Money laundering. Customs forms falsifications. Conspiring with a supposedly “impartial” Internet pharmacy certification program to sell fake cancer medicines to unsuspecting doctors and clinics — and then giving that certification program’s employee an all-expenses paid trip to a tropical island. Sound like the plot of a John Grisham novel? In fact, it’s straight from a fascinating, deeply disturbing federal indictment unsealed last week by the US Department of Justice against CanadaDrugs, several of its employees, and a current or former employee (or possibly contractor) of PharmacyChecker, a supposedly “independent” US-based Internet pharmacy verification program.
Indicted along with CanadaDrugs and several of its principals is Dr. Ram Kamath, the “Director of Pharmacy Policy and International Verifications” for PharmacyChecker. Allegedly, Dr. Kamath certified CanadaDrugs as safe and legitimate after accepting money and a paid trip from CanadaDrugs to Barbados despite being aware that the company was using an illegal and unsafe drug supply chain (and having just hid some of CanadaDrugs' counterfeit drugs in his garage).
At the core of this indictment is CanadaDrugs’ alleged sale of counterfeit Avastin, a prescription-only medicine, to doctors and clinics in the US — information that was originally known three years ago. But the indictment pulls the curtain back on the way in which PharmacyChecker apparently conspires with illegal online pharmacies to, in the words of the indictment, provide a (false) “veneer of legitimacy.”
PharmacyChecker, in its blog this week, threw every excuse it could find at the problem. The company’s argument appears to boil down to a couple of points. First, PharmacyChecker argues, CanadaDrugs was only selling counterfeit drugs through its wholesale distribution system (to doctors and clinics), not directly to patients — so, therefore, its online pharmacy is still legitimate and safe. (Oh, okay.) This ignores the point that CanadaDrugs is using the same unapproved, illegal supply chains for its entire business — and the drugs aren’t really coming from Canada in most cases, as PharmacyChecker full-well knows. PharmacyChecker’s second point trots out the tired old argument that this is all a huge conspiracy led by Big Pharma. (Right … so, Big Pharma planted the counterfeit drugs in Dr. Kamath’s garage, then?)
At any rate, there are 10 important takeaways, in my view, from the indictment.
Ten Important Take-Aways: CanadaDrugs / PharmacyChecker Employee Indictment
1. When they sell to US residents, Canadian Internet pharmacies aren’t really selling drugs from Canada. The indictment indicates that CanadaDrugs was not really shipping drugs from its Canadian pharmacy. Rather, it was routing drugs that originated in Turkey and other locations through the UK and Barbados to US drop-shippers. The fake drugs were traced back to Egypt.
2. The medicines were fake. The cancer medicines were fake, and contained no active ingredient.
3. Cold-chain drugs were stored at too-warm temperatures, returned and then resold to other customers in their adulterated state. Some drugs, like insulin, must be kept at a certain (cold) temperature. Even when the cold-chain drugs — not really from Canada — exceeded that temperature during the illegal shipping process and should have been discarded for safety reasons, CanadaDrugs simply re-refrigerated them to resell to another customer.
4. CanadaDrugs was raking in the profits from the sale of drugs, including counterfeits, to US residents. The indictment states that CanadaDrugs was making roughly $20 million a year from selling unsafe drugs to US residents.
5. After it became aware of the FDA investigation, CanadaDrugs took steps to cover up its counterfeit drug sales, moving the drugs offshore, and continued selling illegal drugs to US residents. CanadaDrugs knowingly tried to evade US law enforcement.
6. CanadaDrugs knowingly engaged in illegal activity, putting patients at risk. CanadaDrugs knowingly sold counterfeit, misbranded and/or unapproved drugs to US patients — not just Avastin — for years.
7. The Canadian International Pharmacy Association certifies Canadian online pharmacies — and is run, in part, by CanadaDrugs. CIPA “certifies” Canadian pharmacies shipping to US residents as legitimate, including canadadrugs.com. Its seal is relied upon by millions. But it is not an independent certification organization: according to the Canadian corporation database, its six directors include Brock Gunter Smith, the Chief Business Development Officer for CanadaDrugs. Five out of six of the other CIPA board members work for a similarly illegal online pharmacy that is CIPA approved, meaning that CIPA is bootstrapped -- run by the very online pharmacies it purports to certify.
8. CanadaDrugs lied, and falsified US Customs records to smuggle illegal drugs into the US. CanadaDrugs claimed that it “worked closely” with the FDA and Customs to ensure that drug importation was conducted legally and safely. That was a lie. No such coordination occurred, and CanadaDrugs falsified Customs records to smuggle illegal drugs into the US.
9. A PharmacyChecker employee helped store the counterfeit drugs in his garage. Ram Kamath, “Director of Pharmacy Policy and International Verifications” for PharmacyChecker, allegedly helped store the counterfeit cancer medicine in his garage, and was indicted as a co-conspirator.
10. PharmacyChecker approved CanadaDrugs as legitimate despite knowing that CanadaDrugs used an illegal and unsafe supply chain. Just weeks after Dr. Kamath stored the counterfeit drugs in his garage, he accepted from CanadaDrugs an all-expenses paid trip to Barbados, where he “inspected” CanadaDrugs’ warehouse and thereafter certified the company as a legitimate online pharmacy, despite being aware of the counterfeit drug problems.