WSJ News Exclusive | Illicit Covid-19 Drugs Bound for Mexico Seized by U.S. Authorities

In recent months, U.S. Customs and Border Protection officers have captured more than 100 shipments that they referred to U.S. Department of Homeland Security special agents for further investigation, according to the people.

DHS agents have coordinated testing to determine whether the confiscated items are counterfeit or generic, according to the people. Generic forms of remdesivir aren’t licensed for use in the U.S. or Mexico. In most circumstances, it is illegal in the U.S. to market or import unlicensed prescription drugs.

Counterfeit prescription drugs typically include fraudulent labeling on a container, with another drug or simply water or a saline solution inside, according to industry and security experts. The counterfeit prescription drug market is valued at more than $200 billion annually, according to PricewaterhouseCoopers.

Demand is high for Gilead’s remdesivir in Mexico because the country only recently cleared its use, the people familiar with the matter said. Mexican health officials and the attorney general’s office didn’t respond to requests for comment.

Remdesivir, first cleared by U.S. regulators last year as the pandemic got under way, has shown to provide only a modest benefit. But demand has grown in some countries as the drug has become part of the standard of care in hospitalized patients, largely because of the limited arsenal of tools available to physicians to treat Covid-19 patients.

Authorities outside the U.S. have been investigating counterfeit or unlicensed remdesivir for months. Colombian authorities in January seized containers of a generic version of remdesivir from a woman at an airport who said the drugs were a Covid-19 vaccine, local officials said. Indian authorities said they arrested a handful of people in connection with counterfeit remdesivir in raids in April and May; in one case, suspects changed the labels and packaging of an antibiotic.

“You’ve got to remember, if you don’t have ready access to a vaccine and your healthcare system is at risk of collapse, you will try anything,” said Shabbir Safdar, executive director of Partnership for Safe Medicines, a U.S. nonprofit group whose members include pharmacist and drug-industry trade groups.

He said that people outside the U.S. will sometimes engage in so-called brown-bagging, in which they purchase prescription medicines on the street and ask doctors to administer the drugs.

“With the potential for Covid to be fatal, people are like, ‘Yeah I’ll go buy remdesivir if I can find it and bring it into the hospital,’ ” he said.

Foster City, Calif.-based Gilead said it works with law-enforcement agencies around the world to address threats that counterfeit and substandard pharmaceutical products pose to patients, including investigations involving remdesivir.

“We caution against sourcing Gilead medicine from outside the approved and regulated supply chain, hospitals or pharmacies and will continue to support U.S. law enforcement in taking appropriate actions to protect patients,” the company said.

Over the past three years, law enforcement world-wide detained nearly $12 billion of illegally smuggled medicines, according to the Pharmaceutical Security Institute, a trade group.

For more than a year, the U.S. government has been investigating fraud related to the Covid-19 pandemic, recovering phony masks, personal protective equipment and other products. It is also working with pharmaceutical companies on investigations related to their Covid-19 products, including counterfeit shots of the Covid-19 vaccine from

Pfizer Inc.

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and

BioNTech SE.

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Remdesivir was authorized for emergency use by the U.S. Food and Drug Administration last spring and received full approval in October 2020. The intravenous drug is sold under the brand name Veklury and carries a U.S. list price of $520 a vial, or $3,120 for a typical course of treatment. The U.S. government and other developed countries can buy a vial for $390.

In the U.S. investigation, CBP officers have seized boxes of products in Texas and New York flown in from India and Bangladesh, according to the people familiar with the investigation.

The items seized mostly come in 10-vial packages under generic names, and not Veklury, and they are labeled as doctor samples or testing kits, according to the people. They say the drugs are being shipped in packages, and not carried by passengers, and are then smuggled by individuals into Mexico.

No arrests have been made, and more details were unavailable because the investigation is ongoing, the people said.

Companies in India, Egypt and Pakistan are manufacturing generic forms of remdesivir, after Gilead last year agreed to license production through a program that the company says has enabled more than 2.3 million people in more than 60 developing countries to use the drugs. Gilead has licensed generic versions of its product to be distributed in more than 100 countries.

Mexican regulators authorized the drug’s use in treating Covid-19 patients in March. U.S. authorities have seen generic forms of remdesivir for sale in Mexico, the people said.

Under Mexico’s authorization, state governments may purchase Veklury and patients can access the drug through local government healthcare providers, a company spokesman said. He said that Gilead hopes to gain full approval, which would expand supply to the private sector.

Some companies in Hungary, Russia and Bangladesh have produced generic copies of the Gilead drug without licensing from the company, including through compulsory licenses granted by their governments. Countries can grant such licenses to drugmakers, allowing them to copy a company’s patented drugs without its approval, under international rules of the World Trade Organization.

Gilead declined to comment or verify the authenticity or effectiveness of such products. It also declined to comment on whether any were involved in alleged smuggling operations.

—José de Córdoba and Rajesh Roy contributed to this article.

Write to Jared S. Hopkins at [email protected]