US charges Cana­dian com­pany with smug­gling


An online Cana­dian phar­macy sold US$78 mil­lion worth of un­ap­proved, mis­la­beled and, in two cases, coun­ter­feit can­cer drugs to doc­tors across the United States over three years, U.S. gov­ern­ment pros­e­cu­tors said.

An in­dict­ment filed in a court in the north­west­ern U.S. state of 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 UK, 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 U.S. Food and Drug Ad­min­is­tra­tion- ap­proved man­u­fac­tur­ers and mar­keters.

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 in- volve­ment in dis­tribut­ing coun­ter­feit ver­sions of the can­cer drug Avastin. The com­pany’s UK 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.

Coun­ter­feit Ma­te­rial

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 UK 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 Mon­day.

Canada Drugs first came to the at­ten­tion of fed­eral pros­e­cu­tors in Mon­tana af­ter the com­pany bought the cus­tomer list and in­ven­tory of a Bel­grade, Mon­tan­abased phar­ma­ceu­ti­cal com­pany called Mon­tana Healthcare So­lu­tions in 2010. 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.

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