Canadian Online Pharmacy Sentenced to Pay Nearly $35 Million for Smuggling Unapproved Drugs
A Canadian online pharmacy will pay nearly $35 million, and its owner will serve six months of house arrest and five years of probation, as part of a plea deal to charges that it smuggled misbranded and unapproved drugs and distributed counterfeit medication. CanadaDrugs.com and a web of affiliated companies pleaded guilty in December to undervaluing its entries to evade scrutiny as it distributed foreign drugs to doctors in the United States. A Montana federal judge sentenced the companies and Canada Drugs’ CEO, Kristjan Thorkelson, on April 13.
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According to court documents, Canada Drugs relied on several “drop shippers” in the U.S. to send drugs to doctors. The company routinely valued its shipments at under $2,000 to avoid having to file formal entries, even though the drugs in each shipment were often worth more. The scheme even attracted the scrutiny of one of the drop shippers’ customs brokers, who suspected one shipment in particular was worth more than declared and also inquired as to whether the drugs were FDA-approved. Representatives of Canada Drugs reassured the broker that it worked with CBP and FDA to make sure its imports were compliant.
In fact, those imports included a variety of drugs, many for the treatment of cancer, that were unapproved by FDA or misbranded. Many were labeled in foreign languages, or failed to note that they were prescription only. Some were cold-chain drugs that required special storage, but were delivered to customers warm and returned. The company also sold counterfeit Avastin, a cancer drug, imported from the EU, that was missing any active ingredient, and attempted to cover up the issue once discovered, rather than report it to the FDA or other authorities, the court documents said.
Per the terms of their plea agreements, the Montana U.S. District Court ordered Canada Drugs and its affiliates to pay a $5 million fine and $29 million in restitution, as well as more than $30,000 in restitution to Eli Lilly. Thorkelson’s sentence of house arrest and probation is for misprision of a felony, a crime consisting of failure to report a felony to authorities. As part of their plea deals, each of the companies agreed to “permanently cease any sales of unapproved, misbranded, adulterated or counterfeit drugs in the United States through the internet or otherwise.”
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