December 11, 2012
Department of Justice
United States Attorney William C. Killian Eastern District of Tennessee
Johnson City Physician Pleads Guilty To Receiving Unapproved Drugs
GREENEVILLE, Tenn. – William Ralph Kincaid, 67, of Gray, Tenn., pleaded guilty on Dec. 11, 2012, in the U.S. District Court for the Eastern District of Tennessee at Greeneville to receiving misbranded drugs with intent to defraud or mislead in violation of the Food, Drug and Cosmetics Act. Sentencing has been set for 9:00 a.m., June 6, 2013, in U.S. District Court in Greeneville.
Kincaid faces a term of up to three years in prison and fines of up to $250,000. He was released pending sentencing.
As set out in his plea agreement, which is attached to this release, Kincaid was a physician and managing partner for East Tennessee Hematology-Oncology Associates, P.C., doing business as McLeod Cancer and Blood Center, Johnson City, Tenn., (McLeod Cancer), a professional corporation providing care and treatment for patients with cancer and blood diseases. McLeod Cancer purchased large amounts of prescription drugs, including chemotherapy drugs, which were administered through the clinic. McLeod Cancer then sought reimbursement through the Medicare and Medicaid/TennCare programs as well as other health benefits programs.
Beginning in 2007, McLeod Cancer began obtaining drugs from a Canadian business, Quality Specialty Products (QSP). The drugs had been obtained from foreign sources and had not been approved by the U.S. Food and Drug Administration (FDA) for distribution or use in the United States. The FDA has responsibility for enforcing the Food, Drug and Cosmetics Act to ensure the health and safety of the American public. The safety and efficacy of drugs is protected by requiring that any manufacturer or distributor of drugs in the United States be registered with and approved by the FDA. Drugs with labeling in a language other than English or from foreign sources not registered with the FDA are considered “misbranded.” Further, the FDA regulates the distribution of drugs to ensure they are handled properly so as not to lose their efficacy (such as becoming too hot or cold).
After nurses at McLeod Cancer raised concerns in late 2007 and early 2008 about chemotherapy drugs with foreign labeling, the clinic stopped ordering drugs from QSP. However, in August 2009, Kincaid and Michael Combs, McLeod Cancer’s business manager, met with a QSP representative and began ordering misbranded unapproved drugs. Kincaid directed Combs to have the drugs shipped to a storage business in Johnson City which Kincaid owned in part. The drugs, after having been received at the storage business, were transported to Combs' office at McLeod Cancer and then placed by a pharmacy technician into the clinic's drug storage and control system where the misbranded drugs were mingled with FDA-approved drugs from legitimate sources. FDA-approved drugs obtained from legitimate U.S. drug manufacturers and distributors were still shipped directly to McLeod Cancer and not to the storage business.
McLeod Cancer obtained misbranded unapproved drugs, including the drugs Abraxane®, Alimta®, Avastin®, Eloxatin®, Gemzar®, Herceptin®, Rituxan®/Mabthera®, Taxotere®, and Zometa®, from approximately September 2007 to early 2008 and from August 2009 to February 2012, purchasing over $2 million in misbranded unapproved drugs, providing those drugs to their patients, and billing Medicare, TennCare, and other government health benefits programs approximately $2.5 million for the unapproved drugs.
“The Food and Drug Administration, Office of Criminal Investigations, along with the U.S. Attorney's Office, Federal Bureau of Investigation and Tennessee Bureau of Investigation are aggressively pursuing unscrupulous medical practitioners who would imperil their patients by administering unapproved medications from dubious foreign sources" said David W. Bourne Special Agent in Charge of the FDA Office of Criminal Investigations Southeast Region.
“This conviction sends a message to all medical providers and practitioners that federal criminal penalties await those who distribute and disseminate misbranded and potentially unsafe drugs, especially those used in cancer treatment. The FDA's regulatory system is designed to protect patients from substances such as these." said William C. Killian
The charges were the result of an investigation by the FDA Office of Criminal Investigations, FBI, and the Tennessee Bureau of Investigation. Assistant U.S. Attorney Neil Smith represents the United States.