Government Enforcement of Foreign Online Retail Pharmacies
By Natalya Bull, Senior Attorney, Smith Pauley
Although the federal government has generally refrained from acting against individuals who import unapproved drugs for personal, non-commercial use, it has issued a myriad of warning letters, seized shipments of illegally imported pharmaceutical drugs, issued injunctions, and shuttered online pharmacies that have sold non-FDA approved drugs. In more egregious instances, where the online pharmacies sold counterfeit medications or offered controlled substances without the appropriate Drug Enforcement Administration (DEA) licensure, the federal government pursued criminal charges against the individual pharmacy owners.
The Federal Food, Drug, and Cosmetic Act (FFDCA) prohibits the importation of foreign drugs that have not been approved by the U.S. Food and Drug Administration (FDA). However, there are three notable exceptions through which individuals and entities may circumvent this general prohibition. This article delves into these exceptions, which hold significant implications for both the personal and commercial importation of foreign drugs and which may play a critical role in expanding access to affordable drugs.
U.S. Government Pursues Criminal Penalties:
The U.S. government has pursued criminal penalties against Canadian pharmacies that ship counterfeit drugs into the United States. For instance, the Department of Justice sentenced a Canadian pharmacy owner to four years in prison and ordered him to pay a fine of $325,000 for selling counterfeit drugs to U.S. citizens through his online retail pharmacy.[1] The Canadian pharmacy owner falsely represented that his company sold prescription drugs that complied with Canadian, UK, and U.S. regulations when, in reality, the online pharmacy obtained its drugs from other countries without ensuring their safety or authenticity.[2] In another case, the operators and wholesale affiliates of a prominent Canadian internet pharmacy were found guilty of illegally importing a counterfeit version of a chemotherapy drug to U.S. physicians and medical practices.[3] The counterfeit versions sold by the pharmacy were adulterated with corn starch and acetone and contained no active pharmaceutical ingredient.[4] In response, the Department of Justice seized the pharmacy’s online website, sentenced the pharmacy and its subsidiaries to five years probation, fined the pharmacy $5 million, and forced it to forfeit an additional $29 million in revenue.[5] In addition, the pharmacy CEO was sentenced to six months’ house arrest and five years’ probation, and fined $250,000.[6]
The government’s enforcement activities against the online sale of counterfeit pharmaceuticals have also extended to businesses that act as middlemen between Canada-licensed pharmacies and U.S. employer-sponsored health insurance plans. On February 26, 2019, the FDA sent a warning letter to a Canadian drug distributor for introducing unapproved and misbranded drugs into interstate commerce.[7] The Canadian drug distributor obtained U.S. patients’ drug prescriptions, which were issued by U.S.-licensed physicians, and had the prescriptions copied by a Canada-licensed physician.[8] The distributor would then substitute FDA-approved drugs prescribed by the U.S. prescription with similar foreign drugs, which the FDA warned could have been contaminated, counterfeit, contain incorrect amounts of active ingredients, or contain entirely different ingredients.[9] Although the government did not take any criminal or civil action against the middleman, its Warning Letter to the company and demand for the company to cease its improper activities indicates an ongoing government vigilance of online pharmacies and their business associates.[10]
Takeaways for Foreign Online Pharmacies:
A review of the Department of Justice and FDA’s actions against online pharmacies that sell foreign drugs to U.S. citizens indicates that the U.S. government is actively monitoring and occasionally enforcing the virtual pharmaceutical landscape. Although the government has limited its enforcement activities to online pharmacies that sell counterfeit drugs or controlled substances to U.S. citizens, foreign online pharmacies should remain vigilant of U.S. laws concerning the sale of foreign drugs to U.S. citizens. In order to avoid potential U.S. government enforcement, online retail pharmacies based in Canada would be well advised to exclusively sell drugs that have been approved by Health Canada, the official federal body that regulates the drug approval process in Canada, and to ensure that the drugs are manufactured and stored exclusively in Canada, and in compliance with Canadian pharmaceutical regulations.
In conclusion, these three exceptions offer a potential pathway for circumventing the prohibition against the importation of foreign drugs into the U.S. While the FFDCA aims to safeguard public health by ensuring the safety and efficacy of pharmaceuticals, these exceptions are a recognition that certain circumstances, such as lack of access to affordable and safe drugs, warrant a more flexible interpretation of our health law policies. These exceptions represent the Government's attempt to negotiate a delicate balance between safeguarding public health expanding individual access to affordable healthcare and meeting the demands of the free market.
As the healthcare landscape continues to evolve, a comprehensive understanding of these exceptions will remain crucial for those navigating the intricate terrain of pharmaceutical importation in the United States. Questions about how this could affect your business, or need to discuss other legal matters? Don't hesitate to reach out to our team at Smith Pauley. We're here to assist and guide you in these ever-changing times. You can contact us at 402-392-0101.
Natalya Bull focuses her practice on regulatory healthcare compliance, medical reimbursement, healthcare fraud and abuse, and the FDA regulatory clearance and approval processes. Natalya graduated from the American University Washington College of Law (WCL) and the University of Florida, cum laude. She received her bachelor’s in political science, with a minor in French, and studied abroad at the Paris Institute of Political Science (Sciences Po). As a law student at WCL, she served as Dean’s Fellow to the U.N. Special Rapporteur on Torture, the Honorable Juan Mendez; the content editor for the WCL Legislation and Policy Brief; and a dedicated member of the Student Animal Legal Defense Fund.
[1] See U.S. Dep’t of Justice, Press Release: Canadian Citizen Sentenced in Scheme to Defraud Consumers Purchasing Pharmaceuticals Online (Jan. 9, 2013), https://www.justice.gov/opa/pr/canadian-citizen-sentenced-scheme-defraud-consumers-purchasing-pharmaceuticals-online.
[2] Id.
[3] See U.S. Dep’t of Justice, D. Mont., Press Release: Canadian Drug Firm Admits Selling Counterfeit and Misbranded Prescription Drugs Throughout the United States (April 13, 2018), https://www.justice.gov/usao-mt/pr/canadian-drug-firm-admits-selling-counterfeit-and-misbranded-prescription-drugs.
[4] Id.
[5] Id.
[6] Id.
[7] See U.S. Food & Drug Admin., MARCS-CMS 554740, Warning Letter CanaRx Services Inc. (Feb. 26, 2019).
[8] Id.
[9] Id.
[10] Id.