Posted Jul 18, 2014 12:19 pm CDT
An indictment accuses FedEx of violations of federal law for shipping illegal prescription drugs for Internet pharmacies.
The indictment (PDF) accuses the package delivery company of distribution of controlled substances and conspiracy to distribute controlled substances and misbranded drugs. The company faces possible forfeiture of $820 million in proceeds and a potential fine of $1.6 billion, according to a press release. The Wall Street Journal (sub. req.), Legal Times and the San Jose Mercury News have stories.
The indictment claims FedEx was warned at least six times since 2004 that it was making illegal drug shipments, but the company instead departed from its usual business practices to accommodate the companies and protect against revenue loss in the event of a closure.
A company policy that applied to Internet pharmacy shippers required a security deposit and a bank letter of credit, according to the indictment. A memo circulated to managers explained the policy was important because many of the companies operate outside state and federal regulations, their drugs could be diluted or counterfeit, and several sites had been shut down, leaving large balances owed to FedEx.
The indictment also says FedEx couriers and customer-service agents had expressed safety concerns about the shipments as early as 2004. Some FedEx trucks were stopped on the road by Internet pharmacy customers demanding pills, and some delivery addresses were parking lots, schools and vacant homes where customers would wait for deliveries.
Patrick Fitzgerald, senior vice president of marketing and communications for FedEx, said the company would “defend against this attack on the integrity and good name of FedEx and its employees.” He said FedEx has repeatedly asked for a list of illegal Internet pharmacies, but it has not been provided. He also said the company should not have criminal liability for the contents of its packages.
“We are a transportation company—we are not law enforcement,” Fitzgerald told the Wall Street Journal.
United Parcel Service had also been targeted in the federal probe, but it signed a nonprosecution agreement in March 2013 and agreed to pay $40 million, the Wall Street Journal says, citing a quarterly filing. UPS has also adopted a an online pharmacy compliance program.