China's Counterfeit Life Scan Diabetes Test Strips: Life Scam

Writing for Bloomberg News, Allan Dodds Frank and Lisa Rapaport have reported that Johnson & Johnson have traced counterfeit versions of OneTouch Test Strip sold by J&J's LifeScan. Such tests are relied upon by 10 million Americans to check blood-sugar levels.

When notified of issues, Johnson & Johnson released a warning as did the Federal Drug Administration (FDA) in October 2006. In mid-December, the FDA issued a class 1 recall:

"FDA has classified the current situation as a Class I recall because some of the counterfeit products have significant deviations in performance. The counterfeit test strips potentially could give incorrect blood glucose values-- either too high or too low--which might result in a patient taking either too much or too little insulin and lead to serious injury or death.

The products of concern are counterfeit – they are not marketed or distributed by Lifescan, and Lifescan is not responsible for conducting the recall. Rather, firms that are distributing the counterfeit product are responsible for conducting the recall using corrective actions developed by Lifescan, with input from FDA. FDA continues to work with Lifescan and the distributors to ensure that counterfeit products are removed from the market.

Life-Scan, which DID NOT MAKE THE PRODUCTS i.e., they were counterfeit, issued a warning in all countries where the product is sold. The list of countries in addition to the United States and Canada, where counterfeit strips were found (and the dates discovered are listed below. Updates indicate new counterfeit lots). Information is from the Life-Scan website.
Greece, October 18, 2006
India, Update June 10 2007
Pakistan, Discovered December 20, 2006, Update March 30, 2007
Philippines, Update March 20
Saudi Arabia, May 15, 2007
Dubai, May 15, 2007
Turkey, March 2007

You should read the entire article in Bloomberg.

"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."

"``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.''

. . .

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.
. . .

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.

. . . Wang Xinpei, spokesman for the Ministry of Commerce declined to comment by telephone on the LifeScan case.

. . .

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.''

. . .

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.

. . .

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.

. . .

``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).