NEWS RELEASE

OFFICE OF THE UNITED STATES ATTORNEY

WESTERN DISTRICT OF MISSOURI

BRADLEY J. SCHLOZMAN

Contact Don Ledford, Public Affairs ● (816) 426-4220 ● 400 East Ninth Street, Room 5510 ● Kansas City, MO 64106

www.usdoj.gov/usao/mow/index.html

NOVEMBER 3, 2006

FOR IMMEDIATE RELEASE

FLORIDA BUSINESS OWNER PLEADS GUILTY

TO $42 MILLION LIPITOR CONSPIRACY

KANSAS CITY, Mo. – Bradley J. Schlozman, United States Attorney for the Western District of Missouri, announced that a Florida business owner pleaded guilty in federal court today to his role in a $42 million dollar conspiracy to sell counterfeit, illegally imported and misbranded Lipitor.

Michael Allyn Carlow, 52, of Fort Lauderdale, Fla., pleaded guilty before U.S. District Judge Ortrie D. Smith this afternoon to the charge contained in a Dec. 14, 2005, superseding indictment. Carlow also pleaded guilty to related wire fraud charges filed against him the Middle District of Tennessee. Carlow owned and operated G&K Pharma, a company that was used to buy and sell pharmaceutical drugs in the secondary wholesale market.

“This defendant played a major role in an illegal scheme to selfishly profit at the expense of patients who needed prescription drugs,” Schlozman said. “This was a corrupt business that took advantage of a vulnerable market, and Mr. Carlow will be held accountable. I want to reassure the public that, as a result of this and other cases, significant reforms have now been adopted to provide better protection for consumers.”

By pleading guilty today, Carlow admitted that he participated in a conspiracy to sell counterfeit, misbranded, and illegally imported drugs from February 2002 until at least April 2003, and to defraud the United States by impeding the lawful functions of the U.S. Food and Drug Administration.

Members of the conspiracy purchased Lipitor that was intended for distribution in South America and illegally imported it into the United States. Because the cost of purchasing Lipitor intended for distribution outside the United States is lower, Schlozman explained, members of the conspiracy were able to sell the drugs for a lower price after they were smuggled into the United States.

Schlozman explained that the conspiracy involved businesses and individuals involved in the secondary wholesale market. Prescription drug manufacturers use a multi-tier system of wholesalers to distribute prescription drugs and pharmaceutical products in the United States. A few large companies with publicly traded stock occupy the top tier of the distribution system, purchasing drugs in large volumes directly from a drug manufacturer. In turn, these top-tier companies sell to several large regional wholesalers. Below the regional wholesalers are the secondary wholesalers, who buy and sell drugs to and from each other and also sell drugs to hospitals, clinics, doctors, and pharmacies.

Carlow admitted that he knowingly participated in a scheme to distribute Lipitor that he knew was not manufactured by Pfizer for distribution in the United States, and that he helped other members of the conspiracy traffic in pharmaceuticals that all of them knew were not manufactured for distribution in the United States.

During the 11-month time period from May 8, 2002, to April 4, 2003, co-defendant Douglas C. Albers, 55, of Leawood, Kan., paid G & K Pharma more than $42 million to purchase counterfeit, misbranded and illegally imported drugs from Carlow.

Albers – the owner of Albers Medical Distributors, Inc., a Kansas City firm engaged in the distribution of pharmaceuticals in the secondary wholesale market – pleaded guilty to selling counterfeit and misbranded drugs on Oct. 18, 2006. Albers agreed to pay a $500,000 civil forfeiture and to surrender his pharmacy licenses in Missouri and Kansas.

Under federal statutes, Carlow could be subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Senior Litigation Counsel Gene Porter. It was investigated by the Office of Criminal Investigations, U.S. Food and Drug Administration.

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This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available on-line at