Companies controlled by the online pharmacy Canada Drugs have agreed to plead guilty to US federal court charges of selling counterfeit and misbranded pharmaceuticals in the US.
The filed plea deal ends a multi-year investigation that began with the discovery of fake cancer medications on the market, which the Winnipeg-based online pharmacy sold to patients and doctors over a three-year period ending in 2012.
Under the deal, which still has to be approved by a US district court in Montana, Canada Drugs and its Barbados and UK subsidiaries, Rockley Ventures and River East Supplies, have agreed to forfeit $29m, which they said equalled the proceeds from the illegal sales from 2009 to 2012.
The deal also requires the company to pay a fine of $5m, surrender its internet domain names and cease all US sales of counterfeit, misbranded or adulterated drugs.
In a separate plea agreement, Kristjan Thorkelson, the founder and president of Canada Drugs, agreed to plead guilty to a charge of having knowledge of the commission of a felony but failing to promptly report it to authorities and concealing the crime.
Thorkelson’s agreement will see him pay a fine of $250,000 and serve six months of house arrest, followed by five years of probation.
A spokesperson for the US Food and Drug Administration (FDA) said it could not comment on the case while it is still before the courts.
Founded in 2001, Canada Drugs is well known for selling low-cost cholesterol and asthma medications, sourced from Canadian suppliers, to US consumers through its website, CanadaDrugs.com.
However, in 2012 an investigation by the Wall Street Journal found that Canada Drugs had started buying pharmaceuticals from other countries that drug-safety experts said had problems with counterfeiting and lax regulation.
It said the company had begun selling foreign-made medications to US doctors attracted by the lower prices, which they had administered to patients.
The sale of such foreign-made drugs in the US is illegal and considered misbranding because they are not made in facilities inspected by the FDA or labelled in accordance with US law.
The investigation also found that in 2011, the companies controlled by Canada Drugs had sold counterfeit batches of the cancer drug Avastin to US doctors. In 2012 the FDA issued a warning that fake Avastin, a cancer drug, had been found on the market, which did not contain the active ingredient in legitimate Avastin.
At the time, the FDA was notifed after doctors at a Californian practice found no national health code on a supply of Avastin. After an investigation, the FDA found that the fake drugs came from an overseas supplier called Quality Specialty Products, which does business in the US with distributor Montana Healthcare Solutions.
Canada Drugs also obtained their counterfeits from Montana Healthcare Solutions.
Thorkelson and several other Canada Drugs officials were indicted in 2015, leading to their arrest by Canadian authorities in June 2017 under an extradition request from the US.
Others Canada Drugs employees charged with selling counterfeit drugs include chief financial officer Ronald Sigurdson, president of the two subsidiaries Thomas Hughton, director of clinical sales and clinical manager Troy Nakamura.
A sixth man, James Trueman, is awaiting an extradition hearing in British Colombia and is accused of serving as a liaison between Canada Drugs and its shippers in Illinois and Washington state.
The Canadian Department of Justice told CBC that the men have been released on bail, on conditions including surrendering their passports and not moving without notifying authorities.
It added that Trueman’s extradition hearing is scheduled for May 2018.
The plea agreed by Canada Drugs and US prosecutors state that if the court accepts the agreements, prosecutors will dismiss the charges against all defendants, including the other Canada Drugs executives.
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