The successful prosecution of Hi-Tech Pharmaceuticals for counterfeiting generic Rx drugs should encourage FDA to pursue criminal charges against other companies selling adulterated products, according to food and drug attorney Marc Ullman.

Four Hi-Tech employees, including founder and CEO Jared Wheat, pleaded guilty Aug. 18 to charges including conspiracy to import and distribute adulterated, mislabeled and unapproved new drugs and committing mail and wire fraud associated with the firm's counterfeit Rx drug operation.

The Hi-Tech employees and the firm were indicted in September 2006 by the Drug Enforcement Agency on these charges as well as for running an allegedly illegal "generic" drug business out of an unsanitary facility located in Belize and selling the products via the Internet (¹ Also see "Hi-Tech Pharmaceuticals Indicted For Online “Generic” Drug Enterprise" - Pink Sheet, 25 September, 2006., p. 9).

DEA also accuses the defendants of marketing these counterfeit Rx drugs through online "spam" ads billing the products as authentic generic versions of drugs imported from Canada when in fact they were produced in the Belize facility.

FDA's Office of Criminal Investigations assisted in the investigation of Hi-Tech.

Ullman, of New York-based firm Ullman, Shapiro & Ullman, asserts FDA should take similar enforcement action against firms marketing erectile dysfunction "dietary supplements" to encourage them to cease unlawful practices and to test raw materials purchased from suppliers.

Over the past year, FDA has announced recalls and consumer warnings concerning supplements containing prescription drugs, specifically male sexual enhancement products tainted with substances similar to the active ingredients in Rx drugs like Viagra and Cialis .

The agency has also called on the U.S. Marshals Service to seize tainted products. Marshals seized $100,000 worth of products from Shangai Distributors in April and made a $74,000 seizure from SEI Pharmaceuticals in July (² Also see "“Promising” Trend: FDA Acts On Unapproved Drugs, Tainted Supplements" - Pink Sheet, 14 April, 2008., p. 6 and ³ Also see "FDA Maintains Pressure Against Adulterated ED Supplements" - Pink Sheet, 28 July, 2008., p. 15).

Pressing criminal charges as in the Hi-Tech case, however, would send a stronger message, Ullman said.

"I have no explanation as to why FDA has not seen fit to refer these cases to the U.S. Attorneys' office. I think the time for that is long past due," he said in an interview.

"FDA needs to refer one of these cases and do a great big press release when somebody's indicted and the threat of jail will probably be a great incentive to anybody to send their raw materials out for testing," he said.

United Natural Products Alliance Executive Director Loren Israelsen agrees, calling the tainted products a health risk that "should be treated as a serious violation, which rises to the level of criminal prosecution."

The Hi-Tech defendants' sentencing is scheduled for Oct. 21 before Judge Jack T. Camp in U.S. District Court for the Northern District of Georgia. The Department of Justice says the conspiracy offense carries a maximum penalty of five years in prison and a maximum fine of $250,000.

However, Wheat will likely serve approximately two years, due in part to time he has already served in custody since the indictment, according to Arthur Leach, the firm's lawyer.

Norcross, Ga.-based Hi-Tech has also run afoul of the Federal Trade Commission's advertising guidelines.

The Northern Georgia federal court in June ordered the firm and several associated parties to pay $15.8 million for allegedly making false and misleading claims about two weight-loss supplements and one ED product (⁴ Also see "Ruling Against Hi-Tech Pharmaceuticals Spotlights FTC Strategies" - Pink Sheet, 16 June, 2008., p. 8).

However, the criminal charges against Hi-Tech were not linked to its weight-loss, sexual health or sport nutrition supplement business.

According to Leach, the case did not involve any business Hi-Tech conducts in the U.S. and production activities at the Belize facility "haven't really been active since 2004."

- Jessica Lake (j.lake@elsevier.com)

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