Canada Drugs reaches plea deal over sale of counterfeit drugs

A tentative plea agreement has been reached that would see a Winnipeg-based online pharmacy and two affiliated businesses fined millions of dollars for selling misbranded and counterfeit drugs in the United States.

The agreement, which still has to be approved by a U.S. district court in Montana, would see Canada Drugs and two subsidiaries plead guilty, pay a US$5 million fine and forfeit US$29 million.

A separate plea agreement for the company’s president, Kris Thorkelson, would see Thorkelson pay a $250,000 fine and serve six months of house arrest followed by four and a half years of probation.

The deals would also require the company to surrender its domain names and stop any distribution of unapproved or misbranded drugs in the U.S. Canada Drugs was charged with selling counterfeit cancer drugs online over a threeyear period ending in 2012.

The U.S. Food and Drug Administration would not comment on the matter, and calls to Canada Drugs, Thorkelson and the company’s lawyer were not returned.

Winnipeg was the centre of a boom in online pharmacies in the early 2000s. Sales of relatively inexpensive Canadian drugs into the U.S. market grew rapidly, but the industry later consolidated as the Canadian supply became tighter.

A plea agreement filed in the Montana court says Canada Drugs and its affiliates will forfeit an amount that reflects, at a minimum, what they earned.

The Canadian International Pharmacy Association, a group that represents more than 60 pharmaceutical websites, said Friday the charges relate only to former wholesale sales by Canada Drugs to clinics and other operations. The company continues to offer direct sales to individuals in the United States.