CANARX treasurer arrested over illegal drug imports into US from Canada
US authorities arrested John Thomas Howard, treasurer of Canadian healthcare firm CANARX, on smuggling and conspiracy charges. His brother and company president Bob Howard remains at large.
CANARX treasurer arrested on drug smuggling charges; brother remains at large
US federal authorities have arrested a top official of CANARX, a Canadian healthcare company, on charges of running a years-long scheme to illegally import prescription drugs into the United States, according to court records filed Tuesday and reported by cnbc.com.
John Thomas Howard, treasurer and director of CANARX, was taken into custody on Sunday. He faces charges of smuggling, conspiracy, introducing misbranded drugs into interstate commerce, and illegal drug importation. No plea has been entered.
His brother, Bob Howard, who serves as president and director of the company, is also sought by federal investigators but has not yet been taken into custody. An affidavit filed by Dustin Dobbs, a special agent with the Food and Drug Administration's Office of Criminal Investigations, confirmed that Bob Howard is the subject of an active federal arrest warrant.
The criminal complaint covers conduct alleged to have taken place between 22 February 2017 and 15 April 2026.
Company denies wrongdoing
CANARX's general counsel, Joseph Morris, issued a statement to CNBC: "The Howards deny all the charges against them, will defend vigorously, and expect to be vindicated in court."
Founded in 2002 and headquartered in Windsor, Ontario, the company describes itself on its website as the first international prescription provider for the US market and the safest such programme in the industry. It says it sources medications from Canada, the United Kingdom, Australia and New Zealand.
The FDA affidavit states, however, that there is probable cause to believe CANARX "illegally imported or caused the illegal importation of prescription drugs into the United States." The affidavit does not specify which medications are at the centre of the investigation.
A model under scrutiny
CANARX featured in a CNBC investigation published last year that examined how the company and others — known as alternative funding programmes, or AFPs — have expanded their presence across the US as prescription drug costs continue to rise. The investigation found that AFPs have worked their way into the country's healthcare system by offering high-cost specialty drugs at reduced prices through private and public employers. In some instances, employers have made participation in an AFP mandatory for staff.
AFPs typically source medications abroad and ship them directly to patients. Federal authorities have said this practice is illegal and carries safety risks. CNBC's earlier reporting traced the drug supply chain from overseas to US patients through routes not authorised by the pharmaceutical manufacturers.
The FDA's scrutiny of CANARX is not new. In 2019, the agency sent the company a warning letter, stating it was operating "in a manner that substitutes the FDA-approved drugs prescribed by the U.S. healthcare provider with unapproved drugs." Morris responded at the time by arguing the company was not misleading patients, though he agreed to halt imports of drugs requiring physician administration.
In 2023, the FDA seized a shipment of medication being delivered by CANARX, saying the drugs were potentially misbranded and counterfeit, according to an email sent to a patient and obtained by CNBC.
Morris told CNBC last year that medicines shipped to US patients originate from highly regulated countries and that CANARX was operating within the law.
Legal grey zone
The broader legal question surrounding AFPs centres on whether importing prescription drugs into the US for personal use is lawful. The FDA permits Americans to import medications for individual use in limited circumstances — specifically when the drug is not available domestically. AFPs have built their business models around this provision to justify shipping medicines directly to patients.
An FDA spokesperson told CNBC last year, however, that "in most circumstances, a person cannot import prescription drugs from other countries into the U.S. … as substitutes for FDA-approved drugs."
Civil lawsuit from Gilead Sciences
In a separate, pending civil case, pharmaceutical company Gilead Sciences has accused CANARX and other firms of illegally importing Biktarvy, its HIV treatment. Gilead issued a statement to CNBC on Wednesday saying the company "has taken strong legal action to protect patients and the integrity of the U.S. medicines supply chain" and that it welcomes the government's efforts to hold accountable those whose conduct "may put patients at risk."
CANARX has not responded to the Gilead lawsuit.
Reporting contributed by CNBC's Paige Tortorelli and Melissa Lee.
Source: Google News MT — Crime (en)