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FDA NEWS RELEASE

FOR IMMEDIATE RELEASE
P04-83
August 27, 2004

Media Inquiries: 301-827-6242
Consumer Inquiries: 888-INFO-FDA

FDA Gets Significant Guilty Pleas

The U.S. Food and Drug Administration announced today that two Cincinnati, Ohio area prescription drug wholesalers pled guilty today in United States District Court for the Southern District of Ohio for failing to provide to their customers what is commonly referred to in the pharmaceutical industry as a drug "pedigree" or a "Statement Identifying Pharmaceutical Sale." This is one of the first convictions of its kind and marks a significant step in assuring that prescription drug wholesalers fully conform with laws that ensure the integrity of the nation's drug supply.

RxBazaar, Inc., and its wholly owned subsidiary, FPP Distribution, Inc., each pled guilty to one misdemeanor charge under the Federal Food, Drug and Cosmetic Act (the Act) for not providing required documentation identifying each prior sale, purchase, or trade of prescription drugs that they distributed. This documentation statement is commonly referred to in the pharmaceutical industry as a drug "pedigree".

Each company was sentenced to five years probation and a $100,000 fine. RxBazaar, Inc., a publicly traded company, operated a web site called www.rxbazaar.com through which buyers and sellers would conduct wholesale pharmaceutical transactions. RxBazaar collected fees from sellers who utilized their web site and would distribute the pharmaceuticals to customers through FPP Distribution, Inc.

The Prescription Drug Marketing Act (PDMA), which became effective in 1988 as an amendment to the Act, was enacted amid growing concerns of prescription drug diversion and counterfeiting. One of the many provisions of the PDMA is the requirement for drug wholesalers that are not manufacturers or authorized distributors of a drug to provide a pedigree for every prescription drug they distribute. Drug wholesalers that do not provide pedigrees, or provide fraudulent pedigrees, facilitate drug counterfeiters and diverters looking to enter illegal and potentially dangerous products into U.S. commerce.

Failure to comply with the pedigree requirement of the PDMA, as well as other provisions of the Act, including the distribution of counterfeit drugs, are strict liability misdemeanors for which ignorance of the law or the lack of criminal intent is no defense.

A second conviction for the same misdemeanor offense under the Act is a felony.

"These guilty pleas are part of FDA's increased effort to combat drug diversion and counterfeiting," said Acting FDA Commissioner Dr. Lester M. Crawford. "We will not tolerate any illegal action which undermines the integrity of our nation's drug supply."

FDA's initiation of its criminal investigation followed several reports that drugs distributed by these companies were misbranded or counterfeit. FDA's Office of Criminal Investigations will continue to aggressively pursue criminal charges against prescription drug wholesalers who seriously and repeatedly violate federal laws and expose U.S. consumers to the risk of counterfeit, diverted or otherwise fraudulently obtained or sub-standard drugs.

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