DESCUENTO LECTORES

FedEx Indicted For Shipping Drugs For Illegal Pharmacies; Denies Allegations


More than a year after UPS agreed to pay $40 million to settle federal charges that it knowingly made shipments for illegal online pharmacies, a federal grand jury has indicted FedEx for similar allegations.

According to the indictment [PDF] the San Francisco-based grand jury charged the shipping giant with Conspiracy to Distribute Controlled Substances, Distribution of Controlled Substances, Conspiracy to Distribute Misbranded Drugs and Misbranding Drugs.


The DOJ alleges that, starting in 2004 (if not earlier), the Drug Enforcement Administration, FDA and others alerted FedEx to the fact that these illegal Internet pharmacies were using its shipping services to distribute controlled substances and prescription drugs in violation of the Controlled Substances Act, Food, Drug and Cosmetic Act, and state laws.


And the pressure to be wary of online pharmacies wasn’t coming from just the feds. The indictment states that FedEx couriers in Kentucky, Tennessee, and Virginia alerted management of their concerns that they may be making deliveries to drug dealers and addicts.


Among the examples given by drivers: FedEx trucks being stopped on the roads near delivery addresses for pharmacy customers; delivery addresses that were actually parking lots, schools, or vacant homes where car loads of people were waiting for the FedEx driver to arrive; customers jumping on FedEx trucks and demanding online pharmacy packages; drivers being threatened if they insisted on delivering packages to the addresses listed on the labels.


Rather than cease doing business with these pharmacies, the DOJ says that FedEx “adopted a procedure whereby Internet pharmacy packages from problematic shippers were held for pick up at specific stations, rather than delivered to the recipient’s address.”


The DOJ also alleges that FedEx knowingly made deliveries for at least two organizations — one which “operated a network of illegal Internet and fulfillment pharmacies” and one that was a “fulfillment pharmacy that filled drug orders” for other illegal operations.


Even after FedEx learned of the arrest of a principal of one of these organizations, it allegedly continued to distribute controlled substances and prescription drugs for the group.


The indictment accuses FedEx of not only knowing that the second organization, Superior Drugs, illegally distributed prescription drugs, but that it was fulfilling orders for other illegal pharmacies. When the DEA shut down a fulfillment operation in Maryland, members of the FedEx sales team discussed how Superior had picked up the fulfillment work for that business’s former clients.


About the time that federal agencies began warning FedEx against becoming involved with illegal pharmacies, the company adopted a policy requiring that its credit department vet all new online pharmacy accounts; not to make sure they were legitimate, claims the DOJ, but to make sure they had adequate finances to pay their bills.


“[I]t is becoming more apparent to us that many of these companies are fraudulent and doing business outside Federal regulations,” reads a 2004 e-mail, cited in the indictment, sent by FedEx’s Managing Director of Revenue Operations. The company’s Chief Financial Officer and its Senior VP of Sales later agreed to the credit check policy, which only applied to online pharmacy businesses.


And the policy did not cut down on the number of pharmacies with which FedEx did business. The DOJ says that between 2004 and 2010, FedEx’s in-house list of known pharmacies (not all illegal, mind you) had grown from 200 accounts to more than 600.


Additionally, when FedEx commission-based sales staff began complaining that they were losing commissions because online pharmacies were constantly picking up and relocating, possibly in order to avoid detection by the authorities, the company began assigning the sales category designation of “catchall” to online pharmacies, meaning they were not assigned to any specific account execs, and that they did not affect the yearly sales goals of account execs or their managers.


In arguing for slapping the “catchall” label on online pharmacies in 2006, a Managing Director at FedEx wrote to the VP of Field Sales for the Eastern Region to say, “I can assure you that these types of accounts will always result in a loss at some point. They have a very short lifespan and will eventually be shut down by the DEA.”


“The advent of Internet pharmacies allowed the cheap and easy distribution of massive amounts of illegal prescription drugs to every corner of the United States, while allowing perpetrators to conceal their identities through the anonymity the Internet provides,” said U.S. Attorney Melinda Haag. “This indictment highlights the importance of holding corporations that knowingly enable illegal activity responsible for their role in aiding criminal behavior.”


FedEx has been summoned to appear in federal court in San Francisco on July 29.


Meanwhile, the company denies any wrongdoing.


“We will defend against this attack on the integrity and good name of FedEx and its employees,” said a company VP in a statement, adding that FedEx repeatedly asked the government for lists of allegedly illegal online pharmacies. “Whenever DEA provides us a list of pharmacies engaging in illegal activity, we will turn off shipping for those companies immediately… We are a transportation company — we are not law enforcement.”




by Chris Morran via Consumerist

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