o matter how bad things seem for the United States Food and Drug Administration these days, 20 years ago they were arguably worse. In the late 1980s, the agency was embroiled in a generic-drug scandal, in which FDA administrators accepted bribes for quick drug approvals, and drug makers admitted to deliberately defrauding drug regulators. The days when the federal agency could rely solely on the trustworthiness of the industry it was supposed to be regulating were done.
But from the ashes of the generic-drug scandal, some positives did arise. One of the programs resulting from the scandal, and the subsequent Generic Drug Enforcement Act of 1992, was the FDA's mission to "debar" people or whole companies from participation in agency activities, such as applying for drug approval, if found guilty of deliberate fraud.
David Read, who was the FDA's first Debarment Task Force chair, says that when the agency first set out to ban investigators for fraudulent activities involved with the generic-drug scandal, the magnitude of dishonesty in the drug business was staggering. "[The Generic Drug Enforcement Act] resulted in a lot of investigations, which turned up a lot of surprises," he says. "As people started investigations, they found things that weren't expected."
What drives an individual to defraud the FDA and attempt to profit from potentially dangerous compounds? "I think what happens is you get people who have been first in their class their whole lives, and they feel like they can hurl thunderbolts," says James Sheehan, a former Associate United States Attorney and now the New York State Medicaid Inspector General. "They think they're saving the world."
Sheehan adds that the problem of policing fraud at the FDA has gotten even harder in recent years. "I think it's a very significant problem, and especially in the last 10 years," he says. "You have this medical-industrial establishment that needs to be fed, and the competition is very keen."
The FDA debars people as a remedial action and not as a punishment, per se, says Douglas Stearn, acting director in the FDA's Office of Enforcement in the Office of Regulatory Affairs. "Our main goal is to protect the [drug approval] process to ensure the safety and effectiveness of the drugs the American public uses," he says, adding that once an individual is on the agency's debarment list, he or she "can't even work in the cafeteria" of a company that files an Investigational New Drug Application with the FDA. Some cases are so egregious they make international news—for instance, Robert Ray Courtney, who was sentenced to 30 years in prison in 2002 for diluting cancer drugs, earned a New York Times–minted nickname, "The Toxic Pharmacist."
The following people are among the more than 60 individuals who have been permanently debarred from providing any services to anyone with a drug application with the FDA. They have all been found guilty of one or more felonies. Most went to prison. Some maintain their innocence.
A former oncologist and his wife, a nurse, almost got away with a fraud that would have made them and an early-stage drug company millions of dollars by placing a largely ineffective topical treatment on the market. But a mistake committed by the oncologist, Harry Snyder, sealed their fate.
In the early 1990s, Snyder was vice president of clinical development at BioCryst Pharmaceuticals, a company based in Alabama; Renee Peugeot, his wife, was a registered nurse at the University of Alabama at Birmingham (UAB). In 1994, BioCryst's only drug, BCX-34, was in early FDA clinical trials for the treatment of psoriasis and cutaneous T-cell lymphoma, a rare form of skin cancer. BCX-34 is a phosphorylase inhibitor that researchers hoped would inhibit T cells, which play a role in both psoriasis and T-cell lymphoma.
At the urging of BioCryst executives, Peugeot was hired to work on the BCX-34 cancer trial at UAB, and she eventually oversaw much of the research involving the drug.
Though the trial was designed to be double-blind, court documents show that Snyder, previously a viral oncologist at Cornell University and author of dozens of scientific papers from the 1970s through the 1990s, started alerting colleagues that BCX-34 was looking like a successful cancer treatment a full month before the studies were completed. He and Peugeot also bought additional shares in BioCryst before the trial ended. Eventually the couple owned company stock and options worth $600,000.
At the end of the trial, data suggested that BCX-34 was an effective treatment in the study's 22 T-cell lymphoma patients at UAB (there were some patients being treated at Washington University in St. Louis). In February 1995, BioCryst issued a press release trumpeting the effectiveness of the drug against both psoriasis and the deadly skin cancer, and informed the FDA that 59 percent of the trial participants either saw their cancer disappear or improve markedly.
BioCryst stock shot through the roof. One share in the company was worth $6 at the end of the trial, and almost $13 only months later. Investors sank millions of dollars into BioCryst and its new cancer blockbuster.
Then BioCryst's medical director and Snyder's superior, William Cook, started writing up the psoriasis arm of the trial for publication, and noticed some irregularities. He found that Snyder had altered the randomization schedule for both trials; reanalyzing the data using the original randomization schedule from the study coordinator, Cook found that only 30 percent of the trial patients who received BCX-34 experienced a benefit from the drug.
In June, BioCryst held an executive meeting and announced what Cook had uncovered. Snyder attempted to justify the discrepancy, to no avail. The company alerted the FDA and issued a press release saying that BCX-34 was not a miracle cure for cancer. The bottom fell out of BioCryst stocks. Investors ended up losing about $34 million.
At trial, prosecutors revealed that Peugeot had participated in the scheme by fudging clinical data in her direct interactions with patients, while Snyder forged a randomization schedule to make it appear that the people who showed improvements in their disorders were also the ones treated with BCX-34. "What made it work so perfectly was that they were on both sides of the double-blind study," says Adolph Dean, a former Assistant US Attorney and one of the prosecutors in Snyder and Peugeot's case. "She was a subinvestigator for the principal investigator and he was working at the company that was conducting the study. They were playing Russian roulette with people's lives."
After a short trial in which the jury took only 3 hours and 35 minutes to deliberate, according to Dean, Harry Snyder and Renee Peugeot were found guilty of mail fraud, conspiracy to defraud the United States, and making false statements to the FDA. Snyder was sentenced to approximately 3 years in prison and Peugeot to 2.5 years. They were permanently debarred from the FDA in January of 2003.
BioCryst declined to comment on the episode involving BCX-34, Snyder, and Peugeot. The duo filed for chapter 7 bankruptcy from jail in 2003. Snyder was released from prison in September 2006, and Peugeot was released in October of 2008.
According to Dean, the pair lives near San Antonio, TX, but phone calls to a Boerne, TX (roughly 30 miles from San Antonio) number registered to Harry W. Snyder, Jr., were not returned.
In the early 1990s, James Kimball founded Discovery Experimental & Development Inc. (DEDI), a Tampa-based company established to research, produce, and distribute health products on the US market. DEDI's star product was Liquid Deprenyl Citrate, which Kimball called a botanical.
The drug's label claimed it to be effective in treating a wide range of ills, from depression and Alzheimer's to autoimmune diseases and high blood pressure. Liquid Deprenyl Citrate, however, is a DEDI trade name for selegiline, a monoamine oxidase inhibitor that prevents dopamine breakdown in the central nervous system, and is used to treat early-stage Parkinson's disease. In the medical literature, there is evidence that selegiline can treat major depressive disorder (J Clin Psychopharmacol, 26:579–86, 2006) and Alzheimer's (Behav Brain Res, 190:224–32, 2008). There are several reports in the literature, however, that indicate the substance is ineffective against ALS, one of the conditions Kimball marketed it for (J Neurol, 241:223–27, 1994).
Kimball claimed that his formulation of selegiline was purer than Eldepryl, a brand-name drug sold by UK pharmaceutical company Somerset Pharmaceuticals. But in 1993, Somerset took Kimball to court claiming that he and DEDI had infringed on the drug marker's exclusive marketing rights to selegiline, the main active ingredient in Eldepryl, and sold selegiline, a prescription-only product, through the mail without requiring a prescription. That year, FDA investigators seized Kimball's financial records and found that from 1990 to 1993, the DEDI CEO had sold more than 7,700 bottles of the nonapproved Liquid Deprenyl Citrate at $75 dollars a piece. His total sales, which included income from selling aspirin and vitamin C, totaled more than $580,000.
Meanwhile, Kimball took advantage of the burgeoning Internet and sold his products online, making more than $2.5 million through DEDI and other companies from 1991–1999, according to FDA investigators. In August 1999, the FDA's Center for Drug Evaluation and Research sent Kimball a warning letter informing him that manufacturing, selling, and exporting his selegiline formulation was illegal and would be met with swift punishment.
In 1999 a federal grand jury charged Kimball with conspiracy, unlawful distribution of Liquid Deprenyl Citrate, and shipping more than 100 bottles of the drug to England. In 2000, a federal jury found Kimball guilty of making false statements to the FDA and conspiracy to distribute an unapproved new drug; he was fined $25,000 and sentenced to 13 years in prison.
Kimball appealed the criminal ruling, maintained his innocence, and claimed that a wider conspiracy sought to undue his work with DEDI. He escaped from prison in 2005.
Kimball was permanently debarred from the FDA in 2007.
As of March 2009, his Web site said that he had passed away. The site also listed a phone number for his wife Jo. After calling and leaving a message at the phone number, I received a call from a man who declined to identify himself except to say that he was "very very close" to James Kimball. The man on the phone told me that Kimball was not dead, and "Mr. Kimball was railroaded" by the FDA and the government.
Thomas Theodore already had a history of fraud before he ran afoul of the FDA in the mid 1990s: In 1987, he was convicted of mail fraud after falsely claiming that he was licensed to practice medicine in Massachusetts.
After having his doctor's license revoked, Theodore hatched another scheme. With his business partner Thomas Rodgers, Theodore, still posing as a doctor, enticed investors to pump $1.6 million into their Private Biologicals Corporation (PBC) by claiming that he had invented a new cancer drug called Lymphokine-200, or LK-200. He told them that the drug was being manufactured using a secret process at a foreign facility in the Bahamas because LK-200 was not FDA-approved in the United States. According to Adam Bookbinder, an Assistant US attorney and one of the prosecutors in Theodore's case, Theodore did acquire a medical degree from a medical school in the Dominican Republic, where he is considered a legal doctor.
In fact, Theodore did not invent the substance he called LK-200. The method needed to produce the substance, made up of cytokines derived from human hematopoietic cell lines, had been used in cancer research throughout the 1970s and 80s, and was well known. In fact, according to court documents, researchers at the University of Pennsylvania had been making the stuff for years. Theodore initially obtained LK-200 from U Penn scientists, and even drew up an agreement for PBC to get ten liters of LK-200 from U Penn, claiming that he was using the drug for research purposes. He instead shipped the LK-200 directly to cancer patients in Mexico. (The documents did not name the U Penn scientists, and a PubMed search did not turn up any relevant articles on LK-200.)
Theodore and Rodgers began producing LK-200 in 1994 at their Massachusetts laboratory, which was not licensed to produce drugs. The two covered their tracks by shipping LK-200 to the Bahamas before redirecting the shipments to physicians, patients, and pharmacists in the United States—in essence laundering their product in the same way that some criminals launder their money using offshore accounts.
This strategy succeeded for several months; Theodore and Rodgers then grew bold enough to ship LK-200 directly from the Private Biologics lab to doctors and patients in the United States. In August 1994, the pair began shipping the drug from Massachusetts using fake mailing labels indicating the Bahamas as the packages' place of origin.
In 2002, Theodore was sentenced to more than 10 years in prison and was ordered to pay more than $1.5 million in restitution to the investors he had defrauded. Rodgers pled guilty to his role in scamming the FDA, testified as a government witness at trial, and was sentenced to one year of probation and a $10,000 fine. The FDA permanently debarred Theodore in 2003 for his role in the scheme, and debarred Rodgers for 5 years starting in 2005.
Theodore currently resides at Canaan Federal Penitentiary in northeast Pennsylvania and is scheduled for release in January of 2011.
George Kindness and his partner-in-crime Roy Page are the most recent inductees into the FDA's debarment list. Kindness, the president and co-owner of Ohio biotech Amscot Medical Labs, and Page, formerly an oncologist, were part of a criminal feedback loop to produce and distribute cancer therapies that were not FDA approved.
Kindness—who according to different court documents is an MD, an immunology PhD, or neither—joined Amscot in 1992 and became lab director, helping the company produce vaccines. Kindness's name appears sporadically in the scientific literature, his latest paper a 1997 review article on causal modeling and alternative medicine (Altern Ther Health Med, 3:40–47, 1997).
Over two days in April of 1999, FDA inspectors visiting Amscot's Cincinnati labs discovered that the company was producing an autologous cancer vaccine made from blood and tumor samples provided by Page, a physician practicing in Memphis, Tenn.
The company would formulate an autologous vaccine tailored to individual cancer patients by using their own tumor and blood cells, and then ship the finished products back to Page's Memphis clinic, where he would administer them to the patients. The idea was that such autologous vaccines could incite the patients' immune systems to mount a reinvigorated response to the cancer cells and attack their cancer with more gusto. Some studies in the biomedical literature do indicate successes in treating cancer with autologous vaccines using immune cells harvested from patients (Science, 314:126–29, 2006).
Amscot was calling the administration of the vaccines a part of its Gene Activated Therapy (GAT) clinical trial. FDA officials informed Kindness that an Investigational New Drug (IND) application had to be filed with the agency before any such clinical trial could be conducted.
About two days after their visit to Amscot, the FDA received an IND application from Kindness, listing the company as the GAT trial sponsor and the provider of the investigational vaccine. The FDA placed a clinical hold on the trial, meaning that all GAT trial activity was supposed to stop until the IND application was approved by the agency. It never was.
Meanwhile, in early December, FDA inspectors dropped in on Page and found that the doctor had been administering Theracine, a vaccine very similar to the GAT vaccine, to his patients all year. Like GAT, there was no IND application filed for Theracine, which was also manufactured by Amscot under the auspices of Kindness.
Upon further investigation, the FDA learned that Kindness had apparently attempted to disguise his continued fraud by having an Amscot employee ship unlabeled vials of Theracine to Page by mailing packages using a United Parcel Service center rather than shipping the vaccine directly from the company. Kindness and Amscot charged patients for the vaccines, while Page charged for surgeries and office visits.
Throughout 2000, Kindness continued to make and ship Theracine to Page, who injected his patients with the vaccine. During subsequent FDA inspections of Amscot, Kindness allegedly instructed staffers to conceal vaccine logs documenting the manufacture of Theracine during the year. The FDA failed to turn up evidence of any research data being collected or analyzed to study the effects of the GAT vaccine or Theracine. Candace Crouse, an attorney at the Cincinnati law firm of Sirkin, Pinales, and Schwartz and one of Kindness's representatives at trial, says that she couldn't recall any patients getting sick or dying due to the Amscot cancer treatments. "My understanding is that several of the patients' lives were prolonged due to the treatments," she says.
In 2003, a federal jury handed down a 21-count indictment, charging Kindness and Amscot with, among other crimes, "conspiracy to introduce and deliver misbranded and adulterated drugs into interstate commerce with the intent to defraud and mislead the Food and Drug Administration." Page was eventually named in the case, and last year surrendered his Tennessee medical license (which he had held since 1956). Page admitted to treating at least 74 patients with either the GAT vaccine or Theracine between 1997 and 2003, and several more with other cancer treatments not approved by the FDA.
In 2006, Kindness pled guilty to one count of selling a misbranded drug and was sentenced to one year of probation and a $1,000 fine. Both Kindness and Page were permanently debarred from the FDA in November 2008.
Amscot Medical Labs no longer seems to be in existence. When I dialed the two telephone numbers found online for the company, one call was answered by a "Digital Broadcasting" and the other by a recording for a "talk-line" where "exciting people" could be reached.
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