CNBC Special Report: How Soaring U.S. Drug Prices Fueled What Feds Call An Illegal Import Of Medications 11/27/25

0:00A question being asked across the country, how can I afford my prescription drugs? Prices are skyrocketing. It's a broken system and we need to make sure everyone is paying attention. With some specialty medications costing tens or even hundreds of thousands of dollars per year and prescription drug prices in the U.S. averaging nearly three times more than in other countries, driving people and employers to find a solution. It's such a desperate thing to think that you might not have your medication at all. A booming cottage industry is selling itself as an antidote, often getting the drugs overseas for a fraction of the cost.

0:40We do a public service. We help people get access to medications. But there's a major catch. What they're doing is illegal and it's putting American lives at risk. What I tell my friends and family is that the most expensive medicine that they could get is one that isn't safe. Patients and employers are desperate for a solution. The question is, at what cost? The FDA says it's illegal to import drugs that are available and sold in the United States. All of these drugs are, in fact, available domestically, correct?

1:17Imagine opening up your mail, expecting your life-saving medication, and getting this. All in Turkish. The HIV drug Biktarvi, originating from this pharmacy in Istanbul, and shipped to the United States via what's known as an alternative funding program, or AFP, which buys high-cost specialty drugs from abroad for a fraction of the price in the U.S. Every time you're taking a foreign medicine that's been delivered from overseas, you're playing a game of Russian roulette. Lori Mayall is in charge of anti-counterfeiting and product security at Gilead Sciences, which manufactures Biktarvi. When you first learned about this case, did you think this was a one-off?

1:59That's what we were hoping. because we knew that it was very dangerous for patients to be receiving foreign medicines from overseas. They're unregulated. They're coming from unknown sources. But this is not an isolated incident. These AFPs are targeting cash-strapped employers and their employees, like teachers, police officers, and retirees, from places like rural Lebanon, Missouri, to small towns in upstate New York. These employers typically don't have traditional insurance and pay health care costs out of pocket, so they carve out coverage of expensive specialty drugs for illnesses like cancer or MS that can cost hundreds of thousands of dollars a year.

2:38AFPs save them money by buying lower-cost drugs from overseas, and AFPs make money by charging fees or taking a percent of the savings. Patients get the drug for little or no cost. AFPs say they're an answer to a broken health care system, and what they're doing is legal, connecting employees directly with cheaper drugs overseas. But regulators say what they're doing is wrong. As part of our investigation, we submitted nearly 100 public records requests that show private employers, cities, counties, school districts, and unions are using AFPs. And we obtained more than 10 ,000 pages of documents, including contracts, emails, invoices, and complaints.

3:20Not all AFPs import medicines, but the ones that do promise outsized savings. So it's easy to see why they're growing in popularity. It's a sales pitch on the backs of the safety of the patients. Patients take a safety hit in order to save an employer money. Shabir Imber Safdar is the executive director of the Partnership for Safe Medicines, a coalition of nonprofit and pharmaceutical industry groups that protect consumers against unsafe and counterfeit drugs. He's been investigating AFPs for the past two years. We have uncovered about$5 million just in the last two years of illegally imported unsafe medicine that patients have been given.

3:57$5 million. Yes. Medicine that was never reviewed by the Food and Drug Administration. Many AFPs we analyzed said their medications were coming from countries like the UK, Australia, and Canada. Why so many of these AFPs have been able to infiltrate, so to speak, so many different employee health plans and county health plans? They think, oh, Canadian medicine is safe, but you don't actually know if that medicine truly came from Canada. For example, Safdar says he found medication from this Canadian pharmacy wasn't always coming from Canada. In the fine print, the pharmacy's website says, we also have options to dispense your medications from our international fulfillment centers around the world, including the UK, Australia, New Zealand, Turkey, and India.

4:46The pharmacy declined to comment. What if patients want to opt out? Sometimes employers don't give them a choice. Emails we obtained show the city of Lebanon, Missouri, told its staff that their medications must be obtained through an AFP called SHARKS, based in St. Louis, Missouri. Otherwise, their high-cost medication will no longer be covered, and they will be required to pay the full price. The city declined to comment. It's no choice at all. Patients are put in an impossible position, and it's a crime that they're still paying health care premiums, and yet they are not getting FDA-approved medicine, legal medicine, or safe medicine.

5:24In a statement, Sharks told us Americans pay, on average, three or four times more than the rest of the world for their prescription drugs, and added that we help employees access the medications they need when their medications are not covered by insurance. No patient, no American, should ever have to be forced to take medication that's going to put their life at risk. We learned that the The Department of Homeland Security has launched several criminal investigations into AFPs. Nicole Johnson is a special agent with Homeland Security Investigations who manages the pharmaceutical program at the department's National Intellectual Property Rights Coordination Center.

6:02A lot of these AFPs are going to target lower income, lower paying jobs. This is going to be a school district, a county government, a religious organization where there's not a lot of money in excess for health benefit plans. So if you only have$500 ,000 to spend a year and you can save a couple hundred thousand dollars, you could use that money elsewhere. So they are really preying on those that are the most vulnerable in the system. Absolutely. Johnson revealed what the ongoing investigations uncovered about how most AFPs operate. What we've discovered is these alternative funding programs are fulfilling prescriptions through unverified suppliers and online pharmacies, potentially illicit, and they're not actually importing the drugs themselves.

6:51So the prescriptions are getting mailed directly to the patients. Therefore, Customs has no idea how many prescriptions have made it to U.S. citizens, how many have come from verified places. and this is a way for them to evade customs and being detected by law enforcement. So we really just don't know. We have no idea. What's wrong with receiving medicines from overseas, especially if they're from Europe or Canada? Isn't that safe? Not necessarily. The United States has very strict laws and regulations that are intended to protect patients. So there's rigorous testing, there's supply chain security that's been put in place, pharmaceuticals that are intended for another country may not have the same safety standards that the United States has.

7:41Johnson says AFPs typically argue they're operating legally under the FDA's personal importation policy, a narrow exception that lets individuals get medications from abroad for personal use. When we asked the FDA specifically if personal importation covered the practices of AFPs, it told us, In most circumstances, a person cannot import prescription drugs from other countries into the U.S. as substitutes for FDA-approved drugs, and that medicines from outside the legitimate U.S. drug supply chain do not have the same assurance of safety, effectiveness, and quality as drugs subject to FDA oversight.

8:21If anyone knows all about the FDA and AFPs, it's Leigh Verbois. She spent nearly 23 years at the FDA, the last five as director of the Office of Drug Security, Integrity and Response. She left the agency earlier this year, and this is the first time she's publicly speaking out about AFPs. What AFPs are doing are importing misbranded and unapproved foreign drugs, which is illegal. Full stop. Full stop. She says the FDA's personal importation policy doesn't allow what AFPs do. The policy is such that it allows for very exceptional instances for importation of products when an individual cannot obtain a product that is approved in the United States.

9:07So if it's not approved or available clinically in the U.S., an individual can obtain a product from a foreign source, assert that they are importing that product for themselves, and then bring that product under a limited supply of 90 days into the United States. And that product cannot be commercially brought into the U.S. So in an instance in which a patient is receiving by mail a drug that is approved for use in the United States, but the drug is coming from outside the United States, is there any circumstance under which that is legal? No. There's no gray area here? There's no gray area when the product is approved in the United States and they are being commercially purchased and brought into the United States.

9:56There is not a gray area. Do you think patients are aware of this practice, that there's something wrong with it, that it might not be legal or allowed? I don't think that the average patient understands that the products that they're getting are not FDA approved. And I don't think the average patient understands the complicated nature of the distribution practice that's happening. Another beautiful day. Bruce Zimmerman is one of those patients. A Florida-based AFP called PriceMDs has taken foreign importation one step further, according to documents we reviewed. going so far as sending patients to the Cayman Islands and Bahamas on all expense-paid trips so they can pick up their medications themselves.

10:43Bruce and his wife Becky took several of these luxury trips, courtesy of PriceMDs, between 2019 and 2021. We interviewed them about the program near their home in St. Helena Island, South Carolina. Let's talk about why we're here. Bruce, when were you diagnosed with multiple sclerosis? 2017 was the official word from the doctor. How has life changed since that diagnosis? Oh, it's a lot harder. Just walking off a set of stairs is an obstacle for me. It's not just an inconvenience. I worry about falling. He says his boss told him about PriceMDs, an optional program the company was offering. They stressed that to me.

11:26It's the exact same medication that I was taking at the time. When you heard about this program from your boss and you go home to Becky and you tell her about it, what was your reaction? Is this even legal? That was my first thought. Despite their initial hesitation, the couple took multiple all-expense-paid trips after the first one went off without a hitch. We tried to take in all that we could. We went swimming with stingrays. We went to Starfish Point. You know, I went scuba diving. I got a license so I could scuba dive and then took three scuba diving trips. It's just, there's so much to do.

12:03And how many times did you do this? I went to the Cayman Islands four times. Bruce went five and then we went to the Bahamas and we did that three times. And each time they would bring back a free three-month supply of Avonex, The medication Bruce took for his multiple sclerosis, which currently retails for more than$2 ,100 per weekly dose. When it was up, time to call him and get another flight. Based on what you saw, do you still believe that the medicine that you received would be the same as if you walked down the street to the pharmacy here? I do. Yep. And the first time I got the medication, I looked at it just to make sure, and it was exactly the same stuff, same plant.

12:47Everything. Same packaging. But Turkish customs data we analyzed show that PriceMDs, as previously rerouted shipments of Avonex, meant for one country or market and sold it through unauthorized channels. The data show that from 2020 to 2023, around the same time Bruce and Becky were making these trips, PriceMDs sourced Avonex originating in Germany, which passed through customs in Turkey via a Turkish exporter, then made its way to the Cayman Islands, Bahamas, Switzerland, or the United States. Biogen, the manufacturer of Avonex, told us this route is not part of Biogen's authorized supply chain and that it does not have any direct customers or ship-to locations in either the Cayman Islands or Bahamas.

13:33The company added it condemns any illegal trade in pharmaceutical products. And Avonex is just part of the picture. Since 2020, Turkish customs data also shows PriceMDs has imported more than 1 ,200 drugs valued at more than$2.7 million to various countries. And that's just the drugs that can be traced through Turkey. PriceMDs declined to comment on this story. Does that concern you at all? That the drug may be coming from a place it's not supposed to be coming from? And I would want to dive a little deeper into that. I see your wheels turning in your head, Becky. Well, because I'm thinking, OK, I can easily say, well, it doesn't concern us now because we're not in that program.

14:19But there are people that are still in that program and I would be concerned for them. Today, Bruce no longer uses PriceMDs. He left the employer that offered it after his MS progressed to the point where he couldn't do his job anymore. Now, he says, his new insurance doesn't consistently cover the medication he needs. When we talked to the special agent, we were discussing this because there's an investigation to these types of programs. And essentially, she said that these kinds of programs have found a loophole. Because if those drugs were shipped directly to the United States, that would be illegal and customs would seize them.

14:55But here they have people go abroad and pick up the drugs themselves. I'm in danger of not having any of my medication at all. at least than I had the medication. And at one point, you don't care if it's illegal. If I would have been told that, I'd say, send me the tickets, I'll go again. So legal or not legal, you'd do it again? Yes. If I was faced with it, I would do it again. It's such a desperate thing to think that you might not have your medication at all. In some contracts, AFPs appear to be transferring blame to the patient. Like this one from Canada-based AFP, Canarex. Patients are required to agree they have purchased my medications internationally for personal use and that title to my medication passes to me when my medications are shipped.

15:44It goes on to say patients must release the plan holder, its officers, employees, agents, heirs from any and all causes of actions with respect to errors or omissions by Canarex. It seems like the patient is saying, I'm assuming all liability here. And that's the scheme, is they are trying to avoid being held responsible for this. So even if they write this in a contract, that doesn't mean that they're not violating U.S. federal and state laws. But Johnson says the responsibility falls on the AFP, not the patients. We are viewing our patients in the United States as victims of these crimes. this company is providing them with illicit pharmaceuticals.

16:29And so we would consider that the company itself is the criminal in this scenario, not the patient. Canarex General Counsel Joseph Morris told us his company is following the law. The FDA says it's illegal to import drugs that are available and sold in the United States. I don't think that's what the handbook means, but understand it's a handbook as opposed to a regulation. It's a handbook that's meant to guide the exercise of discretion by FDA officials. And I do think that there are ambiguities built into that too, because what makes a medicine available if you can't afford it? Specifically, the quote is that the policy, personal importation applies if the effect of treatment may not be available domestically.

17:13All of these drugs are in fact available domestically, correct? Well, A, what if they are available domestically? B, they're not available to you, but the treatment is available to you. If you crossed the bridge from Detroit to Windsor and walked into a drugstore in Windsor, and there's the medicine, the same medicine you could buy across the bridge in downtown Detroit, and there it is in Windsor, substantially lower price. So you're interpreting available as affordable? That's a factor in availability, absolutely to be sure. Morris also cites this law that says the Department of Health and Human Services may grant a waiver to individuals on a case-by-case basis for the importation of a prescription drug.

17:53And he says since Canarex contracts directly with the patient, it's the patient who chooses to accept an imported drug. That's the business that Canarex is in. It assists individual American consumers in exercising their right of personal importation, bringing their product to the border, and asking the United States government at the border to adjudicate the lawfulness and appropriateness of their personal importation of the product. And drug safety is a top priority. Morris says Canarex has never had one instance of a counterfeit drug slipping through. In fact, it advertises the highest safety standards and that the medicine shipped to U.S.

18:32patients comes from highly regulated tier one countries like Canada, the U.K., and Australia. Built into my client's program are the safety precautions that ensure that the medicine is real, that it's coming through a legitimate supply chain, that it's coming from a recognized manufacturer, that it is what the patient's doctor is ordering to be delivered to that patient. But one document we obtained shows the FDA was concerned about a possible fake. In 2023, it emailed a Canarex patient who was receiving a menopause gel. The FDA wrote it sees the medication for being potentially misbranded, counterfeit, and said the patient does not qualify to receive this medication under the personal importation policy.

19:19Does this happen often? It happens probably several times a quarter. Sometimes I will advise the individual patient who's made the order how to contact the customs service or whoever is the relevant agency and say, here's who I am, here's what this is, please deliver my medicine. And most of the time, these things are resolved happily. If there are so few seizures or interceptions, why are the ones that are, in fact, intercepted, why do they say that the patient is not qualified to receive it? What makes the difference? On behalf of the patient, I will say boldly, those regulators are wrong. In 2019, Canarex also received a warning letter from the FDA for importing drugs from abroad by operating in a manner that substitutes the FDA-approved drugs prescribed by the U.S.

20:05health care provider with unapproved drugs. Morris says Canarex responded to the FDA in this document that the FDA's description of Canarex and its business model is incorrect, but did agree to stop importing drugs which require a doctor to administer. The FDA told us it could not comment about ongoing compliance issues. Verbois says Morris' interpretation that the agency has discretion is flat out wrong. That is not what is meant by that handbook. Absolutely not. Absolutely not. So it's not just up to the FDA official to decide whether or not this is OK. It is not OK in any circumstance. No. CanRx is not the only AFP on regulators' radar.

20:49In March 2023, the FDA sent a warning letter to ElectRx and Health Solutions, an AFP based in Ohio. The FDA letter said its drug importation program from overseas poses significant health risks to U.S. consumers. The company responded that its personal importation of medicines was legal. Despite the warning, ElectRx this year was still offering medication from overseas through its personal importation program. The company declined to comment on these practices and took its website offline after we reached out for comment. The FDA has not taken further action. Do you think these AFPs should be shut down?

21:27I do think they should be shut down because what they're doing is illegal and it's putting American lives at risk. It could kill a patient. In the meantime, the House Appropriations Committee in June said it has deep concern over the health risks posed by illegal importation of unapproved and misbranded drugs, particularly through AFPs. Given these significant dangers, the committee directed the FDA to provide a comprehensive report on how to strengthen oversight. But for many, using AFPs are the only way to deal with sky-high health care costs. As part of our investigation, we spoke to more than a dozen patients.

22:05And for these employees, from teachers to police officers to retirees, many told us using an AFP is convenient and saves them money. And for others, it's a matter of using an AFP or not getting the prescription at all. But not everyone is comfortable with it. Take the HIV patient who received the Turkish Biktarvi. As you can understand, receiving life-saving medicine from a mysterious source in a language you can't read was quite concerning. They did not know if the product was safe, genuine, and so they reported it to their health care provider. And that's how it landed on your desk? That's right.

22:40Gilead's testing determined that it was real Biktarvi, but intended to be sold in Turkey and not permitted to be shipped to the U.S. So what's the real danger here? It sounds like a lot of the drugs are just coming from another country. This is my choice. You don't know how that product was stored, handled or distributed. And it travels through an illegal supply chain that's easily infiltrated with counterfeits. How did we get here, do you think, in terms of AFPs and this need? It's really a need to save costs on sky-high prescription medicines. Well, AFPs are another middleman, another for-profit company that sits in between the pharmaceutical manufacturer and the patient.

23:27And in the U.S., HIV medicines are fully covered. So you have to really ask yourself, why are they in this business? It has to be for profit. It's not for the patient. They say that they are saving the patient money. They're saving the employer money. So they're saving everybody money on these prescriptions that cost a lot of money. They're promising savings, but they're delivering risks. And when it comes to prescription medicines, prioritizing cost over quality is dangerous. Drugs like the Turkish Biktarvi, she says, pose a critical threat to pharmaceutical companies like Gilead because they violate their intellectual property rights and undermine the safety and regulatory oversight of their drug supply chains.

24:09Which is why Gilead filed a lawsuit last December to block the shipment of its medications from overseas. Among the companies targeted is Meritain Health, part of Aetna, which is owned by CVS Health. Meritain contracted with a company that used an AFP called RxValet, which is also a defendant, to supply high-cost medication to insured patients. I've been in health care for a good 30 years, so most of my career. Greg Santulli is the CEO of RxValet and president of Advanced Pharmacy, a mail-order pharmacy that handles prescriptions in the U.S. He says RxValet sources high-cost specialty medications from Canada, Australia, and New Zealand, and that it is legal and safe.

24:53Let's talk about the Gilead case if we can. The patient got Biktarvi that was mailed from a Turkish pharmacy. What happened there? So in some cases, we do order some medications from some other countries like Turkey. They have a very sophisticated track and trace policy for medications, which in some regards is as good, if not better, than the United States. Is Turkey a tier one country? Turkey is not a tier one country, but it is a sophisticated country. In fact, Turkey is one of the world's largest suppliers of counterfeit medicines, according to the Office of the U.S. Trade Representative. You've been in the healthcare industry for a long time, so you know that Turkey is well known for being an epicenter of counterfeit drugs.

25:36Isn't that a concern of yours? I mean, of course it's a concern. However, we have a very strong vetting process. Affordable RxMeds, whose label was on the Turkish Biktarvi, is a prescription referral service located in this nondescript Florida building, which Santuli says he works with to obtain the medications from overseas. Affordable RxMeds did not respond to our request for comment. Have you read the FDA guidelines? Yes, I have. So then you will know that that's what it says, that it's illegal to import drugs that are widely available in the United States. It's actually legal to bring across drugs for a disease for which there is no effective treatment known in the United States.

26:15It actually does say for personal use, if you can bring a drug into the United States for personal use, as long as you have a prescription, no more than a 90-day supply, physician's watching you for the disease state, and the drug's been approved in the United States. It's in the documents. The FDA tells us specifically, we asked specifically about this business model, and they told us it is illegal to import drugs that are available and sold in the United States. Those are exactly the drugs that you import, correct?

26:47I have no comment. You still think that what you're doing is a public service. Is that right? 100 percent we do a public service we help people get access to medications people who would not be able to take medications he says his own parents had taken medication shipped from overseas for years with no problems are you putting patients lives at risk if i was putting lives at risk i put my own parents at risk so no we're not putting at risk unfortunately Certainly, sometimes there's bad actors out there, and it does open up an opportunity for bad actors. However, there's a lot of good actors in this industry, and my company is one of those.

27:30AFPs tell us that they're doing a public service that, without them, patients would not be able to receive the medicines they or their family needs, because the choice is either use these medicines that they receive from the AFP or not get medicine at all, because they would have to pay for it out of pocket, and that's not affordable. What I tell my friends and family is that the most expensive medicine that they could get is one that isn't safe, isn't effective, or isn't high quality and doesn't meet the standards that are in FDA approved medicines. AFPs are not providing those measures to ensure that patients are getting safe, high quality and effective medicines.