The former president of a Houston-based pharmaceutical distribution company was sentenced to 15 years in prison July 16 for his alleged role in a $50 million drug diversion scheme, according to the Department of Justice.
Jerrod Smith, former president of Houston-based Cumberland Distribution, was indicted in January 2013 and charged with operating the scheme, which involved shipping tainted pharmaceuticals from a warehouse in Nashville, Tenn., to pharmacies across the country. In February 2018, he was convicted of 15 counts of mail fraud, conspiracy and making a false statement to the FDA.
From December 2006 through August 2009, Mr. Smith and his co-conspirators purchased millions of dollars of prescription drugs from unlicensed suppliers who had bought the drugs from patients in New York and Miami, according to evidence presented at trial. The drugs were sent to Cumberland's warehouse in Nashville where they were cleaned, sorted, repackaged and shipped to independent pharmacies, according to the DOJ.
Many pharmacies reported problems with the drugs purchased from Cumberland. At Mr. Smith's trial, some witnesses testified that at least one bottle of prescription drugs sold by Cumberland contained breath fresheners instead of medicine.
In addition to the 15-year prison term, Mr. Smith was ordered to forfeit $1.4 million.
On July 17, one of Mr. Smith's co-conspirators, Charles Edwards, was sentenced to six years in prison and ordered to forfeit $1.4 million, according to the DOJ.
More articles on legal and regulatory issues:
HHS launches investigation into pending closure of Ohio hospital
Former HHS leaders: Stark and anti-kickback laws 'harm the very patients they are supposed to protect'
SEC proposes $30M cap on whistle-blower awards