At the casino cage, wads
of cash in hand. The security camera
captures a real player, a larger-than-life gambler,
a familiar face at World Poker tournaments in Las
Vegas. Day one chip leader Lazaro
Hernandez is once again setting the pace. With posts from luxury
boats and private planes, Lazaro Hernandez
fashioned himself as a high-flying high roller. Turns out he was the
mastermind of a $230 million drug
counterfeiting operation, and he was gambling with
people's lives. These thousands of
bottles were all originally prescribed and
filled for patients. Now they fill an evidence
room at Gilead Sciences in Northern California. Every single bottle was
discovered in a complex criminal drug diversion
scheme. We are playing a bit of a
game of whack-a-mole. Lori Mayall fights to find
the counterfeits every day. She oversees global
product security at Gilead, which
manufactures HIV medications Biktarvy and
Descovy, drugs at the center of Hernandez's
fraud. We know that upward to
80,000 of bottles of counterfeits were entered
into the supply chain. And what would those be
worth if someone was paying full retail price? Those bottles would be
about $230 million. Here's how drug diversion
works: a patient fills a prescription for a
medication worth several thousand dollars, but
turns around and sells it for a fraction of that in
cash. The buyer, known as an
aggregator, removes the patient information,
alters the bottle, then sells it to a wholesale
distributor who sells it back to the pharmacy at a
discount, so the same bottle reenters the
supply chain. It's part of a massive,
illegitimate drug industry the World Health
Organization estimates at as much as $431 billion
annually around the world. Not only a financial
threat, but one with serious health
consequences, too. Tell me all the ways that
a drug that Gilead manufactures could be
counterfeit. You could have an original
bottle with wrong tablets inside that's resealed to
make it look like a genuine Gilead product. That's a counterfeit. You can have a cap that
is not a genuine Gilead cap on a bottle. That's a counterfeit. The label itself could be
a copy and not coming from our line. Gilead first learned it
had a serious problem in 2020 when reports came in
of Biktarvy bottles filled with an anti-psychotic
drug called Seroquel. That raised immediate
alarms that something was amiss and we mobilized a
team to launch an extensive investigation
to try to understand what was happening. What they found involved a
slew of counterfeits. This bottle doesn't even
contain pills, just rocks. Why do you think somebody
would try to pass this off as a real bottle of
prescription medicine? All they need to do is
make the sale. And this man, let's call
him Julio, who agreed to an interview if we
concealed his identity, said it was easy to
persuade patients to sell their bottles. The had AIDS, cancer, and
they don't have any money. So for $100, $200,
they'll sell it every day. So they'll forgo the
medication. They won't take the
medication. They won't take the
medication. Julio says he got rich,
even as a mid-level middleman, in a hustle
that billed millions to Medicare for counterfeit
medications. What are the most
lucrative drugs to resell? Truvada. Seroquel. He says he processed the
pill bottles himself. How many bottles of pills
would you have to have to fill a box? I'm going to say 300. And then how many boxes
would you sell to the wholesaler? In a week, 1,500. The fraud achieved size
and national scale because licensed distributors buy
from aggregators like Julio, sell to the
pharmacies and give the whole process the sheen
of legitimacy. How troubled are you by
the licensed distributors? Very troubled. They're a critical cog in
the scheme. Most pharmacies are
unlikely to purchase from the fly-by-night entities
that didn't exist a year ago or 30 days ago and
are now offering large amounts of medication for
them to purchase. And the distributors have
relationships with thousands of independent
pharmacies across the nation. Is there ever a
deal to be had on HIV medication? Gilead sells all of its
medicine to our authorized distributors at one price
. So there's no deals to be
made. Is it possible that one
bottle of legitimate prescription medication
gets billed and rebilled over and over again to
Medicare? Yes. One bottle can be
billed two, maybe three times. Stephen Mahmood is
assistant special agent in charge at Health and
Human Services Office of Inspector General. He leads investigations
into Medicare fraud. The pharmacies that are
on the receiving end of these diverted
prescriptions, do they know? Some do, some don't. They're the kinds of drugs
that the government pays a lot of money for people
to receive. Right, yes. Medicare pays
out to pharmacies a lot of money for these drugs
because they are expensive and life-sustaining. It drives up the
government's health care costs and adds to the
more than $100 billion in waste, theft and abuse
that taxpayers pay for annually. Investigators
have watched the crime in progress. This hidden
camera video has never been seen in public. Shot by an undercover
informant, it shows a woman, her husband and
son cleaning prescription pill bottles in a South
Florida apartment. The individual in the
white shirt in the middle, you can see what appears
to be lighter fluid. He's using that lighter
fluid, a harsh chemical, to clean the bottle and
remove the pharmacy prescription label. That would have had the
name of the patient. It would have had the name
of the patient on it. Because obviously no one
is going to sell a drug with someone else's name
on it. And they're cleaning it to
make it look new again. It's a mom-and-pop
operation. Often, it shows. So here is an example of a
patient leaflet that was attached to a counterfeit
Biktarvy bottle that we seized from one of the
wholesalers. And you can see it's a
very horrible copy. It's falling apart. But in other words, if a
patient were to get a bottle and have a patient
leaflet like this, that would be a warning sign
that something's wrong. Absolutely. It would be a
warning sign and a patient should never receive a
leaflet in this type of condition. Though the companies lose
money on every bottle that gets reintroduced in the
system, they say their top concern is safety. Johnson and Johnson,
whose HIV drug Symtuza was targeted, said in a
statement it's found "HIV medication bottles filled
with a different product or bearing false or
adulterated packaging, labeling or instructional
inserts." The company insists "Counterfeiting
of life-saving medicines is a criminal act that
puts patient lives at risk." Cancer patients
cut their dosing in exchange for cash. Hiv patients get paid but
go without. Their viral load can
increase, which makes it more likely to spread HIV
to others. The pharmaceutical
companies are serious about disrupting the drug
diversion. Gilead Sciences and
Johnson and Johnson have sued distributors and
pharmacies throughout the country. Their
investigations and litigation are still
unfolding. These three were
convicted in connection with the prescription
drug counterfeiting operation. Julio served
time behind bars for his pill diversion scheme,
and insists his counterfeiting days are
behind him. And the big-time poker
player? Lazaro Hernandez's
jet-setting days ended abruptly this year. He was convicted in that
$230 million drug counterfeiting operation. An attorney for Hernandez
argued in court his "gambling addiction" was
a "driving force behind his participation in the
criminal conspiracy." And said Hernandez regularly
took "large quantities of cash obtained from his
sales of diverted drugs" to casinos. He pled guilty to
conspiracy charges related to distributing
adulterated and misbranded drugs and money
laundering. He is serving a 15-year
prison sentence. And the critical cog in
these schemes, the distributors? None have been criminally
charged, though the CEO of Scripts Wholesale was
indicted in June for buying more than $150
million of "illegally diverted prescription HIV
medication" and reselling it to pharmacies. He pled not guilty. His attorney declined to
comment. Today, federal
authorities say they are actively investigating
other major drug counterfeiters. In
October, prosecutors charged New York pharmacy
owners with a $20 million scheme to buy and sell
HIV medications on the black market and pay
illegal kickbacks. Then, fraudulently bill
Medicare, Medicaid and private insurance
companies. The proceeds allegedly went for lavish
purchases, like this Mercedes Maybach. Drug diversion is
widespread and it impacts the entire country. I'm saddened and
disheartened that the schemes cross the entire
United States and the territories, but I'm not
surprised. Fraud is always evolving.
