Wednesday, November 23, 2016

California Registered Nurse Who Ordered Botox From Canadian Company Via Internet for Medical Spa Pleads Guilty to Federal Charge of Receipt and Delivery of a Misbranded Drug

One important issue for all medical providers is to understand where FDA medications and injectables come from. Ordering on the Internet or from unauthorized distributers can create serious legal issues, including criminal charges, license discipline and in cases where insurance or Medicare/Medi-Cal (Medicaid) has been billed there will be demands for overpayment and allegations of fraudulent billing.

A registered nurse who owned and operated a day spa in Laguna Niguel, California has learned this lesson the hard way. This month she agreed to plead guilty to a federal charge related to the illegal distribution of Botox that was not approved for use in the United States.  

Bridget “Gigi” Goddard, who allegedly owned Pure Indulgence Skin Rejuvenation in Laguna Niguel, has agreed to plead guilty to one count of receipt and delivery of a misbranded drug, a crime that carries a statutory maximum penalty of three years in federal prison. It would be highly unlikely she would receive the maximum but it is a felony and will likely have license repurcussions.

Lesson of the Case. The issue is often whether there is criminal intent and there have been thousands of physicians purchasing. How is that shown? One way is whether the individual received a letter from FDA about it and continued to order from other countries.  FDA has been transparent about notifying medical providers about illegal use of Botox and other medications from outside the U.S. On the FDA website there's a list of medical providers who were notified from 2013 to the present and there's a list of "repeat offenders." Ms. Goddard unfortunately was one of those listed as having been notified in 2013 and apparently still used product from outside the U.S. The undercover agent was key in her case. 

Government Has List of Providers Who Bought From SB Medical, Inc., TC Medical and Gallant Pharmaceutical. This case comes out of a larger federal case against SB Medical that was filed in Alexandria, Virginia against SB Medical, Inc. and its principals. In that case, the company plead guilty and was ordered to pay a $45 million fine and to forfeit $30 million for smuggle misbranded pharmaceuticals into the United States. The government sent letters to medical clinics and medical spas who had bought Botox and other injectables from SB Medical, Inc. and other companies under investigation and then followed up with them. Other entities that were also prosecuted include Gallant Pharmaceutical. 

Allegations Against Ms. Goddard. The government alleged that the Botox that Ms. Goddard purchased had been manufactured for distribution in foreign nations such as Turkey and was not approved by the FDA for distribution in the United States. All Botox products approved for distribution in the United States by the United States Food and Drug Administration are manufactured by Allergan and must be administered under the supervision of a licensed physician. 

Ms. Goddard admitted in her plea agreement that, over the course of several years, she ordered Botox over the internet from Canadian companies that sold unapproved drugs to customers in the United States. In April 2016, the government send an undercover FDA agent to Pure Indulgence which compounded Ms. Goddard's legal issues.  The government alleges that at this undercover visit, Ms. Goddard told the undercover agent that the undercover agent did not need to be examined by a physician before the Botox injections were administered, and she knowingly misled the agent as to whether the Botox was approved for use in the United States.

Ms. Goddard is scheduled to make her first appearance in this case in United States District Court in Santa Ana on December 12. The investigation into Goddard was conducted by FDA’s Office of Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Scott D. Tenley of the Santa Ana branch office.

Attorney Commentary. The high price of Botox and other injectibles have caused entrepreneurs to buy overseas and sell in the U.S. in person or through the Internet. The salespersons represent that the product is the "same" but often that is not the case. In addition, even if the product were Allergan from overseas - if the drugs are not distributed by Allergan and sold in the U.S., it is illegal to import the products from outside the U.S. One of the reasons is that there are counterfeiters who repackage, are not using real product, and the chain of custody is not guaranteed. In addition, there is product liability insurance in the U.S. that is not available for products purchased from outside the U.S. 

While the pricing structure of pharmaceuticals and medical devices may not seem fair, it is the law and medical providers must be careful and instruct office managers and nurses to order from the manufacturer or authorized distributors. If there is an investigation or visit by an FDA agent, it is important to not handle this alone and seek experience counsel since mistakes during an interview can have serious repurcussions.

How do you prevent an FDA investigation from turning into a criminal case? The government looks for criminal intent. The FDA had been heavy handed in some cases and was even named the Botox Police. Allergan had its own financial interest in pursuing charges. 

Tips. First, if there is an interview request -- and trust me, the agents do not call for an appointment and simply show up in pairs -- be polite and ask for time to have an attorney present and so you can gather all your records and prepare for an interview (or decide not to be interviewed depending on the facts). 

Second, do not lie. Do not fabricate records. Do not ask anyone else to lie or fabricate an invoice. This is what the government loves - when someone panics and acts like a foolish teenager and lies without thinking - since it shows "criminal intent." 

Third, do not minimize the importance of these investigations and attempt to handle it on your own. When you are stressed, part of your brain shuts down and at the time of the interview, the FDA or other goverment agency knows a lot more facts than you.

Finally, each case is different and there could be an additional 10 tips but it will be case specific. Even chain pharmacies have counterfeit and fake drugs and over the counter medications. Counterfeiting is a huge business. Be smart and breathe, take your time to get experienced representation and prepare for an interview like you would anything else.

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Office: 213-233-2261


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