33 indicted for selling BMS' Abilify, Novartis' Gleevec in massive diversion scheme

Federal authorities have rounded up nearly three dozen people indicted in a far-ranging scheme in which they allegedly sold $200 million worth of diverted drugs that included blockbusters like Bristol-Myers Squibb's ($BMY) antipsychotic Abilify, Gilead Sciences' ($GILD) HIV med Truvada and Novartis' ($NVS) cancer drug Gleevec. The feds said the drugs, which often originated from street sales in New York and Miami, were peddled through a series of illegal warehouse operations in California and Minnesota.

Among those at the center of the national enterprise, the Justice Department says, were Ara Karapedyan, 45, Mihran Stepanyan, 29, and Artur Stepanyan, 38, in California. They ran companies with names like Panda Capital Group, Red Rock Capital and GC National Wholesale.

Also pivotal in the scheme was David Miller, 50, whose Minnesota Independent Cooperative bought about $157 million of drugs from Mihran Stepanyan and Artur Stepanyan between 2010 and 2014, even though Miller and his cohorts knew they were unlicensed to sell them and the drugs were obtained illegally. While agents had picked up more than 30 of the suspects, Miller remained at large when the announcement was made last week. The Justice Department said Miller sold nearly $395 million worth of drugs during those years, much of it in Ohio.

Part of the "criminal enterprise" was also involved in a massive check and bank fraud operation and in obtaining illegal tax refunds, while some of the players were accused of trying to arrange a "hit," the feds said.

Authorities have broken up other similar operations. Last year they obtained guilty pleas from Texas couple Charles Jeffrey Edwards and Brenda Elise Edwards, who they said ran a fake drug wholesaling business that sold nearly $60 million worth of drugs obtained off the street. In 2012 they broke up an operation that operated out of South Carolina through Altec Medical. Federal authorities say that operation sold about $55 million worth of drugs that had been diverted, then repackaged and given fake paperwork. Last year they got guilty pleas from a number of people tied to Arlington, VA-based Gallant Pharma International, which bought foreign-made Botox and cancer drugs on the black market and sold them into the U.S. supply chain.

The illegal operations are stealing money all along the supply chain from legitimate drugmakers and wholesalers while putting patients at risk. The dangers when drugs are diverted are that there is no way of knowing their provenance, whether they have been stored properly or are expired and so become unsafe or ineffective, or if they may be counterfeits.

- here's the announcement
- here's another DOJ release