U.S. authorities are accusing two top executives of a Canadian company of operating a long-running scheme to illegally import prescription drugs into the United States, according to court documents filed Tuesday.
John Thomas Howard, treasurer and director of the CANARX company, was arrested Sunday on smuggling and conspiracy charges, records show.
Bob Howard, his brother, president and director of CANARX, is also wanted in the federal investigation, according to an affidavit from Dustin Dobbs, a special agent with the Food and Drug Administration’s Office of Criminal Investigation. He has not yet been taken into custody.
In addition to conspiracy and smuggling, the arrest warrant said John Thomas Howard was charged with introducing misbranded drugs into interstate commerce and illegally importing drugs. No plea was filed.
CANARX was featured in a CNBC investigation last year that revealed how the company and other alternative financing programs, or AFPs, are becoming more prevalent in the United States as drug costs skyrocket. The investigation found that these companies penetrated the country’s healthcare system by offering expensive specialty drugs at more affordable prices through private and public employers. In some cases, employers require their staff to use an AFP.
AFPs often obtain the drugs overseas and ship them directly to patients, a practice that federal authorities have called illegal and poses security risks. CNBC traced the drugs from overseas to the United States through a supply chain that the pharmaceutical companies producing the drugs did not authorize.
On its website, CANARX, founded in 2002 and based in Windsor, Ontario, Canada, described its business as the leading international provider of prescription drugs in the United States and the safest such program in the industry. The company said it sources the drugs from Canada, the United Kingdom, Australia and New Zealand.
But the affidavit says the FDA’s investigation found “that there is probable cause to believe that (CANARX) illegally imported or caused the illegal importation of prescription drugs into the United States….”
The affidavit does not specify which drugs the agency believes were illegally imported. The criminal complaint covers the period from February 22, 2017 to April 15, 2026.
The company’s general counsel, Joseph Morris, told CNBC in a statement: “The Howards deny all charges against them, will defend themselves vigorously and expect to be vindicated in court.”
The company has been under FDA scrutiny for several years. In 2023, the agency seized drugs shipped by CANARX that it said were potentially mislabeled and counterfeit, according to an email sent to a patient obtained by CNBC.
And in 2019, the FDA sent a warning letter to the company, saying it was operating “in a manner that substitutes FDA-approved drugs prescribed by America’s health care provider with unapproved drugs.” Morris, in response to this warning, maintained that CANARX was not misleading patients, but agreed that the company should stop importing drugs that must be administered by a doctor.
In an interview for the CNBC investigation, Morris said last year that drugs shipped to U.S. patients came from highly regulated countries. He said CANARX operated legally.
The central issue for the AFP is the legality of importing prescription drugs into the United States for personal use. The FDA allows Americans to import drugs for individual use in certain cases if the drug is not available domestically. It is on this basis that the AFPs built their models for delivering medicines directly to patients.
But an FDA spokesperson told CNBC last year that “in most cases, a person cannot import prescription drugs from other countries into the United States… as substitutes for FDA-approved drugs.”
In another ongoing civil lawsuit, Gilead Sciences has accused CANARX and other companies of illegally importing Biktarvy, its HIV drug.
In a statement to CNBC on Wednesday, a Gilead spokesperson said the company “has taken aggressive legal action to protect patients and the integrity of the U.S. drug supply chain. We applaud the government’s efforts to hold accountable those whose conduct may put patients at risk.”
CANARX has not responded to Gilead’s lawsuit.
— CNBC’s Paige Tortorelli and Melissa Lee contributed to this report
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