Ripple Effect: How PBMs and Counterfeit Drugs Threaten Patients

The infiltration of counterfeit drugs into the legitimate pharmaceutical supply chain poses a significant risk to patient health and safety, particularly for those living with HIV. While counterfeit drugs are nothing new, the criminals threatening our safety have a surprising new ally: Pharmacy Benefit Managers (PBMs). A report by the Partnership for Safe Medicines unveils how criminal entities exploit vulnerabilities in the supply chain, made worse by PBMs, whose reimbursement policies often leave pharmacies on the edge of financial viability.

The fight against HIV/AIDS is significantly hindered by the infiltration of counterfeit medications into the pharmaceutical supply chain, an issue that transcends mere regulatory challenges or financial losses. It directly impacts the health and safety of people living with HIV (PLWH), undermining the global effort to manage and eventually End the HIV Epidemic.

A striking example of the severity of this issue is the investigation conducted by Gilead Sciences Inc., which was extensively covered by The Wall Street Journal. This investigation uncovered that over two years, a staggering 85,247 counterfeit bottles of Gilead's HIV medications Biktarvy and Descovy, valued at more than $250 million, had been distributed within pharmacies. These counterfeit products, the result of sophisticated criminal networks exploiting supply chain vulnerabilities, ranged from being filled with harmless over-the-counter painkillers to dangerous antipsychotic drugs, posing significant health risks to unsuspecting patients. “Harmless” is relatively qualified here because when PLWH are not receiving necessary antiretroviral medications, conditions can develop quickly with deadly consequences, medication resistance can bloom, and new transmissions can occur.

The presence of counterfeit medications not only endangers the lives of PLWH but also severely erodes trust within communities, particularly those that are already marginalized and financially strained. The breach in the supply chain security caused by these counterfeit drugs highlights a critical public health issue that demands immediate and concerted action from all sectors involved in healthcare delivery.

Addressing the Challenges Posed by Pharmacy Benefit Managers and Under-Reimbursement

PBMs are at the heart of growing scrutiny for practices exacerbating healthcare system challenges, notably impacting the economic viability of pharmacies, and facilitating the entry of counterfeit drugs into the supply chain.

Their primary role is to negotiate drug prices and manage prescription drug benefits on behalf of health insurers, under the guise of controlling costs and streamline the prescription process. The reality is, PBMs do not necessarily pass on “savings” to patients or plan sponsors and have, in truth, become a self-dealing entity working hard to maximize the profits of insurance company shareholders. PBMs often implement reimbursement policies that pay pharmacies less than the actual cost of acquiring and dispensing medications when those pharmacies are not owned by the PBM itself. This under-reimbursement pressures pharmacies, especially independent ones, to find ways to sustain their operations amidst shrinking margins. In other instances, PBMs offer higher reimbursement rates to their mail-order pharmacy and work hard to steer patients away from independent pharmacies.

This economic squeeze leads to a consequential gap in the market: the demand for medications that the legitimate supply chain cannot adequately supply at the prices set by PBMs. Counterfeiters exploit this gap, introducing fake or substandard medications into the supply chain and offering the fakes at a lower acquisition cost than legitimate wholesalers. The cycle perpetuated by PBM under-reimbursement practices not only undermines the financial stability of pharmacies but also compromises patient safety. Pharmacies, caught in the vise of financial pressures, may unknowingly procure medications from less reputable sources, inadvertently becoming conduits for counterfeit drugs. This situation is exacerbated in rural and underserved communities, where pharmacies are often the sole healthcare providers, making the impact of counterfeit medications even more devastating. These counterfeit drugs find their way into pharmacies struggling to balance financial viability with the provision of quality care. The allure of lower cost options in the face of under-reimbursement makes these counterfeit products dangerously appealing for pharmacists seeking to meet patient needs.

The financial strain on independent pharmacies due to PBM policies is further highlighted by the National Community Pharmacists Association's (NCPA) support for a class action lawsuit against Express Scripts. This legal action accuses Express Scripts and several smaller PBMs of colluding to manipulate reimbursement rates and impose higher fees on pharmacies, further squeezing their financial resources and compromising their ability to provide quality services.

American Pharmacy Cooperative, Inc. (APCI)'s initiative to engage Vanguard Inc., a significant investor in the conglomerates owning the "Big 3" PBMs, exemplifies the urgent need for systemic reform. This effort, celebrated by Pharmacists United for Truth & Transparency (PUTT), emphasizes the necessity of reforms that ensure transparency, fair reimbursement, and ethical conduct to safeguard the pharmaceutical supply chain.

Prescription Drug Affordability Boards (PDABs) and Their Impact

Prescription Drug Affordability Boards (PDABs) are quickly gaining popularity among states, being sold as an attempt to make healthcare more affordable. These boards, armed with the authority to scrutinize and cap drug prices, aim to shield the public from the soaring costs of essential medications. However, there's concern that these actions might limit access to medications for marginalized communities and create more challenges for pharmacies.

A recent webinar hosted by the National Minority Quality Forum (NMQF) brought to light the challenges PDABs face in balancing drug affordability with healthcare equity. Jen Laws, President and CEO of the Community Access National Network (CANN), voiced a critical perspective, highlighting the limitations of PDABs' current toolkit, which primarily revolves around setting upper payment limits. Laws pointed out, "The only tool that the PDABs have been provided is an upper payment limit, and they are not being encouraged to explore other tools or learn how to make investments into issues of health equity and access. When we take money out of systems, the people not represented lose out first." Few of these boards have patients appointed to them. This insight underscores the complexity of ensuring drug affordability does not come at the expense of access, particularly for those in marginalized communities.

Echoing this sentiment, Gretchen C. Wartman, Vice President for Policy and Program and Director of the Institute for Equity in Health Policy and Practice at NMQF, emphasized the need for PDABs to broaden their approach. "We must pursue efforts to ensure that PDABs are improving access to medicines, rather than constraining that access in the interest of financial risk mitigation," Wartman stated, advocating for a more holistic strategy that aligns drug affordability with comprehensive access to care.

The discussions surrounding PDABs, particularly highlighted in the NMQF webinar and our CANN blog, reveal a critical need for a nuanced approach to drug affordability that doesn't inadvertently compromise access or exacerbate vulnerabilities in the pharmaceutical supply chain. By focusing narrowly on upper payment limits (UPLs) as a primary tool for cost containment, there's a real risk of creating gaps in the medication supply that counterfeiters could exploit, further endangering patient safety and public health. This scenario underscores the importance of developing comprehensive strategies that not only address the immediate issue of drug costs but also consider the broader implications for healthcare equity, pharmacy viability, and the integrity of the medication supply chain. Policymakers and stakeholders must work collaboratively to ensure that efforts to control drug prices do not inadvertently introduce new risks, particularly for marginalized communities and the pharmacies that serve them.

A Legislative Response: The Florida Prescription Drug Reform Act

The Florida Prescription Drug Reform Act stands as a major legislative response to the pressing issues within the pharmaceutical supply chain, particularly addressing the detrimental practices of Pharmacy Benefit Managers (PBMs) that contribute to pharmacy under-reimbursement and indirectly foster an environment ripe for counterfeit drugs.

Focused Provisions:

• Regulating PBM Operations: The Act mandates PBMs to obtain a certificate of authority, introducing a layer of accountability and transparency previously absent. This requirement aims to scrutinize and regulate PBM practices more closely, ensuring they operate in a manner that supports rather than undermines pharmacy financial stability.

• Prohibiting Harmful Practices: Specifically targeting practices that have strained pharmacies, the Act prohibits PBMs from engaging in retroactive fee recoupments and spread pricing strategies. Such practices have historically placed pharmacies in precarious financial positions, making the supply chain vulnerable to counterfeit medications as pharmacies seek cost-saving measures.

• Ensuring Fair Reimbursement: By enforcing a pass-through pricing model, the Act ensures that pharmacies are reimbursed the actual cost paid by the health plan to the PBM for medications. This approach directly addresses the issue of under-reimbursement, reducing the financial pressures that can lead pharmacies to inadvertently engage with dubious suppliers.

Implications for Supply Chain Security:

These targeted reforms within the Florida Prescription Drug Reform Act are designed to directly impact the economic pressures pharmacies face due to PBM policies. By ensuring more equitable and transparent reimbursement practices, the Act mitigates one of the key factors that have made the pharmaceutical supply chain susceptible to counterfeit drugs. It represents a significant step towards safeguarding pharmacies from the financial instability that can compromise patient safety and healthcare integrity.

In essence, the Act provides a comprehensive framework for other states and federal entities to consider, highlighting the importance of addressing PBM practices as a critical component of enhancing supply chain security and protecting patient health.

Advocating for Change: Strategic Policy Reforms and Mobilization

The challenges posed by PBMs, PDABs, and drug affordability impact not just the healthcare industry and policymakers but directly affect patients seeking affordable, safe medications. This underscores the urgency for a unified advocacy movement towards systemic reform. Drawing on the initiatives of groups like PUTT and APCI, as well as the framework set by Florida's Prescription Drug Reform Act, we have a clear path to advocate for transparency, equity, and patient access across healthcare.

Calls to Advocacy

1. Broadened Engagement with Policymakers, Investors, and the Public: Advocacy efforts must expand to encompass not just policymakers but also investors and the broader public. Echoing APCI’s engagement with Vanguard Inc., it's critical to advocate for investor responsibility in healthcare practices. Moreover, by leveraging the legislative model of Florida's Prescription Drug Reform Act, advocates can champion similar transparency and regulatory measures nationwide. This expanded advocacy should also include a focus on ensuring PDABs operate with a mandate that balances drug affordability with the need for access to innovative treatments.

2. Unified Support for Legislative and Regulatory Reforms: Stakeholders are encouraged to unite in supporting and proposing legislative initiatives that tackle the foundational issues of PBM reform and the effective operation of PDABs. Advocacy should push for laws that not only enhance drug pricing transparency and regulate PBM reimbursement rates but also ensure PDABs do not inadvertently limit access to essential medications for marginalized communities.

3. Active Participation in Rulemaking Processes with Strategic Alliances: Stakeholders should actively participate in the rulemaking process, forming strategic alliances to influence the regulations governing PBMs and PDABs. This collective action is vital in shaping policies that promote fair reimbursement practices, safeguard pharmacy access, and ensure PDABs contribute positively to healthcare equity.

4. Comprehensive Educational Campaigns to Foster Awareness and Action: Initiating educational campaigns that explain the roles and impacts of PBMs and PDABs in the healthcare system is essential. By incorporating success stories from state and federal legislative achievements and insights from advocacy efforts, these campaigns can underscore the benefits of reform for pharmacies, patients, and the healthcare system at large. The goal is to inform the public, inspire support for reform efforts, and motivate active participation in advocacy initiatives.

The path toward meaningful reform in pharmacy benefit management, drug pricing, and the equitable implementation of PDABs is fraught with challenges. Yet, the successes achieved in regions like Florida provide hope that meaningful reform is possible. By rallying for targeted policy reforms and engaging in proactive advocacy, we can drive systemic changes that ensure the pharmaceutical supply chain operates with transparency, equity, and a steadfast commitment to patient health. Together, we have the power to reshape the landscape of drug affordability and access, guaranteeing that all people receive the comprehensive care and medications they deserve.

Advocates Gather to Discuss Pressing Healthcare Issues

The ADAP Advocacy Association held its second Fireside Chat retreat this year, assembling in Chicago to discuss a broad range of issues. The Fireside Chats are somewhat coveted for the nature of the space they provide, with representation of a variety of industry partners, advocacy and service organizations, and patient advocates who don’t necessarily hold any particular affiliations. CEO, Brandon M. Macsata, refers to the gathering as “a group therapy session” whereby the richness of the advocacy work is most frequently the result of conversations at the Fireside Chat, but not necessarily rooted in seeking specific solutions confined to the four walls of the meeting room. The meeting format frees attendees from needing to be the “problem solvers” and allows for a free flow of ideas and perspectives collaboratively that might not otherwise arise. Topics for this event included combatting counterfeit medications, reforming the 340B Discount Drug Program, and dissecting COVID-19’s impact on public health programs.

While many of the participants were familiar with the notion of counterfeit medications, few were necessarily familiar with the details of safeguards taken to ensure patients are indeed receiving the medications they expect to receive or how large recent instances of counterfeit HIV medications were possible. Shabbir Imber Safdar from the Partnership for Safe Medicines started the conversation by sharing the status of implementation of the Drug Quality and Security Act, and how packaging was sold and resold with fake product in containers as part of one of the counterfeit schemes in Florida. Participants asked about various aspects of enforcement and implementation, drivers of fake medicines and medication supplies, to learn that enforcement largely falls outside of criminal codes and to civil litigation on fraud, pushed by medication manufacturers – a cost not well appreciated when put under the lens of medication costs. Advocates also considered more overt impacts of counterfeit medications in the opioid crisis and how they might need to approach community education on the issue of counterfeits in order to further medical mistrust.

The 340B discussion proved to be particularly lively. While having to segregate the pointed and necessary reminder that much of public health program funding is largely dependent on 340B revenues because Congress refuses to adequately fund public health programs, within minutes, participants began asking where patients fell in the funding scheme. Issues of charity care as a measure of success of the program (and the fact that hospital charity care has fallen dramatically since the passage of the Affordable Care Act), the ever-expanding role of contract pharmacies, and how federal grantees are being “caught in the middle” were frequently mentioned. As advocates asked questions, one participant rightly and repeatedly reminded the audience “there are no requirements as to how those dollars are spent.” One participant asked pointedly, as the usual “sides” of the 340B debate began to settle in, “will you come to the table with those perspectives you disagree with to find solutions?”

The final discussion of the Fireside Chat returned to COVID-19’s impact on public health programs. Once again, yours truly facilitated the discussion, though this time it was less on policy issues and more on the state of patient advocacy and provider services as a response. With concentration on sustainability and succession planning, participants reflected how the crisis phase of the COVID-19 pandemic highlighted not just the weaknesses in public health programs, but also re-emphasized the need for HIV advocacy to consider appropriate succession planning and mentorship, as much as our service organization partners need to find room in their budgets to hire enough staff to not burn out their existing staff. Reminding the audience, I reflected, “Because eventually Bill Arnold dies.” The statement hit home for the room’s audience, referring to the empty seat draped in the fishing vest with the AIDS red ribbon on the lapel once worn by the Lion of HIV/AIDS advocacy. We have to plan better and we have to be willing to make these investments now, not later. I implored funders in the room to consider how they might incentivize funded organizations to begin succession planning and mentor investments.

After two years of most, if not all, in-person patient advocacy events being suspended, it was refreshing to convene with such a diverse group of public health stakeholders in Chicago. The ADAP Advocacy Association’s Fireside Chat retreats have filled a void in the patient advocacy space by the very nature of their uniqueness, and CANN remains committed to seeing them succeed. Chicago, like the one earlier this year in Wilmington, did just that.

Criminal Counterfeits Threaten Patient Safety

In February 2021, a patient in New York City opened a sealed bottle of the HIV drug Biktarvy, took his pill, and found that he couldn’t walk or speak. The medicine in the bottle was actually Seroquel, an antipsychotic that can cause dangerous sedation and poses additional risks for patients with high blood pressure, diabetes, or low white blood counts. This patient’s experience reflects a worrying uptick in financial fraud, counterfeiting and drug diversion in the HIV medicine world since 2019. Read on to learn about recent court cases that shed light on the problem, and it threatens HIV patients.

Forged documents helped sell tens of thousands of bottles of questionable HIV meds 

Between February and April 2021, at least eight different patients found Seroquel, the wrong HIV treatment or, in one case, over-the-counter painkillers, in what appeared to be factory-sealed bottles of Biktarvy or Descovy. The Janssen Pharmaceutical Companies had warned about a similar issue in December 2020, when bottles labeled Symtuza turned out to contain Seroquel or Prezcobix, a different Janssen HIV treatment which contains half of Symtuza’s active ingredients, and won’t, by itself, control a patient’s viral load.

After investigating, Gilead Sciences and Janssen filed lawsuits against more than 70 defendants, including licensed distributors and pharmacies, who allegedly sold unsafe versions of HIV drugs acquired in nefarious ways. They used a variety of methods to get perfect looking bottles, including buying them at the street level from HIV patients who needed money. According to court papers and investigative journalists, the medicine the alleged criminals sold was unsafe: some bottles contained the wrong pills altogether, some were no longer factory-sterile because they had been opened and resealed, and all of them came with forged documentation.  According to Gilead, the ring made hundreds of millions of dollars by putting more than 85,000 fake bottles of its products on pharmacy shelves over a two-year period.

Florida HIV prevention medicine assistance program bilked of $68MM

In May, Gilead Sciences settled a lawsuit it filed in November 2020 to stop a scam run by 58 Florida-based clinics, pharmacies, labs and affiliated individuals. According to Gilead’s complaint, the defendants hired van drivers who visited sites like soup kitchens, public libraries, bus terminals, and churches to offer homeless and low-income people money to sign up to receive PrEP, which helps prevent HIV infection, through the program, regardless of whether PrEP was an appropriate treatment for them. Sometimes, after patients received the medicine they had never wanted, the drivers bought it back so that it could be resold into the black market. More than $68M of assistance was diverted from patients who actually needed help paying for their medicine and the scheme provided an avenue for more mishandled, secondhand and potentially expired medicines to reach patients.

Another $230MM in black market HIV drugs slipped into U.S. pharmacies

In June, the Justice Department (DOJ) indicted a Miami man for his alleged role in distributing $230 million in HIV drugs he had acquired illegally. According to the DOJ, he and his co-conspirators established licensed wholesale drug distributors in four states and used them, with false documentation, to sell the medicines at a discount to other co-conspirators running distribution companies in Mississippi, Maryland, and New York. Ultimately, those treatments reached pharmacies, and patients across the country.     

We’re likely to hear more about rings like this; according to the Wall Street Journal, the Department of Justice launched a criminal investigation that involves products from at least 12 drugmakers.

Resold and diverted drugs threaten patients

Patients in the early years of the HIV/AIDS epidemic pooled resources to share medicines with those who could not access new treatments. No one could ensure that those drugs were safe and effective, but community action was critical, and it saved many lives. These days, regulated, safely manufactured HIV medicines are available through public and private insurance and through assistance programs. By steadily controlling viral loads, these drugs help people live long, healthy lives.

These medications only work, however, if patients take the right pills with the right ingredients all the time—and there’s no way to ensure that that’s happening if black market drug rings are breaking into the drug supply. In these cases, vast networks of drug diverters and counterfeiters are enriching themselves while endangering the lives of people living with HIV/AIDS, and they must be stopped.

The scale of these crimes—committed in the last three years— is staggering. The last major drug counterfeiting charge was pegged at around US$80mm, and just this year we’ve had three cases, each one of them around that size or larger. While law enforcement and brand protection attorneys are actively using every last civil and criminal option to protect patients, patients can also take steps to protect themselves using the tips in HIV survivor Brandon Macsata’s recent PSA about counterfeits. PSM urges all HIV patients to take two minutes to learn how to stay safer.

Too Good to be True: Drug Importation

“Never let a good crisis go to waste.”

Most famously attributed to Winston Churchill (or Saul Alinksy, depending on which rumor you follow), this phrase is as apt for politicians, activists, and scam artists alike. In general, the former two groups mean “seize an opportunity to move forward an agenda,” while the latter focuses solely on personal gain at a cost to the well-being of others. There are few more fertile fields for those scam artists to seize the moment than counterfeit products. The United States has worked hard to combat counterfeit scams across a variety of industries on international, federal, and state levels: forming investigative agencies, imposing high fines, and establishing consumer protection and reporting entities charged with receiving complaints and notifying the public of fake and potentially harmful consumer items.

The COVID-19 pandemic offered a fresh chance for a scheme that gained notoriety in the 1980’s: fake medicines. For much of the United States, COVID-19 became “real” on March 13th, 2020. As soon as March 19th, the FBI issued warnings over fake testing kits, making the problem of fake medicines, treatments, cures, tests, and even personal protective equipment (PPE) a front-and-center issue in the fight against COVID-19.

Counterfeit medicines have long plagued the chronic illness space. From insulin and cancer medications to anti-retrovirals and hepatitis medicines. Notably, the FDA participates in Interpol’s Operation Pangea, a global effort to crack down on counterfeit medicines and collaborative work to ensure supply chain safety. Operation Pangea specifically targets illicit websites claiming to be “pharmacies”. In 2017 alone, the collaborative work resulted in more than 400 arrests and the seizure of more than $51 million in potentially counterfeit drugs.

Despite nearly three decades worth of work fighting this dangerous practice, it continues to plague patients, their families, and our communities. While not as much a news item these days, counterfeit opioids remain an issue, having resulted in at least 42 deaths in the United States this year. As recently as December 23rd, 2020, manufacturer, Janssen, issued an alert regarding counterfeit Symtuza and, in July, the Department of Justice secured admissions in federal court on a pair of men pushing fake cancer and hepatitis treatments.

The problem is growing. In 2018, Operation Pangea identified and took down 465 websites illegally selling potentially dangerous, unapproved versions of opioid, oncology and antiviral prescription drugs to U.S. consumers. It’s not just direct consumers these potentially dangerous actors target, the FDA sent a warning letter in 2019 to CanaRx, an entity that contracts with self-funded health care plans.

Most disturbingly, despite many of these online websites masking themselves as “Canadian pharmacies”, in the waning days of the Trump administration, HHS has issued a final rule that would allow states, tribes, pharmacists, and wholesalers to import medications from Canada. While already facing legal challenges from industry and advocates, the final rule does not outline specific measures of safety – rather it forces states and manufacturers to take on the cost of ensuring a safe drug supply – and does not point to any specific evidence importation will reduce costs to consumers.

The issue of defending (or not) or further defining the rule will fall squarely on the shoulders of the Biden administration as the legal and logistical challenges work their way through their respective processes.

The American drug supply already faces an uphill battle to remain safe in an ever-evolving environment with increasingly sophisticated and predatory bad actors. Those most vulnerable to exploitation are not served (and the dangers of counterfeit medicines are not diminished) with unproven notions and a lack of safeguards. Whether in treatment of disease states with which we are long familiar or in the case of a novel virus, the American public deserves both to be able to afford their medications and to trust them.

For providers, BeSafeRX, an FDA resource page.

For patients seeking assistance in affording your medications, PAN Foundation may be able to help.