Thread: China Counterfeit Diabetes Tests Tracked by J&J (Update1

China Counterfeit Diabetes Tests Tracked by J&J (Update1)

By Allan Dodds Frank and Lisa Rapaport
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Packages labeled as Johnson & Johnson products

Aug. 16 (Bloomberg) -- A global manhunt launched by Johnson & Johnson has tracked to China counterfeit versions of an at- home diabetes test used by 10 million Americans to take sensitive measurements of blood-sugar levels.

Potentially dangerous copies of the OneTouch Test Strip sold by J&J's LifeScan unit surfaced in American and Canadian pharmacies last year, according to federal court documents unsealed in June. New Brunswick, New Jersey-based J&J, the world's largest consumer-health products maker, learned of the counterfeit tests after 15 patients complained of faulty results last September.

Tipped off by J&J, the U.S. Food and Drug Administration issued a nationwide consumer alert in October without disclosing the link to China. While no injuries were reported, inaccurate test readings may lead a diabetic to inject the wrong amount of insulin, causing harm or death, the agency said. Fake medicines are a $32 billion global business, says the World Health Organization, and the FDA says it ran 54 counterfeit investigations in 2006, almost double the year before.

``Growth in counterfeit medicines and devices is probably the biggest health threat besides infectious disease,'' says Peter Pitts, director of the Center for Medicines in the Public Interest in New York and formerly an FDA official investigating knockoff drugs.

The court filings disclose, for the first time, that China is the source of about one million phony test strips that have turned up in at least 35 states and in Canada, Greece, India, Pakistan, the Philippines, Saudi Arabia, and Turkey.

`China, Through Canada'

``The source was from China, through Canada, to the United States,'' says Steven Gutman, director of the Office of In Vitro Diagnostic Devices and Evaluation at the FDA in Rockville, Maryland. ``As far as we can tell, the counterfeiter has been put out of business in the U.S.''

The court documents reveal, also for the first time, a worldwide distribution chain discovered in the past year by investigators hired by Johnson & Johnson. The trail, initiated by consumer complaints to a LifeScan hotline, first led detectives to 700 pharmacies where the products were sold, then to eight U.S. wholesalers, and then to two importers, one in the U.S., who was tracked down in a hotel room in Las Vegas, and another in Canada.

Records seized from the importers show the counterfeit strips were bought from Henry Fu and his company, Halson Pharmaceutical, which according to its Internet site is based in Shanghai.

Started with One Box

``When we started down this road, we had one box of product,'' Geoffrey Potter, the lead lawyer for J&J, told the U.S. District Court in Brooklyn. ``The box looked like a counterfeit $100 bill looks, perfect. They were made of parts we don't have in our factory.''

Potter's firm, New York-based Kramer Levin Naftalis & Frankel, on behalf of J&J has brought an anti-counterfeiting and trademark action against more than a dozen companies.

``Our ongoing market surveillance hasn't revealed any new cases of counterfeit products in the U.S. for several months,'' David Detmers, a spokesman for Milpitas, California-based LifeScan, said in an e-mailed statement. ``We recommend customers obtain their diabetes testing supplies from reputable sources to reduce their risk of receiving counterfeit product in the future.''

Halson's Web site says the company distributes and manufactures medical supplies, such as syringes, and is run by Fu, who, according to a court order, is also known as Su Zhi Yong. Fu was arrested by Chinese authorities and remains in prison in China, awaiting resolution of his case in the Peoples' Court of Shanghai.

The Shanghai address listed on Halson's Web site doesn't exist. Calls to phone numbers on the site and to his home went unanswered.

Consumer Scares

China, the biggest exporter of consumer products, has created a series of worldwide consumer scares this year ranging from contaminated toothpaste to drug-tainted seafood. The communist country executed its former chief drug regulator last month for taking bribes and the nation said it will take five years to stamp out counterfeiting.

Just this week, Mattel Inc., the world's biggest toymaker, said it is recalling 18.2 million Barbie dolls and other products with magnets children risk swallowing.

Most of China's toy exports are safe and it's ``irresponsible'' to criticize the overall quality of products based on a handful of incidents, Wang Xinpei, spokesman for the Ministry of Commerce, said at a press briefing in Beijing today. Wang declined to comment by telephone on the LifeScan case.

LifeScan sells a variety of strips under the OneTouch Ultra and OneTouch Basic Profile names. The test sells in the U.S. without prescription for about $1 per strip, in boxes of 25, 50 and 100.

Investigators

Johnson & Johnson officials first learned that corrupted strips were being sold ``between September 18 and September 28, 2006, when LifeScan received complaints from 15 customers from various states, including Wisconsin, New Jersey and New York, concerning the same lot,'' according to a J&J statement in court papers. ``The complaints included, but were not limited to, allegations of inaccuracy and error messages.''

On Oct. 5, investigators hired by LifeScan visited three pharmacies in Wisconsin and found OneTouch packages with a lot number not created by the company's plants in Inverness, Scotland or in Cabo Rojo, Puerto Rico, the papers say. On the same day, another investigator, following a call to LifeScan's toll-free hotline, found a package with the same phony lot number in a Brooklyn, New York drugstore.

Consumer Alert

``The first box we found, in fact, had a unique lot number,'' Potter said at a hearing held July 13 by U.S. District Judge Sandra Townes in Brooklyn. ``The counterfeiters counterfeited every element from the original box except they put a fake lot number. They really did us a favor and we were able to advance this case quite rapidly because of that. We tracked one box all over the country and up a chain of distribution.''

On Oct. 13, the U.S. FDA published its consumer alert and LifeScan issued a press release and notified pharmacists, distributors and wholesalers to watch for packages with four separate lot numbers.

Patients place blood from a finger prick onto the strip and insert it into a plastic test device that looks somewhat like a hand calculator. The results help patients make sure the right amount of insulin is used to keep glucose, or blood sugar, from rising to dangerous levels.

Gray Market

As diabetics without insurance may spend $100 to $200 a month for the strips, pharmacies with low-income customers are tempted to buy discounted tests from gray market distributors. The U.S. and Canadian defendants say they believed the counterfeit strips were lower-priced gray market products diverted from normal distribution channels.

``I think it's very important before I take my shot before I eat something, I need to know what my blood sugar is,'' says Gamze Tufekci, a 38-year old New York adult education teacher who uses LifeScan's Ultra Strips. ``Sometimes it goes low and it's too high so I need to know exactly what the result is so I can eat or I can take more insulin.''

Pharmacists told investigators they bought the strips from wholesalers who, in turn, said they had purchased the product from Royal Global Wholesale Corp., of Boynton Beach, Fla. That company is run by Jacques Duplessis from his home.

A J&J team raided the Duplessis Boynton Beach home and discovered he was vacationing in Las Vegas. So at 6:30 p.m. on Oct. 11, 2006, J&J obtained a seizure order from federal court to ``take possession of business records, computer, rolodex cards, etc. of Royal Global Wholesale Corp. or Jacques Duplessis in room 539 of the Imperial Palace Hotel'' in Las Vegas.

Importer

``My client is very distraught that he was distributing test strips that were alleged to be counterfeit,'' says Steven Horowitz, a New York attorney for Duplessis. ``Basically he was duped by his supplier, who still owes him a lot of money.''

The other importer from China, according to court documents, is a Montreal company known as Zoe Diagnostics Inc., owned by Alexander Vega. He had worked for LifeScan for nine years and owns another Canadian company called Blue Sky World Corp. with Duplessis. J&J sued Vega in both Brooklyn and Quebec, where a raid seized counterfeit products from a storage locker.

Investigators linked Vega to Henry Fu from seized e-mails, purchase orders and wire transfers of money.

``Our clients reiterate their denial that they ever engaged in the sale of counterfeit product and expect that their position will eventually be vindicated before the courts,'' George Pollack, Vega's attorney in Montreal, said in an e-mailed statement.

The case is Johnson & Johnson v. Champion Sales Inc, 06-cv- 05451, U.S. District court for the Eastern District of New York (Brooklyn).

To contact the reporter on this story: Allan Dodds Frank in New York at allanfrank@bloomberg.net ; and Lisa Rapaport in New York at lrapaport@bloomberg.net
Last Updated: August 16, 2007 03:31 EDT



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China has certainly shown its ability to deal underhandedly. They seem to be no better than common crooks! I say we repeal any trade agreements we have with China right after we do away with the Federal Reserve system. This will put America back on the gold standard in which case China can do what they want, but they cannot devalue the American dollar!

I want to know how and why these pharmacies are purchasing from companies they don't know.

Shouldn't you know everything about your suppliers before you purchase from them?

I'm thinking a lot of these businesses know exactly what is happening.

It is greed - pure greed and yes China is to blame but so are the people putting it out here in the US.


This isn't just China -

All of our country's well known companies are running the risk of ruining their company's reputation by doing business with these shady Chinese companies.

The Senator fron Conn. Senator Chris Dodd (D) definately has is right calling for a freeze of imports from China!


Here are the transcript from tonights Lou Dobbs Report on the growing problem.


http://transcripts.cnn.com/TRANSCRIPTS/ ... dt.01.html

PILGRIM: Well, there are new allegations the federal government and corporate America are not doing enough to protect Americans from dangerous Chinese imports. Now, despite the massive recall of products ranging from toothpaste to toys, imports from communist China are still flooding into the United States unchecked.
Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): A chemical used in antifreeze found in toothpaste, lead in toys, high levels of contaminates in seafood, counterfeit drugs, all products made in China.

Add to that list reports of pigs suffering a highly infectious virus, which the Chinese have been reluctant to be open about as they were in the SARS epidemic. Then there are counterfeit diabetes testing strips which give users a false reading, potentially leading to an inaccurate dose of insulin.

One group that opposes what it calls corporate globalization says:

LORI WALLACH, GLOBAL TRADE WATCH: We are now importing huge amounts of goods which we are increasingly finding out are not safe. So we have sent out good jobs. We're importing unsafe products. And the Bush administration is basically fiddling while Rome is burning.
TUCKER: There are tires which had to be recalled because they could literally come apart on the highway. Then there's the Chinese Chery car, which is to be imported into the United States and distributed by Chrysler.

Consumer advocates are worried that our reliance on Chinese products will not be addressed until:
PETER PITTS, MEDICINES IN THE PUBLIC INTEREST: I'm here to tell you a kid is going to die, a person is going to overdose, a diabetes monitor is going to send somebody into insulin shock, and then there will be people held accountable, and those people are going to be the politicians. And it's unfortunate that people are going to have to die and suffer before Congress gets off their behinds and gets something done. But that is unfortunately what makes things happen.

TUCKER: The driving factor in moving production out of America, whether it be a manufacturing line or a food product, is cost. Labor is cheap in China. Activists say the string of incidents in China underscore the true cost.
TOM BUIS, NATIONAL FARMERS UNION: The middle class is rapidly disappearing. And it's all over this free trade agenda, this race to the bottom to see who can produce the products the cheapest. You look at the pet food and the wheat gluten and the pig feed and the cattle feed that they were bringing in here, they were using products that we're not allowed to use here. No wonder they are cheaper.

TUCKER: Politicians are starting to respond. Senator Chris Dodd, a Democratic presidential candidate, is now calling for an immediate suspension of all toy and food imports from China.
(END VIDEOTAPE)

TUCKER: And New York's senior senator, Charles Schumer, today called for an import czar to coordinate all of the different agencies overseeing all of the imports that we are bringing into this country.

And Senator Sherrod Brown has already introduced a bill that would give a tax credit to companies, Kitty, who produce their products here in America using American workers. So, we will see what happens. At least Congress is starting to make some noise on this issue.

PILGRIM: You know, Bill, it's becoming very apparent that cheap imports have a hidden price tag. And that's at the very least worry over what you're bringing into your own home.

TUCKER: And there's a lot of discussion that they also have a not-so-hidden cost, in that we're going to have hire more people, going to have put them at ports, because, if we want to ensure the safety of the American public, we are going to have to spend money to do that.

PILGRIM: That's a fair point.

Thanks very much, Bill Tucker.