The COVID drug profit scheme has trapped Tennessee pharmacies

A Delaware man is facing five years in federal prison for a COVID-19 drug fraud scheme that circulated at pharmacies in Etowah and Maryville, authorities said.

Jose Torres, 58, of Shelbyville, Delaware, pleaded guilty last week to one count of conspiring to engage in the unlicensed wholesale distribution of prescription drugs. in U.S. District Court for the Eastern District of Tennessee. Torres faces a sentence of up to five years, $250,000 in fines and three years of supervised release and is expected to be sentenced on March 29, according to the U.S. District Court for the Eastern District of Tennessee.

“This plea agreement represents the U.S. Attorney’s Office’s commitment to prosecute those who have exploited the fears of others for unlawful profit during the COVID-19 pandemic,” said U.S. Attorney Francis M. Hamilton III. .

Federal prosecutors enter the Howard H. Baker, Jr. U.S. Courthouse in downtown Knoxville on Monday, June 7, 2021.

Torres conspired to buy drugs that were in short supply and resell them to wholesale distributors for a big profit, according to the lawsuit filed against him. Torres worked with a California-based company that recruited independent retail pharmacies to join a network called 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 intended to help fill gaps in the drug supply chain . This allowed Torres to buy drugs from the pharmacies’ authorized distributors, paying the pharmacies a commission of up to 23%.

Pharmacies were led to believe it was a valid program and that 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 onset of the COVID-19 pandemic, when Torres bought hydroxychloroquine sulfate tablets from a Maryville pharmacy for $178 apiece and resold them to an alumni medical center. fighters for $442 a unit, according to the complaint.

The fraudulent purchase of Torres came as the outbreak began to flood healthcare systems and an unverified 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 US government to purchase and stockpile 29 million tablets of hydroxychloroquine for use by patients with COVID-19. The FDA subsequently revoked its authorization to use the drug in mid-June 2020.

Howard H. Baker, Jr. United States Courthouse in Knoxville, Tennessee on Thursday, November 4, 2021.

Torres used an Etowah pharmacy to purchase epinephrine for $63 apiece and resold it for a 120% markup, the complaint states. The drug is used for emergency treatment of severe allergic reactions. The man then purchased amiodarone, a heart medication, from the same pharmacy for $42 apiece and resold it to a veterans medical center for nearly three times the purchase price.

Similarly, he purchased famotidine, an antacid, from a Maryville drug store and resold it for a profit of $60 apiece.

According to the federal indictment, Torres personally profited nearly $120,000 from those four transactions, an amount he agreed to repay.

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