CANARX executives face U.S. drug importation charges

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CANARX drug import charges

Highlights

CANARX treasurer John Thomas Howard was arrested on smuggling, conspiracy, misbranding, and illegal drug importation charges covering Feb. 22, 2017 to April 15, 2026.
CANARX faces ongoing regulatory scrutiny as alternative funding programs raise legal risk, with the FDA seizing its shipments in 2023 and issuing warnings since 2019.
Gilead Sciences has an active civil lawsuit against CANARX alleging illegal importation of its HIV drug Biktarvy, compounding legal pressures on the company.

Charges and investigation timeline

As first reported by CNBC, court records filed Tuesday allege CANARX treasurer and director John Thomas Howard was arrested Sunday on smuggling and conspiracy charges tied to prescription drug shipments into the U.S. Bob Howard, the company's president and a director, is also sought in the federal investigation but has not yet been taken into custody, according to an affidavit from Dustin Dobbs, a special agent with the Food and Drug Administration's Office of Criminal Investigations.

In addition to conspiracy and smuggling, the arrest warrant says John Thomas Howard is charged with introducing misbranded drugs into interstate commerce and illegal drug importation. No plea has been filed, and the criminal complaint covers the period from Feb. 22, 2017 through April 15, 2026.

CANARX, founded in 2002 and based in Windsor, Ontario, describes itself on its website as an international prescription provider for the U.S. market, sourcing medicines from Canada, the UK, Australia and New Zealand. But the affidavit says the FDA investigation found probable cause to believe the company illegally imported, or caused the illegal importation of, prescription drugs into the United States.

The affidavit does not identify which medications investigators believe were imported illegally. CANARX general counsel Joseph Morris says in a statement that the Howards deny all charges, plan to defend the case vigorously and expect to be vindicated in court.

Broader pressure on alternative funding programs

CANARX has drawn scrutiny for several years as alternative funding programs, or AFPs, become more common in the U.S. healthcare system by offering high-cost specialty drugs at lower prices through private and public employers. Federal authorities have said the model, which often relies on obtaining medicines overseas and shipping them directly to patients, is illegal and can pose safety risks.

Regulatory pressure on the company predates the criminal case. In 2023, the FDA seized medication being shipped by CANARX that the agency said was potentially misbranded and counterfeit, according to an email sent to a patient and obtained by CNBC. In 2019, the FDA also warned the company that it was substituting FDA-approved medicines prescribed by U.S. healthcare providers with unapproved drugs.

Morris argued at the time that CANARX was not misleading patients, and the company agreed to stop importing drugs that need to be administered by a doctor. The legal risk around the sector remains centered on whether prescription drugs can be imported for personalized use, while the FDA has said that in most circumstances medicines from other countries cannot be brought into the U.S. as substitutes for FDA-approved drugs.

CANARX is also facing a separate pending civil lawsuit in which Gilead Sciences accuses the company and others of illegally importing Biktarvy, its HIV treatment.

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