Targeting Phony Pharmaceuticals

Tim Fagan was just 16 when he underwent a life-saving liver transplant. But something was wrong. Fagan was having severe spasms, and nobody knew why.

"I would wake up in the middle of the night screaming, crying in pain," Fagan recalls.

"It was extremely upsetting to see Tim in such pain," his father, Kevin Fagan, told The Early Show correspondent Melinda Murphy. "And we were totally helpless. …I didn't know where to turn. I didn't know who to go to."

Tim suffered for weeks in 2002, but only on the nights he was injected with a drug called Epogen, designed to increase his depleted red blood cells.

"It was traumatic enough to be giving these shots," says Tim's mother, Jeanne Fagan. "But now, to be giving him these shots and knowing that he would have a reaction was…just horrible."

Then Jeanne got a call from their pharmacy, CVS, that the Epogen could be counterfeit.

"This is the United States of America," Kevin says. "And I thought that our drug system was safe and secure. Lo and behold, Tim's exposed to counterfeits."

The only way to tell was by scrutinizing the label.

The sole distinction between phony and real was a degree symbol missing from the fake label.

Kevin called the pharmacy, the distributor, even the manufacturer. No one would explain what happened, Murphy says.

"I was absolutely frantic as to what this counterfeit medication might have done to my son in the short-term and in the long-term," Kevin remembers.

As the Fagans searched for answers, medical journalist Katherine Eban began investigating counterfeit drugs. Her book due out Monday, Dangerous Doses, is the culmination of that three-year investigation. It examines the very real problem of counterfeit, diluted, recycled and mishandled prescription medications.

The book hits shelves as a bill is being proposed by Rep. Steve Israel (D, NY) to combat counterfeit drugs. The measure is dubbed "Tim Fagan's law," in honor of the Long Island victim of fake pharmaceuticals that Murphy met.

"Counterfeit medicine means that what is in the bottle, or in the pills, is not what it says on the label," Eban explains to Murphy in an exclusive interview. "Our medicine moves through a complex distribution system where it is handled by many middlemen…and during that journey that our drugs take, often they are mishandled. They are stolen from warehouses. They are recycled and bought for cash from Medicaid patients. And they can also be counterfeit and deadly."

Why is it, Murphy wondered, that our drugs go straight from the manufacturer to the pharmacy?

"What they would rather do," Eban responded, "is unload all their drugs to a big distributor and have them deal with the logistics of reselling it."

Eban learned there are three large wholesale companies in the U.S. that handle 90 percent of Americans' drugs. They purchase primarily from manufacturers, but they also buy from smaller wholesalers.

"Then," Eban continues, "it is moved like a chess piece through a maze of distributors and wholesalers. And that maze is very poorly regulated. It's simply watched over by a patchwork of state laws with minimal federal regulation."

Eban's investigation led her to Florida, and she discovered there were nearly 500 licensed wholesalers in the state. Just about anybody could get a license. This opens the door for counterfeiters.

"A number of former narcotics traffickers got state licenses to distribute pharmaceuticals," Eban says. "All they needed was $900, a small refrigerator and some air conditioning, and a lock on their door, and they were in business."

Counterfeiting, Murphy points out, is more widespread than you might think. In 2003, for instance, counterfeit Lipitor, the popular cholesterol drug, was estimated to have reached 600,000 patients worldwide.

Typically, the more expensive the drug, the more likely it is to be counterfeited. High-priced cancer and AIDS drugs are vulnerable.