U.S. authorities are looking into connections between two Canadian businessmen and the sale of counterfeit cancer drugs to American oncologists earlier this year, CBC News has learned.
Legal documents link the Canadians and some of their companies to the U.S. Food and Drug Administration's investigation of two cases of counterfeit versions of bevacizumab, an injectable cancer medication that goes by the brand names Avastin and Altuzan.
The fake cancer drugs were purchased by nearly 100 physicians, mostly in California, and the FDA is now trying to track where they came from.
CBC News has obtained a copy of a U.S. grand jury subpoena, asking doctors to hand over documents related to the purchase of foreign-market drugs from a long list of companies and people — many of which have Canadian connections.
"We're taking it very seriously," said Connie Jung of the FDA's Centre for Drug Evaluation and Research in Washington.
"These medical practices are buying unapproved products from foreign sources. Because of this risky practice, what it does is put our patients at risk," she said.
"We don't know where they are coming from, we don't know where they've been manufactured. We don't know how they've been handled."
Benjamin Gluck, a Los Angeles-based lawyer who represents several affected physicians, says his clients were horrified to discover they may have given patients fake drugs.
"As far as the doctors knew, they were dealing with a licensed pharmacy in Montana," Gluck said.
"Once they understood … they may have been misled about that, frankly, they feel they are victims of this as well."
The physicians were approached by a drug salesman named Paul Bottomley, who provided them with an order form from a company called Montana Healthcare Solutions (MHCS).
CBC News has obtained a copy of the order form, in which MHCS was offering 400-milligram vials of Altuzan and Avastin for up to $1,875 US — about $400 less than the manufacturer's price.
According to Gluck, Bottomley told physicians he could offer good prices on approved drugs that they were already buying from other distributors.
"The prices were cheap enough that it was worth buying from them, but they were never so cheap that it raised any kind of suspicion with the doctors," Gluck said.
"Quite frankly, as one of my clients explained, even with the discounts local hospitals [have] — because they have these special buying groups and can get special discounts — [they] were probably paying less than he was."
Some of the physicians did some due diligence, and found Montana Healthcare Solutions was a registered pharmacy based in Montana. They bought and gave the drugs to their patients, Gluck said.
The FDA now says some of those drugs were counterfeit and did not contain any active ingredients.
Gluck said his clients were distressed to hear that, and shocked that they inadvertently bought drugs that were brought in from a foreign supplier, which is illegal in the U.S.
"It appears now that the supplier, the distributor, the people behind this scheme were taking great efforts to make sure there was no indication. For example, when the practices had to call Montana Supply, they called a phone number with a Montana area code and Montana telephone exchange," Gluck said.
"We are told now that, in fact, those phones may have in fact been ringing somewhere else — maybe in Canada or Barbados."
Calls allegedly rerouted to Winnipeg call centre
According to allegations contained in court documents, phone calls to Montana Healthcare Solutions were rerouted to a call centre in Winnipeg, at the headquarters of CanadaDrugs.com.
That company is owned by internet and wholesale pharmacist Kris Thorkelson, who is one of the men named in the U.S. grand jury subpoena.
The Barbados connection is through Thomas Haughton, a Canadian citizen who is Thorkelson's brother-in-law.
Haughton owns several drug distribution companies in Barbados and the United Kingdom.
Court documents also reveal that in 2010, Bottomley sold Montana Healthcare Solutions to Rockley Ventures, which is owned by Haughton. MHCS is also known as Quality Specialty Products (QSP).
"We have information that indicates that doctors purchase from QSP, Quality Specialty Products, and they basically supplied unapproved drugs to the medical practices," Jung said.
Who is Kris Thorkelson?
Bottomley's lawyer, Jay Lansing, told CBC News in an email that his client has not been charged.
"During the time that Mr. Bottomley owned and operated Montana Healthcare Solutions, he never sold Avastin or Altuzan; he never sold any counterfeit medications; and he never sold any adulterated medications," Lansing wrote.
But while Bottomley has not been charged criminally, authorities in the U.S. have seized nearly $1.4 million in cash and two vehicles worth nearly $200,000, based on accusations that Bottomley may have profited from selling illegal pharmaceuticals.
The U.S. Attorney's Office is also seeking the forfeiture of 11 parcels of Montana property owned by Bottomley, according to court documents obtained by CBC News. None of the allegations against him have been proven in court.
'Chain of custody'
The tragedy is that these two counterfeit cancer drugs were given to very sick people, said Len Lichtenfeld, deputy chief medical officer for the American Cancer Society in Atlanta.
"Imagine the people or families who have been treated at this time, who passed away. They must be wondering whether or not this drug made a difference in the lives of their loved ones. That to me is absolutely the worst scenario," he said.
"Everybody is on notice, especially the doctors who buy drugs. That the chain of custody of that drug — from the person who manufactures it, through the middlemen who sell it, to the final step into that doctor's office — that chain of custody is critically important."
The FDA and its counterparts in Europe are trying to trace where the counterfeit drugs came from.
The chain is murky, but it's believed the product may have originated in Turkey, been purchased by a Syrian middleman, and resold to an Egyptian company called SAWA.
It used the product to fill an order for Hadicon AG, a Swiss drug distributor, which sold the product to Caremed of Denmark, which sent the counterfeit product to two wholesalers in the United Kingdom.
One of the U.K. wholesalers is River East Supplies Ltd., which is owned by Haughton.
It may have been repackaged and relabelled in Barbados before being sent to Montana Healthcare Solutions, which is also known as QSP.
Some of the counterfeit drugs were then sold to American oncologists before they were confiscated by the FDA.
'I have nothing to hide'
The claims against Thorkelson and Haughton have not been proven in court.
Neither Thorkelson nor Haughton has returned any calls or emails from CBC News requesting comment.
But in a recent interview with CBS News in Barbados, Haughton confirmed that River East Supplies sent some of the counterfeit Avastin to the U.S.
Haughton said he did not realize the product was fake.
"For me, that's shocking and so disappointing," he told the U.S. television network.
"I have nothing to hide. The businesses I have are ethical, safe and legal."
U.S. authorities consider Haughton's business of shipping foreign-made drugs to American buyers illegal, but Haughton said he is breaking no laws in the countries from which he operates.
Wholesalers ship foreign drugs to the U.S. because American pharmaceuticals are some of the most expensive in the world. The traders buy the product at a discount overseas and sell it at a markup.
"It was only a matter of time before counterfeit penetration occurred," said David MacKay, a former executive director of the Canadian International Pharmacy Association, and a former employee of CanadaDrugs.com.
"If you think about the various points of distribution, the insertion of counterfeit [drugs]
could have occurred anywhere," he added.
"If there was lax or minimal regulatory oversight, one might not know, because the network is so vast with so much product moving through it, that being able to catch a small amount of counterfeit product is immensely difficult."