Bottles of Gilead HIV prescriptions seized at Best Scripts pharmacy
Courtesy: Gilead Sciences
Gilead Sciences says it uncovered a dangerous drug counterfeiting operation in which its HIV drugs were improperly manipulated and resold before reaching patients.
The scheme, which allegedly ran out of two New York City pharmacies, identified Peter Khaim, a twice-convicted medical fraudster, as the mastermind, according to court documents unsealed this month. The company described Khaim as one of the most brazen and largest manufacturers and sellers of Gilead’s counterfeit drugs in the country.
Gilead sued Khaim along with 71st RX and Best Scripts pharmacies, both located in Queens, and others it says were linked to the counterfeiting scheme. Gilead’s complaint said Khaim controlled both pharmacies.
“Defendants and their co-conspirators manufactured and trafficked these counterfeit Gilead-branded HIV medications to pharmacies and patients in at least New York and New Jersey, putting the health and safety of untold numbers of patients at risk,” says the lawsuit, filed by attorney Geoffrey Potter of Patterson Belknap Webb & Tyler.
Gilead alleges in its complaint that the counterfeiters used its authentic prescription bottles but altered the actual medication or associated documentation.
“In some cases, the vials were emptied, refilled with the wrong drug, and then resealed with material other than Gilead's authentic security seals,” the complaint states. “The co-conspirators sold the counterfeit vials with falsified patient information documents, caps, and/or pedigrees or invoices.”
Most of the Gilead HIV drugs seized in the case were Biktarvy and Descovy.
Victims include both “patients living with HIV who are targeted by defendants and convinced to stop taking their prescription medications” and “patients who go to their local pharmacy and are unwittingly handed a sealed bottle that looks authentic” but instead receive a counterfeit, Gilead said in the complaint.
Gilead lawyers and private investigators, joined by New York City Sheriff's Office deputies, conducted raids at the two pharmacies and Khaim's home in July, seizing more than $750,000 worth of suspected counterfeit drugs, according to court documents.
A lawyer for Khaim declined to comment.
Lighter fluid was found alongside Gilead medications during a seizure at Best Scripts pharmacy.
Source: Gilead's Complaint Annex
The case is the second major civil complaint filed by Gilead against Khaim involving counterfeit HIV drugs in the legal supply chain. Gilead sued Khaim and others in 2021 and obtained an injunction barring him from selling Gilead-branded products. In that case, according to Gilead, Khaim made more than $38 million selling counterfeit Gilead drugs to distributors and directly to pharmacies.
Despite the court order, Khaim continued to oversee a counterfeiting operation from the two Queens pharmacies, the latest complaint says.
In other unrelated criminal cases, Khaim was sentenced to 96 months in prison for one medical fraud case and 15 years in prison for another insurance fraud case. He wore a court-ordered GPS ankle monitor while awaiting sentencing in the medical fraud case and also while operating the pharmacies and selling counterfeit drugs, according to documents in the case file.
“This lawsuit is another clear demonstration of our ongoing commitment to prioritizing patient safety and protecting people from criminals attempting to sell counterfeit and illicit versions of Gilead's medicines,” Gilead said in a statement to CNBC. “In addition to this lawsuit, we continue to work closely with the FDA, OIG, FBI, and prosecutors to dismantle counterfeit networks, deter fraudsters, and thwart illegal pharmaceutical distribution.”
Last year, a CNBC investigation revealed the dark world of counterfeit drugs and how Gilead was struggling to stop criminals from altering its packaging and medications.
In many cases, according to Gilead and law enforcement, counterfeiters obtain drugs from patients who sell them for cash. Labels are often removed with lighter fluid, and the bottles are resealed and distributed to other patients. In this most recent case against Khaim, lighter fluid was found in pharmacies during seizures, according to court documents.
