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. CanadaDrugs.com Director of Pharmacy Robert Fraser, left, takes then-Governor of Minnesota Tim Pawlenty, second from left, on a tour of the internet pharmacy, in Winnipeg. (Photo by THE CANADIAN PRESS)

Tentative deal reached in case of Canadian firm that sold cancer drug online

WINNIPEG — 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 three-year period ending in 2012.

The U.S. Food and Drug Administration would not comment on the matter while it is still before the courts, 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 defendants admit that proceeds from misbranded and counterfeit pharmaceutical drugs they distributed … from January 2009 to January 2012 totalled at least $29 million in United States currency,” the document reads.

The Canada Drugs website continued to be up and running Friday.

A Health Canada inspection registry shows the company had its Drug Establishment Licence suspended by the department in 2014 after an inspection found several deficiencies including a problem with refrigerated storage equipment.

The licence was reinstated following another inspection that found the company in compliance with regulations.

The Canadian International Pharmacy Association, an industry group that represents more than 60 pharmaceutical websites, said Friday the charges in Montana 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.

“That was a complete and separate business from the online pharmacy that they … have operated very successfully for over 15 years,” said executive director Tim Smith.

“They’re very well-liked by their customers. They’re very well-trusted by their customers.”

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