BORDER CASES

In addition to the pharmaceuticals that come into the United States from
Mexico and Canada, U.S. regulators are concerned about medicines intended
for foreign markets that get diverted for domestic consumption.

MIAMI -- In June 2002, Florida pharmacy inspectors found 734 cases of an
injectable HIV drug -- intended for sale in Mexico -- in a cold-storage
food locker alongside fruits and vegetables near the Port of Miami. The
drug had been diverted, stored and illegally sold in increments to small
U.S. wholesalers.

TYLER, Tex. -- Thousands of glucose-testing strips, used by diabetics to
check blood-sugar levels, were recalled nationwide in late 2002 after boxes
of strips made for use outside the United States were found at a Texas
wholesaler's warehouse.

The foreign designation on the packaging was covered. Strips intended for
use outside the United States are calibrated for a metric system, meaning
they could give false readings and put diabetics at risk if used with U.S.
measurements. "I don't know how this happened, and we're a very small
company so I may never be able to find out," said Gary Krantz, owner of
Diagnostic Solutions Inc., maker of the strips. "It happens because the
prices on products going international are cheaper."

RICHTON PARK, Ill. -- In July, as part of a continuing investigation into
counterfeit Lipitor -- the best-selling cholesterol-lowering drug -- the
Food and Drug Administration seized nearly $2.5 million worth of
medications from Phil and Kathy's Inc., near Chicago. The drugs included
foreign-labeled Lipitor. The company has a repackaging unit called Local
Repack and a distributor and mail-order pharmacy called Alliance Wholesale
Distributors. Customers include Walgreens, the United Mine Workers, the
Navy and several Illinois hospital groups, Alliance's Web site shows.

In August, Phil and Kathy's sued the federal government, contending that
the company should be allowed to resell to Americans drugs it buys overseas
at lower cost. In September, the FDA seized all drug products with foreign
labels at Alliance and Local Repack. The agency said it had found a
Brazilian version of Celebrex and Portuguese-labeled Zyprexa, a
schizophrenia treatment.

Also found were thousands of empty bottles labeled as Lipitor in Portuguese
or Spanish. The bottles were not in authentic packing from the drug's
manufacturer, Pfizer Inc. An attorney for Phil and Kathy's did not return
calls seeking an interview.