Hearing for LV drug sellers proceeds

Michelle Swafford

Tuesday, Oct. 14, 2003 | 11:10 a.m.

Two Las Vegas drug wholesalers accused of selling counterfeit prescription drugs and dealing in drugs with unlicensed companies say their actions have been misrepresented and they've complied with Nevada laws governing their activities.

Dutchess Business Services Inc. and Legend Pharmaceuticals Inc. will rebut the allegations in oral arguments beginning today in Las Vegas. The attorney for both companies filed a written response on Sept. 9 to numerous allegations against them signed by Keith Macdonald, board executive secretary of the Nevada State Board of Pharmacy.

Pharmacy wholesalers are the middlemen when it comes to prescription drugs. They purchase drugs in bulk and store them until they are needed by retail pharmacies.

A 57-page complaint against both companies alleges they are related to each other and says they could lose their licenses or pay fines of up to $10,000 per count if they're found guilty.

Steven Gibson, attorney for both companies, said in his written response that they are separate entities and any accusations should be brought against them individually. He also said the companies have been wrongfully associated with another Las Vegas wholesaler, Las Vegas Distributor Inc., that he said was involved with a conspiracy to sell deeply discounted prescriptions from 1996 to 1998.

Gibson said in his response that the term "counterfeit" is not explained in the complaint nor is a definition provided of what constituted an authorized dealer for various drugs.

Dutchess and Legend are accused of buying millions of dollars worth of Serostim, Lupron and Zoladex from unauthorized wholesalers in South Carolina and Florida and selling them to wholesalers in other states. Serostim is used for several diseases, but is most commonly used to treat AIDS. Lupron and Zoladex are competitive products used primarily to treat prostate cancer.

The pharmacy board said some of the drugs at issue branded as Serostim were fake and were not produced by the manufacturer. It also said Dutchess bought and sold 399 vials of counterfeit Serostim and had been informed by the manufacturer that certain lots were fake.

Some of the counterfeit Serostim was purchased and used by patients who suffered harm, the board complaint said.

It is not known if the counterfeit Serostim reached Nevada pharmacies or exactly what harm, if any, Nevada consumers experienced.

Gibson said in his response that there were also legitimate vials of Serostim with the same lot number and there is no evidence that Dutchess ever possessed any of the fake Serostim. Also, Dutchess voluntarily recalled the vials as a precautionary measure.

Another accusation against Dutchess said the company provided two sets of documents regarding its sales and that many of them were re-dated, redacted or incomplete. Dutchess said its computer system malfunctioned and that it provided the additional information to correct the erroneous sections caused by the glitch.

Crystal Coast, Genendo, Xenigen and Rekcus, the wholesalers Dutchess and Legend allegedly did business with, are not licensed in Nevada, the state pharmacy board said. Gibson said the law does not require them to be licensed in Nevada because they are not located here.

The owners affiliated with those Florida wholesalers were arrested in Florida in May on a charge of illegal possession of drugs with intent to deliver. The pharmacy board said part of the basis for the arrest was transaction records involving Dutchess and Legend.

Gibson said neither company he represents had any knowledge of any wrongdoing nor should they have.

Macdonald and board general counsel Louis Ling are under a gag order issued by a federal judge in Las Vegas. Gibson said Dutchess and other companies secured the restraining order against both men as individuals in March, which was five months prior to the state's complaint against Dutchess and Legend.

Ling and Macdonald are accused in a federal lawsuit filed by the distributors of business slander and intentional interference of an economic advantage.

Gibson has said he is investigating whether the complaint against his clients was made in retaliation of the gag order.

The parties are still in the discovery process and a trial date has not been set.