Iowa telepharmacy sells fake Ozempic to Michigan company
Counterfeit GLP-1 drugs, including Ozempic, are becoming a national problem and pose a health risk, experts say.
An Iowa telepharmacy company is accused in a civil lawsuit of selling the highly sought-after weight-loss drug Ozempic to a Michigan company.
The lawsuit appears to be one of the first of its kind accusing a licensed pharmacy in Iowa of selling customers counterfeit semaglutide, a rare but growing problem nationwide, according to the U.S. Food and Drug Administration and the National Association of Boards of Pharmacy.
The lawsuit, filed by Central Pharmacy Management LLC of Dearborn, a suburb of Detroit, in Washington County, Iowa, accuses SmartScripts and CEO Todd Thompson of Iowa City of breach of contract, negligent misrepresentation, fraudulent inducement, fraudulent misrepresentation, unjust enrichment, consumer fraud and fraud.
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It alleges that Central Pharmacy Management, which owns and manages pharmacies across Michigan, purchased and paid for 168 1-milligram injection doses of Ozempic for nearly $132,250 in late 2023 and then learned from a Food and Drug Administration special agent who visited one of its pharmacies that the drugs were counterfeit.
Thompson, a graduate of the University of Iowa College of Pharmacy and former administrator of a long-term care facility, did not respond to calls seeking comment.
It is unclear whether the allegedly counterfeit Ozempic has caused illness in patients. Substandard or counterfeit semaglutide has reportedly led to hospitalizations and, in some cases, death around the world.
A spokesman for the Iowa Department of Inspections and Appeals said Tuesday that the agency was not aware of any case in which a licensed pharmacy in Iowa had been disciplinary action taken for selling counterfeit Ozempic or similar drugs.
Ozempic, manufactured by Novo Nordisk, is one of several GLP-1 agonists taking the world by storm for their weight-loss effects. GLP-1 agonists are typically used to treat type 2 diabetes and obesity and increase insulin production and satiety, according to the National Association of Boards of Pharmacy. Ozempic was among several of these drugs that were in short supply in the U.S. at times because demand skyrocketed.
In a report released this year, the National Association of Boards of Pharmacy warned that numerous websites were illegally selling counterfeit drugs such as Ozempic. But counterfeit versions have also been appearing in licensed facilities, the association said.
In late December, the FDA announced that it had seized thousands of counterfeit Ozempic products from the legal drug supply chain. The needles in the products were also counterfeit. The announcement came a week before the FDA agent visited the CPM pharmacy and allegedly discovered the counterfeit Ozempic being sold by SmartScripts.
SmartScripts is accused of altering the transaction history of medications
Opened in 2017, SmartScripts was one of Iowa’s first telepharmacy companies. Similar to Amazon’s Pillpack, the company delivers long-term medications to customers across the country through pre-sorted SmartPacks. In 2018, it also launched an insurance product that allowed it to offer its customers discounts on prescription drugs.
In 2021, Thompson told the Business Record, it employed 120 people and served 8,000 to 10,000 customers nationwide. The company has locations in Iowa City, Washington, Iowa and Fort Worth, Texas.
CPM claimed in its lawsuit that it obtained a transaction history and chain of ownership of the Ozempic purchased from SmartScripts that purported to show a series of transactions for a legitimate drug. The lawsuit alleges that SmartScripts, through Thompson, falsely claimed the drugs were legitimate, provided false transaction information, and knowingly altered the transaction history.
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The company discovered that Ozempic was counterfeit when an FDA agent visited one of its pharmacies, Farmington Drugs in Livonia, Michigan, on December 27, 2023, the lawsuit says.
“The FDA required CPM to immediately stop selling the counterfeit drugs, maintain a list of patients who had received any of the counterfeit drugs, and provide the Food and Drug Administration with identification information,” the lawsuit states. “CPM complied with all of the FDA’s requests and turned over all counterfeit drugs.”
The company reportedly informed SmartScripts that the FDA had seized the drugs, but SmartScripts did not respond to calls. The company later received an email saying that SmartScripts was working on a resolution to the matter. The company has not yet received a refund of the purchase price, the lawsuit states.
Watchdog has asked, through CPM’s Des Moines attorney Alison Kanne, to question CPM officials about the FDA investigation and whether patients have been affected by the counterfeit Ozempic. Kanne did not respond.
The FDA said it could neither confirm nor deny the existence of an investigation. “As a general rule, FDA does not discuss compliance matters except with the company involved.”
The World Health Organization warned in June that counterfeit Ozempic had been found in the United States, Britain and Brazil.
In its report this year, the National Association of Boards of Pharmacy said the FDA’s Adverse Event Reporting System found that 42 people worldwide had been hospitalized after being injected with substandard or counterfeit semaglutide. Of the reports, 28 were classified as “serious,” with consequences that could include death. Three of the hospitalizations occurred in the United States.
SmartScripts is sued in further cases
The lawsuit, filed on July 8, is not the first against SmartScripts.
Last week, an accounting firm called CFO Systems LLC of Omaha, Nebraska, filed a motion to garnish funds from SmartScripts after it failed to pay the company $29,615.16. The move came after CFO filed a lawsuit alleging breach of contract and unjust enrichment after providing financial management services and winning a court case.
A jury trial is scheduled for August in another lawsuit filed by Texas-based McKesson Corp. against SmartScripts in February.
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The lawsuit alleges that SmartScripts sought credit from McKesson in 2015 to purchase pharmaceutical products from the Texas company. McKesson claimed it sold and delivered pharmaceutical products purchased from SmartScripts, and Thompson and another of its companies, Thompson Long-Term Care, owed McKesson at least $2.1 million.
In 2023, the company was also the target of a class action lawsuit for allegedly calling people whose names were listed on the national Do Not Call Registry. SmartScripts admitted to using phone numbers purchased from data brokers, but denied intentionally calling people on the registry. Within a few months, the case was settled out of court.
Companies, including online sellers, that offer counterfeit or tampered drugs, or both, should be reported to the FDA. Suspected counterfeit products can be reported to the FDA by calling an FDA consumer complaint coordinator.
Lee Rood’s Reader’s Watchdog column helps Iowans get answers and accountability from public agencies, the justice system, businesses and nonprofits. Reach her at [email protected], at 515-284-8549, on Twitter at @leerood or on Facebook at Facebook.com/readerswatchdog.
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