Indictment alleges the company falsified customs declarations by placing low values on its shipments
HELENA, Mont.—U.S. government prosecutors are accusing an online Canadian pharmacy of selling $78 million worth of unapproved, mislabelled and counterfeit drugs to doctors across the United States over three years.
An indictment filed in U.S. District Court in Montana charges Canada Drugs and its affiliates in the United Kingdom and Barbados with smuggling, money laundering and conspiracy. Thirteen of the 14 companies and individuals named as defendants are located outside the U.S. and have not appeared to face the charges, leading prosecutors to undertake a possibly lengthy extradition process.
The 14-year-old Winnipeg company’s website describes itself as offering low prices on medicine from Canada, the U.K., Australia and New Zealand. A company spokesman and its attorney did not return calls Monday.
The medicines named in the criminal indictment are mainly clinical drugs that treat cancer or the effects of chemotherapy. Nearly all of the drugs are legal in the U.S. when sold by FDA-approved manufacturers and marketers.
Health Canada suspended the company’s establishment licence in June, 2014 over what it called “significant concerns” about its manufacturing practices.
Canada Drugs’ affiliates bought their non-FDA authorized or mislabeled drugs abroad, and shipped them to the United States to sell to physicians at lower prices compared to the U.S. equivalents, according to the indictment. The money would go to the company’s Barbados affiliate, which would then send the profits to Canada, the indictment said.
Prosecutors said sales went on until 2012, when the FDA began investigating the company’s involvement in distributing counterfeit versions of the cancer drug Avastin. The company’s U.K. affiliate, River East Supplies, had bought another supplier’s inventory of Avastin that included some counterfeits. At least one of the counterfeits was sold to a U.S. physician, prosecutors said.
The company also sold a non-U.S. approved Turkish version of Avastin, called Altuzan, to U.S. doctors, and that shipment included counterfeit packs of the medicine, according to prosecutors.
The indictment accuses the company of falsifying customs declarations by placing low values on its shipments to avoid scrutiny by U.S. customs officials. When the drugs arrived at warehouses in the U.S., they sometimes were not stored properly, the indictment alleged.
The grand jury returned the original indictment in November 2014, but the case in Montana federal court was under seal until this month. It was unsealed to allow the case against the one defendant living in the U.S., Ram Kamath of Downers Grove, Illinois, to move forward while prosecutors attempt to extradite the other defendants.
Kamath was the director of pharmacy policy and international verifications for an unnamed Illinois entity. Prosecutors said Kamath agreed to temporarily store some of the company’s Avastin supplies in his house when Canada Drugs was shipping its inventory back to the U.K. amid the FDA investigation.
Kamath has pleaded not guilty to a smuggling conspiracy charge. He is scheduled to appear in court later this month. His attorney, Michael Sherwood, declined to comment on the case.
Canada Drugs first came to the attention of federal prosecutors in Montana after the company in 2010 bought the customer list and inventory of Belgrade-based pharmaceutical company called Montana Healthcare Solutions. The acquisition of that and other companies already selling drugs to U.S. physicians allowed Canada Drugs to begin its direct sales of cancer drugs to doctors, prosecutors said.
The former owner of Montana Healthcare Solutions, Paul Bottomley, pleaded guilty in 2013 to failing to report his company sold counterfeit cancer drugs.