Two South Africans and a Zambian have been exposed for sourcing thousands of packs of expired antiretroviral (ARV) medicines illegally from Southern Africa and supplying them to an unsuspecting European pharmaceutical market.
The three men – James Buckley, Izak Coetzee and Alexander Lawrence – were named when the Swiss medical regulator, Swissmedic, published verdicts last month after finalising a long-running prosecution of European businesspeople who imported these antiretrovirals illegally via Switzerland during the late 2000s.
Organised syndicates took advantage of the huge price difference between the cost of subsidised HIV medicines in Africa and their full retail price equivalent in Europe, our own subsequent investigation found.
In one instance, a pack of Epivir, which contains the ingredient lamivudine, also known as 3TC, was obtained in South Africa for €5 and later sold to a medical wholesaler in Germany for €227 – a markup of 4 440%. 3TC was part of the South African government's first-line treatment regimen in 2004. First-line treatment is an effective and affordable drug therapy that an HIV-positive person initially receives.
This profiteering diverted HIV medicines from Southern African public health systems struggling to keep pace with the HIV epidemic. In the period this trade was at its height – from 2005 to 2010 – South Africa was emerging from a time when ARVs were not widely available. The government started the initially slow roll-out of ARV treatment only in 2004.
"These are life-saving drugs. If people don't get a regular supply, it's bad for them and it's also bad for public health because you create resistant strains of the virus," explains Mark Heywood, who co-founded the country's largest HIV activism organisation, the Treatment Action Campaign.
In Europe, laboratory tests showed that some of the medicines were expired or damaged, representing a danger to unsuspecting users.
"Once the expiration date has passed, there is no guarantee that medicines, including ARVs, are effective or safe to use. Expired drugs are risky because of a change in chemical composition and a consequent decrease in strength. When ARVs are not fully effective, taking them can lead to resistant strains of HIV developing in a person's body," says Heywood.
How an international syndicate profited from Southern Africa's HIV epidemics
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Lionel Faull takes us inside the investigation that exposed an ARV-smuggling syndicate that have managed to escape South African justice.
German patient sets off an unlikely chain of eventsThe alarm was first raised in 2009 when an HIV-positive man picked up his prescription ARVs from a pharmacy in Germany and found that some blisters in the pack were empty. The pharmacy reported this to the medical manufacturer, who notified the police in Germany.
Working down the supply chain, the German police traced the wholesaler – one Ernst Schwarz, an elderly and seemingly respectable businessperson. They discovered Schwarz had bought thousands of packs of suspect HIV medicine from Moses Kraus, a wealthy Zurich businessperson. Swissmedic got involved and the scent took investigators to South Africa.
Last month, Swissmedic finally published its verdicts, implicating the two South Africans, Buckley and Coetzee, and the Zambian, Lawrence. At the time, Buckley owned Rainbow Pharmaceuticals, a wholesale medical supplier based in Cape Town. Coetzee was a Johannesburg businessperson who was involved in the medical supply business in South Africa and neighbouring countries, as well as the import and export of goods.
Although the verdicts do not make any findings of criminal wrongdoing on the part of the three men, they detail several examples of suspicious behaviour, including:
• Buckley obtaining single samples of HIV medicine packs from a European source, whose batch numbers were later found to correspond to large volumes of poorly packaged expired antiretrovirals circulating in Europe;
• Coetzee, Buckley and Lawrence, each concealing their trading with Europe behind anonymous Panamanian shelf companies and secretive Swiss bank accounts, opened with identical service providers in a pattern that suggests co-ordinated intent;
• Coetzee, the alleged middleman, referring to his two alleged suppliers, Buckley and Lawrence, in coded language as "J" and "A" when communicating with a Swiss buyer; and
• An inability on the part of any of them to provide proof of the origin of the drugs when their European buyers, under pressure from Swissmedic, requested it.
Buckley declined to comment, saying that, because of a related conviction (for trading medicines without a licence) he received in 2012, he "considers the matter as finalised".
In a brief telephone conversation before he hung up, Coetzee said his only role was to introduce Buckley to a European supplier, whom he did not name. He did not respond to further written questions.
Lawrence denied any involvement, and suggested the Swiss had misidentified him. He promised to provide an email address so he could receive and study the verdict. But his only action since then has been to delete his LinkedIn profile and remove his WhatsApp profile picture.
The impression of suspicious behaviour is bolstered by evidence gathered during the German police investigation into how medicines exported to Switzerland ended up on pharmacy shelves in Germany. The German prosecution fizzled out in 2014 after the main suspect in Germany, the businessperson Schwarz, died.
A cold case heats upHowever, earlier this year the German public radio programme Bayerischer Rundfunk obtained the investigation record compiled by German federal police between 2009 and 2011. Bayerischer shared the records for this story.
The documents show how German police used undercover agents and communications intercepts to infiltrate the supply chain network and identify its key players.
In 2011 an undercover agent contacted Schwarz to "prepare" 400 packs of Combivir. Combivir is a two-in-one pill that contains the antiretroviral drugs 3TC and AZT. From 2004 onwards, the South African government provided Combivir to HIV-negative people who had been exposed to HIV, for instance through rape or a needlestick injury. If Combivir is taken within 72 hours after exposure to the virus, it is highly likely to prevent infection.
Schwarz assured the undercover agent that he had "contacts in South Africa" who had supplied him with "thousands of packages", which "to this day … could not be determined if they were counterfeit or genuine".
Intercepts suggested that Schwarz was simultaneously in contact with Coetzee in Johannesburg, to prepare the Combivir order. After the agent disappeared, the intercepts show, Schwarz discussed other orders with Coetzee, who contacted Buckley to source them.
Coetzee also allegedly told Schwarz that he had been unable to contact "Alex" – presumably Alexander Lawrence – because they had lost contact in 2010.
Trail of evidence turns to South African shoresSouth African agencies that co-operated with this investigation included police crime intelligence, the South African Revenue Service and the Medicines Control Council (MCC).
Acting on information obtained by the MCC, South African police secured the minor conviction against Buckley in 2012.
Although there is no evidence to suggest that this network is still active today, doubts remain about whether the police dismantled it entirely.
The MCC confirmed that its investigators had identified both "the source of supply to Buckley" and "another leg to these illegal activities linked to … Coetzee".
"The police took over the investigation," the MCC said in a written response to questions, but "the outcome … was never communicated back to the [MCC's] law enforcement officers".
The police did not respond to requests to clarify what action they had taken against Buckley's "source of supply" as well as Coetzee.
A source close to the investigation warned: "This highly profitable trade is like a watering hole – unless you chase the animals away for good, they'll always be tempted to come back and drink."
This is a joint investigation between the African Network of Centres for Investigative Reporting, Beobachter (Switzerland) and Bayerischer Rundfunk (Germany)
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