'Operation Pill Scam' Nets Felons in Drug Scheme

By Ropp, Kevin L. | FDA Consumer, September 1994 | Go to article overview

'Operation Pill Scam' Nets Felons in Drug Scheme


Ropp, Kevin L., FDA Consumer


Two pharmacists and a drug manufacturer's sales representative were recently sentenced for diverting prescription drugs and samples in violation of the Prescription Drug Marketing Act.

The sentencing, in the U.S. District Court for the Western District of Wisconsin, is the first in which jail terms were imposed for this felony.

Virgil Lee, a pharmacist for the Mayo Clinic's St. Mary's Hospital, Rochester, Minn., was sentenced Dec. 17, 1993, to 14 months in jail, three years' probation, restitution to the hospital of $95, 288.30, and a $5,000 fine. He had pleaded guilty Oct. 21, 1993, to unlawfully removing and diverting the prescription drugs Zantac and Calan from the hospital's pharmacy and transporting stolen checks payable to St. Mary's Hospital.

Terry Martell, G.D. Searle and Co. sales representative, Rochester, Minn., was sentenced Jan. 4, 1994, to 30 days in jail and three years' probation, and fined $7,200, following a guilty plea last Nov. 5 to unlawfully selling the prescription drug sample Calan.

Edward Carr, pharmacist and owner of Berg's Pharmacy, La Crosse, Wis., was sentenced last Dec. 15, to 30 days in jail, two years' probation, a $5,000 fine, and $1,590 for the cost of confinement. He had pleaded guilty Aug. 15, to unlawfully purchasing the prescription drug sample Calan.

All three men were nabbed during a joint FDA and FBI undercover investigation, code-named "Operation Pill Scam."

It began in June 1992 when John Harlos, a Mead-Johnson drug sales representative in La Crosse, informed FDA's Minneapolis district that he was involved in a drug diversion scheme. In an interview July 8 with Randy Baxter, acting resident-in-charge of the agency's La Crosse resident post, Harlos detailed the scheme and the people involved.

"Lee dispensed drugs for use within [St. Mary's] hospital and had direct access to and responsibility for the pharmacy inventory," said FDA compliance officer Jeffrey Spykerman. "Harlos claimed that Lee had been stealing drugs from the hospital for approximately 10 years. There was no computer tracking of drug inventories--that's what made the pill scam so easy."

Harlos sold the stolen drugs obtained from Lee to pharmacists, including Carr. Harlos also bought from Martell physician samples of prescripton durgs that had been repackaged from the original labeled containers into unlabeled containers. …

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