Canadian firm gets fined for selling mail-order drugs - Medicine Club International Inc

FDA Consumer, July-August, 1995 by John Henkel

A Toronto-based mail-order firm has received a $500,000 fine--the maximum amount allowed--in federal court for one count of shipping and selling an unapproved generic drug.

Medicine Club International Inc. also was ordered by the U.S. District Court for the District of Maryland last Jan. 5 to pay nearly $340,000 for investigative costs incurred by the U.S. government. The firm must maintain a $1 million letter of credit that will be forfeited to the U.S. Treasury if the company manufactures, advertises or distributes adulterated or misbranded drugs during a five-year probation.

The company, which also operated under the name Interpharm Inc., was affiliated with the major Canadian generic drug manufacturer, Apotex Inc.

Medicine Club International practiced what is commonly called "off-shore pharmacy." From at least January 1991 to August 1993, the company routinely promoted and shipped more than 75 unapproved new drugs into the United States from Canada. Among the drugs were generic versions of Prozac (fluoxetine), used to treat depression; Retrovir (zidovudine), used to treat AIDS; and Tagamet (cimetidine), used to treat ulcers.

The company took consumer orders over an 800 telephone number that it publicized through ads in U.S. newspapers, magazines, and direct mailings. The ads targeted the general public, as well as specific groups such as the male homosexual community, senior citizens, and veterans. Between January 1991 and January 1992, ads ran in 24 different gay publications. Drugs were sold at greatly reduced prices and did not require a prescription. Quantities sold generally were limited to a three-month supply.

By law, companies intending to market generic drugs in the United States must file an abbreviated new drug application (ANDA) with FDA and must be authorized to distribute or sell those products. Otherwise, FDA cannot ensure that such products have been properly manufactured and are effective. Medicine Club International had no ANDA on file and did not obtain authorization to sell the drugs. In addition, the drugs the firm sold require a prescription, but Medicine Club customers were not asked for one.

FDA first became aware of the illegal activities in January 1991, when agency officials saw a magazine ad promoting the mail-order products. The company's ads implied that FDA permits such purchases under its "personal use" policy, which allows individuals to import some unapproved drugs for personal use under certain conditions.

FDA traced the 800 numbers to Toronto and Montreal. From interviews with newspapers and magazines in which the ads appeared, investigators determined that Medicine Club International (then called Interpharm) was placing the ads and shipping products. An investigator from FDA's Buffalo district office bought drugs undercover from the 800 number. Over the next year, officials from nine other FDA field offices around the country bought drugs.

Based on evidence collected, FDA sent Interpharm warning letters in early 1992 telling the company to stop distributing the drugs. FDA also sent the company written notice that the mail-order products did not fall within the agency's "personal use" policy, which pertains only to products not available in the United States.

But the drug sales continued. To elude FDA, the company changed its name and 800 number. "They didn't heed our warning letters, and they dodged surveillance," says David Kiessling, investigator in FDA's Buffalo district office.

In January 1993, the Federal Bureau of Investigation joined the investigation, and the next month, an FBI agent bought 100 fluoxetine tablets from Medicine Club International. That purchase formed the single count of shipping unapproved drugs under which the U.S. government secured a guilty plea in January 1995 from the firm.