Man pleads guilty in COVID drug scheme that ensnared Tennessee pharmacies
A Delaware man is facing five years in federal prison for a COVID-19 drug fraud scheme that roped in pharmacies in Etowah and Maryville, authorities said.
Jose Torres, 58, of Shelbyville, Delaware, pleaded guilty last week to one count of conspiracy to engage in the unlicensed wholesale distribution of prescription drugs. in U.S. District Court for the Eastern District of Tennessee. Torres faces a term of up to five years, $250,000 in fines and three years of supervised release and is set to be sentenced March 29, according to the in U.S. District Court for the Eastern District of Tennessee.
“This plea agreement represents the commitment of the U.S. Attorney’s Office to prosecuting those who exploited the fears of others to unlawfully profit during the COVID-19 pandemic,” said U.S. Attorney Francis M. Hamilton III.
Torres conspired to buy drugs that were in short supply and sell them to wholesale distributors at a hefty profit, according to the complaint filed against him. Torres worked with a California-based company that recruited independent retail pharmacies to join a network referred to as the Pipe-Line Program.
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Independent pharmacies in Etowah and Maryville, which were not named in the complaint, joined the Pipe-Line program, which was described as a partnership meant to help fill voids in the supply chain of medications. This allowed Torres to buy drugs from the pharmacies' authorized distributors, paying the pharmacies a commission of as much as 23%.
The pharmacies were led to believe this was a valid program and they were legally allowed to wholesale up to 5% of their annual gross sales, according to the federal complaint.
The most egregious fraud came after the start of the COVID-19 pandemic, when Torres purchased hydroxychloroquine sulfate tablets from a Maryville pharmacy for $178 per unit and resold them to a Veterans Affairs medical center for $442 per unit, according to the complaint.
Torres' fraudulent purchase came as the epidemic was beginning to inundate health care systems and an unvetted medical study suggested hydroxychloroquine could help patients, according to the Journal of the American Medical Association.
At the start of the pandemic, then-President Donald Trump authorized the U.S. government to purchase and stockpile 29 million pills of hydroxychloroquine for use by patients with COVID-19. The FDA subsequently revoked its authorization for the use of the drug by mid-June 2020.
Torres used an Etowah pharmacy to buy epinephrine at $63 a unit and resold it at a 120% markup, the complaint stated. The drug is used for emergency treatment of severe allergic reactions. The man later purchased amiodarone, a heart medication, from the same pharmacy for $42 a unit and resold it to a Veterans Affairs medical center for nearly three times the purchase price.
Similarly, he purchased famotidine, an antacid, from a Maryville pharmacy and resold it for a profit of $60 per unit.
According to the federal indictment, Torres personally profited to the tune of nearly $120,000 from those four transactions, an amount he has agreed to repay.
This article originally appeared on Knoxville News Sentinel: COVID drug profiteering scheme ensnared Tennessee pharmacies
