(NEW YORK) — A massive black market scheme that diverted and resold critical prescription drugs potentially put unsuspecting patients in the path of harm and bilked the U.S. government out of millions of dollars, according to federal charging documents unsealed Wednesday.
The illicit operation was allegedly led, aided and abetted by multiple pharmacy owners and employees in Puerto Rico, as well as a medical facility procurement worker who “used his position” to steal legitimate medications from the warehouse before they hit the market and then resold them at a “steep discount” to individual pharmacy owners, according to an indictment.
The 27 people indicted in the scheme include a onetime Olympic basketball player, officials at the U.S. Department of Health’s Office of Inspector General told ABC News. Of those indicted, one has already pleaded guilty, officials said.
Eddin Orlando Santiago-Cordero, aka “Guayacan,” allegedly served as one of many unlicensed wholesale distributors, according to an indictment. Decades before facing charges in the scheme, he was on Puerto Rico’s Olympic roster, a spokesperson for the HHS-OIG told ABC News.
Early Wednesday, federal authorities arrested some of the individuals allegedly involved in the operation across Puerto Rico and in Florida, the HHS-OIG spokesperson said.
More than 100 different drugs — many of grave necessity to the people who take them — were part of the drug diversion scheme, the charging documents said. These drugs include multiple HIV+ medications, insulin, thyroid medication, antipsychotic / schizophrenia medication, alcohol and opioid addiction medication, blood thinners, asthma and COPD medications, IV antibiotics to treat serious infections like meningitis or sepsis, hormone replacement therapy estrogen, malaria medication, popular obesity and diabetes drugs including Ozempic and Mounjaro, as well as medication used for erectile dysfunction and enlarged prostate.
Those drugs were snatched before reaching retail, often stored in resealable plastic baggies without markings — and importantly, without the conditions needed to maintain some of the meds’ safety and effectiveness, the charging documents say. One example cited in the court documents is insulin, which must be refrigerated.
“It becomes difficult, if not impossible, for regulators such as the FDA, law enforcement, or end-users to know whether the prescription drug package actually contains the correct drug or the correct dose” once the meds are diverted, court documents said. “Law enforcement officers, regulators, and end users would not know whether the prescription drug was altered, stored in improper conditions, or had its potency adversely affected.”
Nearly $21 million in fraudulent funds — just shy of $14 million of that from ill-gotten gains selling misbranded and diverted prescriptions and more than $7.6 million of that from false Medicare and Medicaid claims — were netted in the alleged scheme, court documents allege.
The alleged operation is part of an “alarming” and a “growing” trend, HHS-OIG’s special agent in charge of the New York Regional Office Naomi Gruchacz told ABC News in an exclusive interview ahead of the takedown she helped lead.
“The motivation oftentimes to conduct this type of scheme is for greed,” Gruchacz said. “They’re making a financial profit. The greed takes over and even though the community is put at risk, that’s overlooked — even though oftentimes it’s happening in the same community that these healthcare providers should be servicing.”
Since syndicates like these operate outside official channels’ guardrails it’s not only near-impossible to track if the drugs are downgraded or even what they purport to be — it’s also hard to track where exactly the diverted prescriptions go, and into whose hands, an HHS-OIG spokesperson said.
Co-conspirators of the operation “sold prescription drugs in resealable clear plastic bags without any labels and adequate directions,” paid each other in cash, and sent shipments of diverted drugs via the United States Postal Service “as well as private and commercial carriers using fictitious names and addresses,” the charging documents said.
“We have seen in other investigations that sometimes the medication is sold on legitimate, wholesale distribution websites,” Gruchacz said.
Syndicates like this one have at times collected drugs from patients who ration and sell their own prescriptions for a kickback, she said.
“It is patient harm that we’re talking about, both on the front end – the patient that should be taking the medication, and on the back end if a patient is unknowingly receiving a diverted medication,” Gruchacz said. “We don’t know how it’s being stored. We don’t know if it’s expired.”
Attorney information for Santiago-Cordero and other defendants was not immediately available.
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