misdemeanor charges of introducing unapproved new drugs into interstate commerce and are scheduled to be sentenced later this year.

Dr. Patwardhan treated about 35 cancer patients a week and allegedly told investigators prior to charges being filed that he had been bringing in medication for "quite some time." Employees became suspicious of the unauthorized drugs because Dr. Patwardhan would bring them in gym bags or other concealed packages. Generally, FDA approved oncology drugs are shipped by U.S. companies in refrigerated containers through Federal Express or other courier services.

One employee told investigators that Patwardhan traveled to India three or four times a year and had been purchasing cancer medication from there for six or seven years. Employees said he also had one person purchasing drugs from Honduras and asked them to purchase drugs on trips to Canada and the Philippines.

Dr. Patwardhan is scheduled to be sentenced by United States District Court Judge Virginia A. Phillips on July 20. At sentencing, Patwardhan faces a statutory maximum penalty of 71 years in federal prison.

Attorney Comments: Although the U.S. Attorney spokesman stated that this is the first such case he had seen in 12 years, we have seen numerous cases such as this one. This type of case arises by the huge difference in prices between FDA approved medications or devices in the U.S. and the price for these same medications or devices in other countries. The U.S. prices can be anywhere to 300% to more than 1,000% more than the foreign prices.

There appears to be no evidence that any patients were harmed by these medications made in other countries. Instead, it was a case about providing and billing for non-FDA approved medications (and bringing them into the U.S.) Some drugs made in other countries do not have safety controls that are required by the FDA but these drugs did not seem to have these issues.

Our office handled a number of cases where Copper T-380 IUDs made in other countries were being sold by pharmacies and suppliers to medical offices. The price differences were very large and enabled the offices to provide these IUDs to their patients. The price of the FDA approved IUDs distributed by only one company were higher than the reimbursement for Medi-Cal. The device appeared identical and there was no indication that there was any difference between the devices made outside the U.S. Nevertheless, some physicians were charged criminally where it could be shown that they knew the device was made overseas and that it was bought at a significant discount. Some of our clients were able to avoid criminal prosecutions but each case was fact specific.
It appears that Dr. Patwardhan was offering these medications made outside the U.S. to HMO patients where the HMOs refused payment or treatment. Regardless of the doctor's intentions, cases such as these are often open and shut when it is possible to prove that the physician knew that the medication or device was from another country and was not FDA approved. Insult is added to injury where the physician bills for the non-FDA approved drug or device and the Medicare and Medi-Cal manuals are clear that only FDA approved drugs or devices are reimbursable.

Be wary of suppliers coming to your office and offering drugs or devices at a large discount. Further, do not succumb to the temptation of saving money by buying drugs or devices from other countries (including Canada) and then billing for them. In the event of any question about whether you are purchasing FDA approved drugs or devices or have failed to do so in the past, err on the side of caution and involve your health care attorney or compliance officer at the earliest time possible.

Any questions or comments should be directed to: Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals and businesses in civil, business, administrative and criminal proceedings, with a specialty in health care providers.


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