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Kris Thorkelson, of the Internet Pharmacist's Association, sits in his Winnipeg internet dispensary Monday, Jan. 20, 2003. (PHIL HOSSACK/Winnipeg Free Press/The Canadian Press/PHIL HOSSACK/Winnipeg Free Press/The Canadian Press)
Kris Thorkelson, of the Internet Pharmacist's Association, sits in his Winnipeg internet dispensary Monday, Jan. 20, 2003. (PHIL HOSSACK/Winnipeg Free Press/The Canadian Press/PHIL HOSSACK/Winnipeg Free Press/The Canadian Press)

Fake Drugs

Probe sheds light on Canada's lucrative online drug industry Add to ...

Today there are less than two dozen Canadian online drug sellers and CanadaDrugs dominates the field, boasting of having more than one million customers.

Also fuelling CanadaDrugs’s expansion has been the company’s foray into what is known as the “parallel trade” of drugs, experts say. Parallel trading developed in Europe years ago when drug wholesalers and pharmacies started buying low-cost drugs in one European Union country and re-selling them at a higher price in another EU country. That practice has since expanded worldwide and many drugs now follow a convoluted network of dealers around the world.

Mr. Haughton, a Canadian citizen married to Mr. Thorkelson’s sister Maryanne, has set up dozens of online drug companies and distributors in Barbados and Britain and some supply CanadaDrugs. Mr. Haughton was unavailable Wednesday but he acknowledged to the Wall Street Journal that one of his companies, Montana Healthcare Solutions, inadvertently distributed counterfeit Avastin in the U.S. None of the drugs came to Canada, according to the drug’s manufacturer, Switzerland-based Roche Holding AG.

Officials at Health Canada said they are not part of the investigation that includes regulators in Britain and Turkey.

Mr. Gunter-Smith said Montana Healthcare is a separate business that serves different groups. “There is no evidence that any tainted product has ever come through CanadaDrugs, but we are doing everything possible to mitigate any future concern,” he added.

For now Mr. Zimmer and others still standing in the business are watching the saga closely. “At the end of the day I feel kind of bad for Kris Thorkelson. He’s always been a model for our industry about how you want to build your business and your approach to business and his ethics,” Mr. Zimmer said. “These things he’s been involved in recently, I think they could happen to anyone. Whether you’re a Canadian community pharmacy, a mail-order pharmacy, an international wholesaler, you have to depend on the entire integrity of the entire chain.”

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When it comes to selling pharmaceuticals in the U.S., the rules are simple: If the drugs weren’t approved by the Food and Drug Administration or produced in a facility the regulatory body monitors, it’s illegal to import them. In short, according to the FDA, “nearly all” drugs that are shipped to the U.S. are illegal.

But every day, with little difficulty, U.S. residents order millions of dollars worth of prescription drugs online and have them shipped across borders to their homes. While it’s easy enough for consumers and investigators to trace where the online storefront is based, tracking the origin of drugs up the supply chain is no small feat.

Last year, a group of academics including Amir Attaran, Canada Research Chair in law, population health and global development policy, published a study in the Journal of International Criminal Justice arguing for the establishment of medicine counterfeiting as an international crime.

In their paper, the team explains one of the reasons there is little enforcement in the counterfeit drug trade (or, in the U.S., even the illegal import of drugs that are from the real manufacturer) is because of the complex supply chain. Drugs made in China could be shipped to several countries on several continents before finally reaching the consumer: most often a patient or a doctor. In the end, so many jurisdictions are involved that the original source is obscured. Free trade zones make the movement of these prescription drugs hassle-free for those involved in the trade.

According to a report in the New York Times, in 2007, authorities seized a large supply of counterfeit drugs in the United Arab Emirates that was halfway through a multi-stop global journey to the U.S. It was made in China, and moved on to Hong Kong, the U.A.E., the Bahamas and then Britain before reaching its final destination. It turned out U.S. residents were ordering the drug from Canadian online pharmacies (though the site’s servers were set up in the Bahamas), believing it came from their neighbour to the north. In the end, authorities from all jurisdictions were involved in the investigation and the FDA zeroed-in on Andrew Strempler, the online pharmacy pioneer from Minnedosa, Man. behind the site RxNorth.com. While Manitoba’s pharmacy regulator stripped him of his licence and registration for a different matter (filling orders without having prescriptions signed by a Canadian pharmacist), he was not criminally charged.

-Dakshana Bascaramurty

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