California Lawyer Sentenced in Serostim Scheme

Posted on May 25, 2009 in Business/Law, Health & Medicine

Robert McFadden, a Palm Springs, Calif. lawyer was sentenced Wednesday to three years in federal prison for illegally purchasing and distributing the HIV drug Serostim. McFadden, 63, was also ordered to pay a fine of $96,639.

Evidence introduced at the January trial revealed that Serostim was purchased from HIV infected patients at prices significantly below the price that manufacturers charge pharmacies. The medication was then resold using falsified paperwork to make it appear as if it had come from legitimate licensed wholesalers. The Prescription Drug Marketing Act requires wholesale distributors of prescription drugs to be licensed by the states in which they operate, in order to eliminate potential risks to public health.

McFadden used his client trust account to receive money from licensed wholesalers of prescription drugs who purchased the Serostim from a licensed wholesaler in Milford, New Hampshire. Over $2.1 million was funneled through the client trust account, which was also used to pay illegal suppliers of Serostim through cashier’s checks. The medication was then distributed to pharmacies and prescribed to HIV patients across the United States.