U.S. authorities are accusing the 2 prime officers of a Canadian firm of working a long-running scheme to illegally import prescribed drugs into the U.S., in response to courtroom data filed Tuesday.
John Thomas Howard, treasurer and a director of the corporate, CANARX, was arrested Sunday on smuggling and conspiracy expenses, in response to the data.
Bob Howard, his brother, who’s president and a director of CANARX, can also be needed within the federal investigation, in response to an affidavit from Dustin Dobbs, a particular agent with the Meals and Drug Administration’s Workplace of Felony Investigations. He has not but been taken into custody.
In addition to conspiracy and smuggling, the arrest warrant stated John Thomas Howard was charged with introducing misbranded medicine into interstate commerce and unlawful drug importation. No plea has been filed.
CANARX was featured in a CNBC investigation final yr that exposed how the corporate and others referred to as various funding packages, or AFPs, have gotten extra pervasive across the U.S. as drug prices skyrocket. The investigation discovered these firms have penetrated the nation’s healthcare system by providing high-cost specialty medicine at extra inexpensive costs by way of personal and public employers. In some instances, employers are requiring their workers to make use of an AFP.
AFPs typically acquire the medicines abroad and ship them on to sufferers, a follow that federal authorities have stated is prohibited and poses security dangers. CNBC traced the path of medicine from overseas to the U.S. through a provide chain that the pharmaceutical firms producing the medicines haven’t approved.
On its web site, CANARX, based in 2002 and based mostly in Windsor, Ontario, Canada, described its enterprise as the primary worldwide prescription supplier for the U.S. and the most secure such program within the trade. The corporate stated it sources its medicines from Canada, the UK, Australia and New Zealand.
However the affidavit stated that the FDA’s investigation discovered “there may be possible trigger to imagine that (CANARX) illegally imported or precipitated the unlawful importation of prescribed drugs into the US ….”
The affidavit doesn’t specify which medicines the company believes had been illegally imported. The prison criticism covers the interval from Feb. 22, 2017, by way of April 15, 2026.
The corporate’s normal counsel, Joseph Morris, advised CNBC in a press release: “The Howards deny all the costs towards them, will defend vigorously, and count on to be vindicated in courtroom.”
The corporate has been underneath FDA scrutiny for a number of years. In 2023, the company seized treatment being shipped by CANARX that it says was probably misbranded and counterfeit, in response to an electronic mail despatched to a affected person that was obtained by CNBC.
And in 2019, the FDA despatched a warning letter to the corporate, saying it was working “in a fashion that substitutes the FDA-approved medicine prescribed by the U.S. healthcare supplier with unapproved medicine.” Morris, in response to that warning, argued CANARX was not deceptive sufferers, however agreed for the corporate to cease importing medicine that should be administered by a physician.
In an interview as a part of the CNBC investigation, Morris stated final yr that the medicines shipped to U.S. sufferers come from extremely regulated nations. He stated CANARX was working legally.
The central query for AFPs is the legality of importing prescribed drugs into the U.S. for private use. The FDA permits People to import medicines for particular person use in some instances if the drug isn’t out there domestically. That’s the foundation on which the AFPs constructed their fashions for delivery medicines on to sufferers.
However an FDA spokesperson advised CNBC final yr that “in most circumstances, an individual can not import prescribed drugs from different nations into the U.S. … as substitutes for FDA-approved medicine.”
In a separate civil lawsuit that’s pending, Gilead Sciences accused CANARX and different firms of illegally importing Biktarvy, its treatment to deal with HIV.
In a press release to CNBC on Wednesday, a Gilead spokesperson stated the corporate “has taken robust authorized motion to guard sufferers and the integrity of the U.S. medicines provide chain. We welcome the federal government’s efforts to carry accountable these whose conduct could put sufferers in danger.”
CANARX has not responded to the Gilead lawsuit.
— CNBC’s Paige Tortorelli and Melissa Lee contributed to this report