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Gilead widens battle against alleged counterfeit HIV drug ring

Stock Markets Sep 28, 2022 09:12PM ET
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© Reuters. FILE PHOTO: The logo of Gilead Sciences Inc pharmaceutical company is seen in Oceanside, California, U.S., April 29, 2020. REUTERS/Mike Blake/File Photo
 
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By Brendan Pierson

(Reuters) - A federal judge in New York has frozen the assets of dozens of people and entities accused of operating a massive nationwide scheme to distribute counterfeit bottles of Gilead Sciences Inc (NASDAQ:GILD) HIV drugs, including two alleged "kingpins."

Gilead, which has been pursuing alleged counterfeiters in a civil lawsuit since last year, said in a court filing unsealed on Wednesday it had uncovered an operation that was "staggering in scope," responsible for sales of hundreds of millions of dollars of counterfeit bottles of its top sellers Descovy, Genvoya and Biktarvy, and other medicines.

U.S. District Judge Ann Donnelly's latest asset freeze order, also unsealed on Wednesday, targets more than 50 defendants newly added to Gilead's lawsuit.

Many counterfeit bottles contain antiviral pills manufactured by Gilead but illegally bought off the street and repackaged, while some have been found to contain other, potentially dangerous drugs, including the powerful antipsychotic Seroquel, Gilead has said.

HIV drugs accounted for $7.6 billion of Gilead's $12.6 billion revenue in the first half of the year. The company in January warned that more than $250 million of counterfeit drugs had been sold over the last two years, and said it had identified more than 85,000 bottles that were fake or tampered with.

The newly added defendants include alleged "kingpins" Lazaro Roberto Hernandez, who was arrested on drug counterfeiting and money laundering charges in June as part of a related federal investigation and remains under house arrest, and Armando Herrera, who lives in Florida.

"Gilead's ongoing investigation revealed that these two kingpins directed the initial sale of the counterfeits through suppliers created solely to sell counterfeit medications," the company said in a statement on Wednesday.

Gilead said it had identified the two men, who took elaborate steps to conceal their identities, by matching approximate locations of their disposable burner cell phones with flight records.

The Foster City, California-based company first announced it was pursuing counterfeiters in August 2021, shortly after filing its lawsuit.

In addition to the alleged kingpins, the case now includes alleged mid-level leaders and a complex web of shell companies, distributors and pharmacies.

It also involves so-called collectors, who pay cash on the street for the bottles used in the scheme, often acquiring them from people who are homeless or suffering from drug addiction, Gilead said.

Gilead widens battle against alleged counterfeit HIV drug ring
 

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