Update Regarding the Importation of Prescription Drugs: Canadian Importer, President Plead Guilty

At the same time, I noted that such importation remains illegal under U.S. law, and all of those engaged in such activity, especially on a commercial level, risk prosecution.  I observed that notwithstanding these risks, several large Canadian companies remain involved in such importation activity on a broad scale, including the major Canadian prescription drug importer, CanadaDrugs.com. (Canada Drugs).²  One wondered how the United States Department of Justice (DOJ) under the current political administration, which has bemoaned the high prices of prescription drugs, would weigh in on this issue. 

That question was answered this month, with the criminal prosecution of Canada Drugs and its President by federal prosecutors in Montana.

In that case, captioned UNITED STATES OF AMERICA V. CANADADRUGS.COM LTD. PARTNERSHIP, ET. AL.,³ Canada Drugs, an online pharmacy located in Canada, and multiple subsidiaries and corporate officers, were originally charged in a 46-page indictment with several crimes, including felony smuggling and international money laundering, carrying up to 20 years’ imprisonment.⁴  The case was resolved on April 13, 2018, with the entry of a guilty plea by Canada Drugs and two subsidiaries to a principal felony charge of importing non-FDA approved prescription drugs in violation of Title 21 U.S.C. 331(a) and 333(a)(2).⁵  The same day, the corporation was sentenced to five years’ probation, fined $5 million, ordered to make restitution in the amount of $30,250 to Eli Lily, a U.S. manufacturer adjudged to be a victim of the offense, and ordered to forfeit to the DOJ an additional $29 million.⁶  In addition, the President of Canada Drugs pleaded guilty to a felony charge of misprision of a felony and was sentenced to five years’ probation and a $250,000 fine.⁷      

As part of their guilty plea, the defendants admitted that the proceeds from the drugs they imported into the United States from Canada from 2009 through 2012 totaled at least $29 million, which the defendants agreed to pay to the United States by wire transfer on the date of sentencing.  Defendants also agreed to “permanently cease” the importation of all such drugs into the United States.⁸

In addition, the defendants agreed to cooperate fully with U.S. law enforcement authorities, to include making their owners, executives, independent contractors, and employees available “to provide information and/or testimony as requested by FDA’s Office of Criminal Investigations or the United States Attorney’s Office for the District of Montana, including sworn testimony before a federal grand jury or in federal trials, as well as interviews with federal law enforcement authorities.”⁹   They further agreed to surrender all information evidencing their sales of drugs to U.S.-based physicians, clinics, and hospitals, and any other individual,¹⁰ which request for cooperation carries with it the implicit suggestion and possibility that additional prosecutions may follow.  Practitioners, entities, and others who were recipients of these drugs may be the subject of further criminal investigation or administrative action as a result of these events.  In other words, anyone who procured the drugs from the Canadian defendants may be in harm’s way.     

In its sentencing memorandum, the government stated: “Canada Drugs’ business model was based on illegally importing unapproved and misbranded prescription pharmaceutical drugs into the United States from abroad and selling the drugs illegally to consumers throughout the United States in violation of 21 U.S.C. § 331(a).”¹¹  

The same can be said for a great many companies currently operating in Canada, selling prescriptions drugs to U.S. consumers, and doing so in a manner that is open and notorious.  One would think the Montana prosecution will have a chilling effect on all of this importation activity given the serious consequences that resulted to Canada Drugs.  Such prosecutorial action may also put greater pressure on Congress to locate some mechanism for allowing U.S. consumers cheaper prices for prescription drugs.  Only time will tell.  In the meantime, medical providers, facilities, and consumers should be very wary and aware of the legal consequences of importing non-FDA approved prescription drugs.  

1.  ABA Health eSource, Vol. 14 No. 7, March 2018, Importing Prescription Drugs Remains Risky Business Due to FDA and DEA Regulation, by Ronald J. Friedman, https://www.americanbar.org/groups/health_law/publications/aba_health_esource/2017-2018/march2018/importing.html.
2.  Id. at note 28.
3.  Case No. 2:14-cr-00027-DLC (USDC, District of Montana).
4.  Id. at Docket # 54 (Superseding Indictment).
5.  Id. at Docket # 152 (Plea Agreement, CanadaDrugs).
6.  Id. at Docket #183 (Criminal Judgment, Canada Drugs).
7.  Id. at Docket #s150 and 189 (Plea Agreement and Criminal Judgment, Thorkelson).
8.  Id. at Docket # 152 (Plea Agreement, pp. 4-6, Canada Drugs).
9.  Id. at Docket # 152 (Plea Agreement, p. 8, Canada Drugs).
10.  Id. at Docket # 152 (Plea Agreement, pp. 8-12, Canada Drugs).
11.  Id. at Docket #173 (Government Sentencing Memorandum, page 5, Canada Drugs).