Fourth of five articles

She had made peace with the indignities of chemotherapy: the baldness and the vomiting. And she had learned to brace for the pain that broke in waves during the end stages of her breast cancer. But the bone-deep fatigue that settled over Maxine Blount was different and troubling.

"I couldn't get out of bed. I was really tired, worn out, exhausted," she said.

Even the costly injections she relied on to rejuvenate her did not help.

"The girls at the cancer suite," as Blount called her nurses, figured it out first, remembering a recent warning about counterfeit medicines in circulation. They checked a remaining vial from the set of four Blount, of St. Charles, Mo., had bought in March 2002 at her drugstore.

She had bad medicine.

Already weak herself, Blount was taking a weakened version of Procrit, which fights fatigue and anemia. Testing confirmed her dose was one-twentieth the strength listed on the packaging -- packaging that was so authentic-looking that it fooled health inspectors.

Blount died last October at age 61, knowing that when she needed the most from her Procrit she had received the least.

"You're very angry," she said in an interview a month before her death. "You have faith in your pharmacy and faith in the medicine, faith in the packaging and the people doing the buying that they know what they're doing. Now, whenever I get my medication I wonder where it's coming from. But what can I do?

"I need it. I have to have it. And I'm scared of it, every time."

At a time when more Americans are relying on medication, their chances of receiving a drug that is fake, diluted or mislabeled have never been so great.

Last summer, a drug wholesaler was forced to recall nearly 200,000 counterfeit and mislabeled Lipitor tablets after patients complained that their medication tasted bitter. In May 2002, investigators discovered that nearly 110,000 bottles of cut-strength Epogen had passed undetected into the open market. In the past three years, counterfeit, adulterated or diluted medications have been found in drug wholesaler warehouses in Maryland, Kentucky and California. Some of the drugs were distributed in Hawaii, Texas, Washington, Arkansas, Tennessee, Louisiana, Mississippi and Alabama.

Driven by advanced technology and old-fashioned greed, a new breed of highly sophisticated criminals has insinuated itself into the system that distributes medication from drug manufacturers to patients. These rogue operators have sold everything from fake cholesterol-lowering Lipitor to diluted blood-boosting Epogen to saline labeled as the growth hormone Nutropin, and a shadow market reaches from small wholesalers to the nation's largest drug distributors.

Purchase orders, sales records and information from numerous state and federal investigations illustrate how easily counterfeit and mislabeled medication makes its way from the shadow market into the legitimate marketplace.

Recall notices from manufacturers and wholesalers in the past two years strip the problem to its bare, numeric essence: Procrit Lot P002384, Serostim Lot MNK612A, Epogen Lot P002970, Nutropin Lots L9504A3 and L9101A4. Linked to those numbers are patients nationwide.

Blount was a victim of Procrit Lot P002384.

Robert Lynn, an HIV patient in San Diego, was taking the anti-wasting drug Serostim to offset debilitating weight loss. He bought from Lot MNK612A at his drugstore, injected it, and it "burned like hell and raised a knot the size of a quarter" on his stomach. Instead of Serostim, a steroid was found in vials from that lot.

A 17-year-old boy with stunted growth was injected with Nutropin and experienced stinging and swelling. Annabella Foo, chief pharmacist at Bay Area IV Therapy in Sunnyvale, Calif., discovered the clinic had been sold part of counterfeit batches, some of which contained saline or human insulin.

The cut-strength Epogen went to terminally ill patients at Dickinson County Memorial Hospital in Iron Mountain, Mich. The rural 100-bed hospital "had one of its worst days" when it had to break the news about the medicine, which increases red blood cells, pharmacy manager Gary Lindeman said.

The counterfeiters behind those cases have yet to be unmasked.

Increase in Counterfeiting

Pharmaceutical counterfeiting has risen with the 21st century. A slice of the problem can be seen in the increasing number of counterfeiting incidents reported to the Food and Drug Administration, from about five per year in the 1990s to 20 per year since 2000. Those numbers are almost certainly low.

While FDA regulations explicitly demand that drugmakers tell the agency about many other problems with medications -- from testing failures to adverse reactions -- manufacturers who know their product is being counterfeited are not required to report it. The FDA favors a voluntary industry reporting program, contending that introducing a new rule and getting it through Congress would take years, said William K. Hubbard, senior associate commissioner for the FDA.

A convergence of factors helps account for the increase in counterfeits, which by the FDA's definition includes medicine that has been watered down, mislabeled or faked.

Improved desktop printing and digital imaging make it easier to download and duplicate a medication's packaging. Internet sites sell everything from pill-punching machines to special inks that furnish the sophisticated touches needed to turn out convincing finished goods. The rise of bioengineered medicines for otherwise fatal illnesses has driven up demand and cost -- a tempting opening for counterfeiters.

Unsophisticated operators still exist -- people such as Hassib Selbak, who imported fake Viagra stuffed in teddy bears from China and sold it by mail as a sideline to his Mr. Spotless carpet-cleaning business near Cincinnati, court records show. But the largest counterfeiting operations net millions of dollars and involve networks of front companies able to distribute thousands of boxes of medicines at a time.

The labeling change that recast 110,000 bottles of low-strength $22-a-bottle Epogen as high-strength $445-a-bottle Procrit netted an estimated $46 million for counterfeiters before the scheme was discovered in May 2002. Only 8,000 bottles were seized in a Texas warehouse of Bindley Western Industries Inc., now part of Cardinal Health Inc. of Dublin, Ohio.

Nearly 90 percent of the bad medicine never was recovered, which meant it may have gone to as many as 25,000 cancer and HIV patients.

For buyers with low profit margins, the ballooning price tags on many pharmaceuticals provide incentives to scout for a deal.

The great variation in price for a particular drug -- driven by volume discounts and special buying arrangements -- helps counterfeiters operate because discounts do not draw attention, several industry analysts said. "So long as the same pill can have 20 different prices on it -- which it can, depending on who it's being sold to -- you open the door to all kinds of problems," said Donald deKieffer, an international trade lawyer who tracks pharmaceutical counterfeiting.

Outdated Regulations

Counterfeiters have also been aided by a regulatory system that is struggling to catch up. Even as increasing reports of counterfeiting surfaced nationwide earlier this year, the FDA insisted it was not a major threat. As recently as March, Hubbard said in an interview with The Washington Post that "we don't think counterfeiting is a huge problem or that you need to worry you're going to get a counterfeit drug."

Then came congressional inquiries and this summer's $55 million Lipitor recall, which deKieffer said was "about as hot-button as counterfeiting infant formula."

By July, the FDA announced it had formed a task force on counterfeiting. The agency further stated that bogus products "virtually indistinguishable from the authentic versions" posed "a potentially serious health risk." The FDA blamed some of the rise on wholesalers who "ignore warning signs indicative of illegal or unethical behavior."

In an interim report this month, the task force suggested exploring everything from radio-frequency chips on packaging to enhanced state licensing and increased federal regulation. New technology alone will not solve all the tracking problems, said FDA Commissioner Mark B. McClellan. And even promising technology -- such as the radio-frequency chips -- could take at least months and probably "a few years" to put in place.

"What I see in my world scares me," said Robert Penezic, who recently left a job as a Florida state prosecutor pursuing counterfeiting cases.

Penezic declined to talk about specific examples. He did say that a company might be conned into buying fake drugs once or even twice, but that "if I'm conned three times, that opens up whether I'm conned, or complicit and looking to save money for my bottom line."

Albers Medical Distributors, the small wholesaler in Kansas City, Mo., at the center of the Lipitor recall, was warned by state authorities about its repeated purchases from small, unlicensed wholesalers.

In an administrative complaint filed in April, the Missouri Board of Pharmacy said it flagged Albers between 2000 and 2002 about dozens of the unlicensed wholesalers that appeared in the company's purchasing records. Yet Albers continued to buy from many of them. The last warning was five weeks before the recall.

In August, Florida filed a separate complaint against Albers over $4.6 million in drug purchases in late 2002 that were accompanied by suspicious paperwork. The medications, including the anti-psychotic drug Zyprexa, sometimes arrived without proper labels or in battered boxes missing safety seals, "which should have put Albers on notice to investigate further into the source of the drugs," the complaint reads.

The source of the counterfeit and mislabeled Lipitor remains under investigation. Several federal and state investigators, and some industry security officials briefed on the case, said some of the tablets were overseas versions made by Pfizer Inc., Lipitor's manufacturer, that were hijacked on loading docks and resold as domestic Lipitor. Other tablets appear to be fakes made in Costa Rica and illegally shipped into the United States.

Albers has denied any involvement in counterfeiting and said it relied on a California broker, who put the company in contact with other wholesalers. Albers said it counted on that broker to verify its suppliers' credentials. Laurie Roberts, spokeswoman for Albers, said, "To its knowledge, Albers was conducting business with the utmost integrity." The firm, which has four employees, entered a consent agreement with the Missouri pharmacy board in which it did not admit to the allegations but agreed to a 30-day suspension of its license and a five-year probation.

A Weak Link

In the emerging shadow market for pharmaceuticals, numerous middlemen along a circuitous route may handle a pharmaceutical from the time it leaves the manufacturer to when it arrives at the final point of sale. "Drugmakers know pretty well who they're buying from for their manufacturing," but when it comes to knowing "where every bit of every thing they sell actually goes, it gets foggier," said Myles Culbertson, director of the Physical Science Laboratory at New Mexico State University, who recently headed a task force on product integrity for the FDA.

Culbertson said drugmakers are not like food manufacturers, who "know their sellers and their buyers extremely well and try to keep control on them. The food people are very, very protective of their supply chain because they are very, very protective of their brand."

The criminals who introduce fake medicine exploit this soft spot in the drug industry.

Gregg Jones, a Florida pharmacy investigator, said: "Distribution has been a weak link in the system."

States have their own problems protecting the drug supply chain.

Jones's department issued hundreds of wholesaler licenses through the 1990s, including some to felons with convictions on narcotics charges and other crimes.

Among them was Chantel Banatty, who in July 2000 agreed to surrender to police on charges of being part of a ring that dealt in medication stolen from a Miami hospital, court records show. Earlier that month, she had received her wholesaling license. Despite her criminal charges, she managed to hold onto the license for two years, handling numerous sales of counterfeit cancer and HIV products, according to a 2002 state Health Department complaint.

Florida began its licensing crackdown in the past year, as police identified more and more companies selling bogus and mishandled drugs.

Counterfeiters also take advantage of criminal channels that have long been used for the illegal diversion of pharmaceuticals. These diverter networks take medicines sold at steep discounts under special contracts to nursing homes or hospices and resell them for great profit. The diverters rely on shady wholesalers that easily obtain licenses in states with lax systems.

The networks now help move counterfeits, said Rick Allen, deputy director of the Georgia Drugs and Narcotics Agency. "Counterfeiting is joined at the hip to diversion -- it's how they get the product to the shelves."

Allen investigated numerous diversion cases in the late 1980s, but that fraud did not draw the attention that recent counterfeiting incidents have.

In the diversion scams, he noted, "They were moving real product -- though you can ask how good care they took of it -- and at the end of a day, the manufacturer still made money, just not as much as they would have if the contract weren't being violated. A dollar was a dollar.

"Counterfeiting? That gets everyone more exercised."

The stakes go even higher when counterfeiters target flagship products, said Aaron Graham, head of security for the drugmaker Purdue Pharma and formerly for Pfizer, and a former investigator for the FDA and Drug Enforcement Administration. "For so many years, companies didn't understand the complexities of the gray-market diversion underworld and appeared not to be taking action," he said. "But when counterfeit drugs started flowing through the gray market, jeopardizing consumer safety and brand integrity, that's when everybody started paying attention."

Big Three Affected

The country's Big Three pharmaceutical distributors -- McKesson Corp. of San Francisco, AmerisourceBergen of Chesterbrook, Pa., and Cardinal Health of Dublin, Ohio -- have bought medication from smaller wholesalers that later was deemed counterfeit.

In 2000, McKesson bought fake Serostim in a chain of sales from small wholesalers that traced back to Dutchess Business Services, a Las Vegas wholesaler, and from there to Crystal Coast Inc., a smaller wholesaler in Florida, the Nevada State Board of Pharmacy alleges. The board is seeking to revoke Dutchess's license. Steve Gibson, the wholesaler's attorney, said, "My client does not believe it is culpable or contravened any regulation with the state of Nevada."

Crystal Coast has since lost its license over a separate incident involving the sale of counterfeit Nutropin. More recently, the company's owner was arrested on suspicion of selling the pricey prostate cancer drug Lupron, which he bought from doctors and illegally distributed from his Coconut Grove home, Florida records show.

The owner, who had been deported from the United States on a narcotics conviction, said he is a Norwegian citizen, arrest records show. He is being held under the name he gave: Per Loyning. His attorney did not respond to requests for an interview.

Loyning did business with a South Carolina wholesaler, records show. The company was open for just four months in Charleston. The corporation's name was Rekcus -- "sucker" spelled backward, investigators noted in an arrest warrant.

Some of the Serostim was ultimately sold to Robert Lynn, the San Diego HIV patient. Lynn filed a lawsuit against his drugstore and McKesson. In a settlement reached last year, McKesson denied wrongdoing or liability, referring to the Serostim as "allegedly counterfeit" in court documents.

"Until this," Lynn said, "I never thought about where my drugstore bought its medicine. Now, I don't think about anything but that."

AmerisourceBergen was stung when more than half of $8.5 million worth of Epogen it bought between April 2001 and May 2002 was found to be one-twentieth of its labeled strength, according to a lawsuit the company filed against an Arizona wholesaler. The suit triggered a string of suits as each wholesaler upstream of the Amerisource sale denied it knew the Epogen it passed along was not genuine. The legal actions eventually involved wholesalers in Florida, Tennessee, Utah and Texas.

That lone incident involved 2,082 boxes of Epogen, valued at $4,090 each, the Amerisource suit says. Nearly one-third of the drugs made it to patients, the company said.

Cardinal's problems with counterfeits arose when the company bought 1,353 boxes of Procrit for $2.4 million in 2002 from three smaller wholesalers in Arizona, California and Florida, sales records obtained by The Post show. The three wholesalers, in turn, had purchased the Procrit from five other wholesalers in Tennessee, Florida, New York and California, records show.

The sales records obtained by The Post show Cardinal paid between $1,691 and $1,727 for each four-vial box of Procrit it bought from the smaller wholesalers. At the time, the manufacturer's price was slightly less than $1,780.

That lot turned out to be tainted: In March 2002, Maxine Blount bought some of it from her pharmacy at Schnuck Markets. Schnuck's does not keep the high-priced drug in stock and buys it to fill individual orders, said Lori Willis, a spokeswoman. "Our only source for this medication is Cardinal," she said. Cardinal charged Schnuck's $1,783 and Schnuck's charged Blount $1,850 for a four-vial box, Willis confirmed.

In response to a lawsuit brought by Blount, Cardinal denied selling the specific vials Blount received, according to Don Downing, Blount's attorney.

Cardinal declined to talk about the Blount case or the sales records.

Measures to Fight Fakes

As a result of these and other incidents, the Big Three wholesalers say they have increased their anti-counterfeiting efforts. They say they limit purchases from smaller wholesalers to no more than 3 percent. They also say they have become more aggressive at policing suppliers and now buy certain expensive drugs -- cancer medicines, injectables and biotech drugs -- only from the manufacturers.

Some customers of the Big Three wholesalers said they were shocked that the large companies bought drugs from firms with only three or four employees.

"It's startling they would go dipping into that pool," said Nancy A. Andrew, who heads the pharmacy purchasing team at Legacy Good Samaritan Hospital in Portland, Ore.

The hospitals, drugstores and doctors' offices that dispense medications often know little about the winding paths of the drugs they buy. They know the seller they dealt with, but they do not automatically see all the paperwork that is supposed to reveal every prior sale. That pedigree paper, as it is known, passes only from wholesaler to wholesaler. It is closely held by wholesalers who do not want to risk being cut out as middlemen by divulging too much pricing information.

Like the drugs, the pedigree papers are vulnerable to counterfeiting.

For example, invoices for $3.2 million worth of various drugs sold between late 2001 and early 2002 to Stone Medical Group, a wholesaler in Boca Raton, Fla., state the original seller was a Cardinal distribution center in Phoenix. But that distribution center was out of business at the time, having burned down a year earlier, Florida inspectors found.

"We were taken," said Adam Runsdorf, president of Stone, which let its wholesaler license lapse rather than remain in business, and now sells medical equipment. "Some guys creep in with bad product, and they ruin your reputation. It's at the point now where you have to be suspicious; you can't assume anymore that it is good."

Over the past two years, several drug manufacturers have made changes to try to thwart criminals. Serono Laboratories Inc. added bar coding on Serostim and eliminated wholesalers' handling of the drug by selling directly to pharmacies. Pfizer adopted a single pricing system to wholesalers for Viagra, a change that makes any discounters suspect. Johnson & Johnson added security markers to its Procrit and plans to do the same with each of its products by 2004.

Still, a pair of Levi's has more anti-counterfeiting features than any prescription drug, said deKieffer, whose clients include Levi Strauss & Co. and several drug manufacturers.

The counterfeiters have also gotten better.

In April 2002, Texas inspectors confiscated a large load of diluted Procrit at a warehouse in Grapevine. They suspected it was counterfeit. But when they compared it with other boxes of Procrit in the warehouse, it appeared identical. Three months later, the Texas inspector realized that both batches were fake.

A stray line through the digit "6" on the Procrit boxes and an accent mark over the "i" in the word sodium were the tip-offs on the second load.

A national recall was issued for the second lot: P002384 -- the same number that had gone to Blount.

Florida investigators say that lighter fluid and heating guns were used to remove the sticky dispensing labels from these medications bought from Medicaid patients, to try to make the boxes look new before they were resold to wholesalers. "What I see in my world scares me," said one former Florida investigator who handled counterfeiting cases. Cesar Arias, far right, drug inspector supervisor for the Florida Department of Health, tells a House committee how easy it is to package counterfeit drugs. Improved computer technology has made it easier to download and duplicate a medication's packaging. Some packages even fool health inspectors.William K. Hubbard, left, senior associate commissioner for the Food and Drug Administration, shows a House committee an example of a counterfeit drug that entered the United States. The FDA favors a voluntary reporting system for drugmakers.MAXINE BLOUNT