Bogus Viagra Business Booms

(CBS)  Smuggled inside speakers and teddy bears, it looks like the real thing.

It's actually a bogus version of Viagra. The popular impotence pill is now the most widely-counterfeited drug in the world, worth as much to the crooks as illegal narcotics.

While many people might chuckle upon hearing about counterfeit Viagra, as CBS News Correspondent Sharyl Attkisson reports, it's a serious issue.

"It could be a real health hazard," says Manhattan district attorney Robert Morganthau.

A hazard because of all the unknowns: counterfeit drugs can have too much or not enough medicine, they could be the wrong kind or could be contaminated.

An investigation by the Manhattan District Attorney's office that began in January 2001 and went on for 17 months uncovered four supply streams of counterfeit Viagra; three from China and one from India.

Undercover investigators, through e-mail and phone conversations, pretended to be involved in selling counterfeit Viagra in New York.

The investigation revealed that pharmaceutical companies in China and India were involved in the manufacture and illegal importation of the counterfeit Viagra into the U.S. Also, a chemical company in China was a prime source for counterfeit Viagra sold by two of the indicted drug brokers and their companies.

Snagged in the busts were David Rayner of Denver and Berrin Isbell, an import-export broker in Las Vegas. Both operated out of their homes. In all seven people and five companies are charged with making and selling the look-alikes over the Internet. The suppliers bragged they could import 2 1/2 million tablets a month.

Investigators say Isbell, owner of B.I. Import/Export Brokers, received her supplies of counterfeit Viagra from a Chinese manufacturer or Hong Kong middleman. She then served as a broker and sold counterfeit Viagra to undercover investigators from the Manhattan District Attorney's Office.

She was arrested in Manhattan in May in a sting operation after receiving a $10,000 commission check from undercover investigators in a deal to supply hundreds of thousands of "fake" Viagra cases a week.

Rayner owns Rayner Enterprise and is charged with selling 750 counterfeit Viagra tablets to undercover officers for $6.33 per tablet. He allegedly shipped most of the pills hidden inside stereo speakers. He was arrested in Denver in May.

In the U.S., Viagra is manufactured by Pfizer Corporation and distributed to pharmacies in 30 tablet bottles. The wholesale cost is about $7 per tablet; retail is approximately $10 per tablet.

And it's not just Viagra that's being counterfeited. In the past few years, the FDA has opened 55 counterfeit drug investigations, but admits it can't even begin to scratch the surface of a problem that's so huge.

Philip Manuel is a counterfeit drug super sleuth who's been sniffing out bogus drugs for two decades.

"Most of the counterfeit comes from outside of the United States, in places where it's easy to manufacture," says Manuel.

Alarmed by the ease with which counterfeit profiteers are smuggling drugs into the country, he's begun focusing on a new worry: a motive more nefarious than profits.

"If it's counterfeit designed specifically to harm people and cause an outbreak of disease, then you have a real serious problem on your hands," says Manuel.

He says that it's a 'definite possibility' that a terrorist group could actually poison medicine and send it into the United States.

Congress, too, has expressed the same concern.

"I think the potential for a terrorist to see this as an avenue to do grave damage to U.S. citizens, particularly the elderly, is certainly very, very real," says Sen. John Breaux, D-La.

There's no evidence of any terrorist connection to counterfeit drugs. But U.S. pharmaceutical companies know what a disaster that would be, and are hiring detectives like Manuel on their own to try to get an edge.

In the case of the fake Viagra, most of the suspects and companies are untouchable - out-of-reach in China and India. And U.S. investigators are left with the reality.

"We think some of those drugs, we're pretty sure, are now in local pharmacies," says Morganthau. "And we're going to prosecute those pharmacies because we think that they knew that they we're buying counterfeit drugs."

With no idea where the next fake pill will turn up, investigators only know they haven't seen the last.