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A prominent La Jolla oncologist and his corporate medical practice have pleaded guilty in connection with a scheme to import unapproved foreign cancer drugs at a deep discount, dispense them to unwitting patients, bill Medicare as if the drugs were legitimate, and pocket the profits. In a hearing before United States Magistrate Judge Bernard Skomal on January 15, Dr. Joel I Bernstein entered a guilty plea to a single count of introducing an unapproved drug into interstate commerce – in this case, a cancer drug called “Mabthera” intended for market in Turkey – and administering it to patients. The approved United States drug with the same active ingredient is Rituxan, which is used to treat lymphomas and leukemias such as non-Hodgkin lymphoma and chronic lymphocytic leukemia.

Bernstein was released pending sentencing, which is scheduled for April 16 at 1:30 PM before Judge Skomal. In addition, his medical practice, Dr. Joel I Bernstein, MD. Inc ., also pleaded guilty at a hearing today before United States District Judge Cathy Ann Bencivengo to one count of health care fraud.

According to the plea agreement with the corporation, employees of Dr. Joel I Bernstein, MD. Inc. purchased $3.4 million of foreign cancer drugs, knowing they had not been approved by the United States Food and Drug Administration for use in the United States.

From 2007 to 2011, Bernstein’s office purchased these drugs for significantly less than market value in the United States and then submitted claims to Medicare at the full reimbursement price. To conceal the scheme, the office fraudulently used Medicare reimbursement codes for approved cancer drugs, as Medicare does not pay for unapproved drugs. The plea agreement for the corporation also calls for $1.7 million in restitution to Medicare, plus forfeiture of $1.2 million in profits. The corporate medical practice is scheduled to be sentenced on May 17, 2013, before Unites States District Judge Cathy Ann Bencivengo.

In addition, the government has also filed a False Claims Act lawsuit in District Court against Dr. Bernstein and his medical corporation for submitting false claims to the Medicare Program for these unapproved drugs. According to this civil complaint, the Medicare Program was defrauded of over $1.7 million, and under the False Claims Act, the United States can recover triple the amount of damages plus monetary penalties.

The cases involving Dr. Bernstein and his practice are the latest example of an alarming nationwide trend that potentially puts patients at risk by exposing them to foreign drugs – particularly injectable chemotherapy drugs – that are not vetted by the FDA. Agency officials have described the trend as an “epidemic of unapproved and counterfeit drugs.” The FDA’s Office of Criminal Investigations (OCI) currently has over 200 investigations nationwide involving schemes in which medical practices purchase foreign, unapproved drugs and dispense them to unsuspecting patients for personal financial gain. This practice is particularly disturbing because, unlike traditional prescription drugs which are dispensed to the patient by a pharmacy, oncology drugs are typically infused into a patient without the patient ever seeing the box it came in, or any of the related labeling. “This isn’t just about the greed of one doctor but about the welfare of many patients,” said United States Attorney Laura Duffy.

There have been numerous similar cases of illegal importation and distribution of foreign unapproved drugs in San Diego and around the United States in recent years. In cases related to Bernstein, a Florida-based cancer-drug supplier, Martin Paul Bean, III was indicted by a federal grand jury in San Diego in September 2012 for allegedly selling more than $7 million of misbranded and unapproved prescription oncology drugs to United States doctors. Please see 12-cr-03734-WQH USA. The indictment alleged that from 2005 to 2011, Bean, doing business as GlobalRxStore; ordered the misbranded and unapproved drugs from foreign countries, including Turkey, India, and Pakistan; and sold them to the doctors throughout the United States at substantially discounted prices via a wholesale pharmacy in San Diego.

That pharmacy – Oberlin Medical Supply and Service Corp. – was owned and operated by Maher Idriss, who pleaded guilty March 8, 2012, to conspiring with Bean to supply the unapproved drugs. Idriss acknowledged that United States doctors paid him over $7 million for foreign-sourced unapproved oncology drugs from May 2006 to May 2011. Idriss faces up to five years in prison and restitution and has already forfeited approximately $54,000 of profits. He is scheduled for sentencing May 20, 2013.

Elsewhere in the country, doctors, office staff, and drug suppliers in Maryland, Missouri, Tennessee, and California were indicted in similar schemes in 2011 and 2012. They were accused of importing misbranded cancer drugs at significantly cheaper prices, providing them to patients without disclosing the source of the drugs, and then submitting claims for reimbursement from healthcare programs. It was the FDA’s discovery of two counterfeit drugs – Avastin, the approved blockbuster cancer drug for treatment of colorectal, lung, kidney, and brain cancer; and Altuzan, the unapproved Turkish version of Avastin – that brought national media attention to the problem. The Altuzan was found to contain no active ingredient at all and thus would provide no benefit whatsoever to patients.