In the shipping industry, it can be nearly impossible for a carrier to vet the contents of every package without violating the privacy of customers. However, a case going to federal court on July 29 will determine whether or not law enforcement agencies can impose more stringent rules on shippers, requiring them to confirm that packages do not contain controlled substances or illegal drugs sold by unregulated online marketplaces.
On July 17, shipping giant FedEx Corp. was indicted in a San Francisco federal court for conspiracy to traffic controlled substances for online pharmacies. The indictment was announced by U.S. Attorney Melinda Haag.
Issues cited stem from the disparity of laws and standards between the ways those pharmacies vet prescriptions, and whether or not FedEx should consider that in their shipping process. The results of proceedings could put much stronger requirements on shippers to know exactly what they’re in possession of.
While many online pharmacies are owned and operated by well-known brick and mortar locations, others require little more than an online form filled before they ship prescription drugs to customers. The indictment argues that the lax requirements of these marketplaces, coupled with poor oversight from FedEx, aided in the proliferation of opioid abuse in many states and jurisdictions.
“Pharmaceutical drug abuse is a serious problem affecting millions of consumers in the United States,” said DEA Special Agent in Charge Jay Fitzpatrick. “While DEA is committed to ensuring patients receive legitimate prescriptions, today’s action should send a strong message that corporations that participate in illegal activity risk investigation and prosecution.”
FedEx did attempt to establish an Online Pharmacy Credit Policy, which required pharmacies to obtain approval from their credit department before the shipment. However, the indictment argues that this was done less to help enforce Drug Enforcement Agency and Food and Drug Administration (FDA) policies and more to stop companies from leaving large tabs on the table when they were inevitably shut down.
While the indictment alleges that FedEx was aware what was going on at a high level, it specifically targets to FedEx’s operations concerning two Internet pharmacies: the Chhabra-Smoley Organization, and Superior Drugs. The grand jury says that FedEx knew that many the operators and employees of the two companies had been indicted, and that operations had been shut down in multiple locations, but continued to deliver drugs for them regardless. Illegally shipping these drugs is a violation of the Controlled Substances Act, Food, Drug and Cosmetic Act, and numerous state laws
“Illegal Internet pharmacies rely on illicit Internet shipping and distribution practices. Without intermediaries, the online pharmacies that sell counterfeit and other illegal drugs are limited in the harm they can do to consumers,” said Philip J. Walsky, Acting Director, FDA’s Office of Criminal Investigations. “The FDA is hopeful that today’s action will continue to reinforce the message that the public’s health takes priority over a company’s profits.”
FedEx is scheduled for arraignment today, and will plead not guilty to the charges. It has denied any wrong doing and Reuters reports that a spokesman for the company says, “We are a transportation company. We are not law enforcement.”
In a statement released following the indictment, FedEx cited its long stand relationship assisting law enforcement agencies and said in a statement that it, “transports more than 10 million packages a day. The privacy of our customers is essential to the core of our business. This privacy is now at risk, based on the charges by the Department of Justice related to the transportation of prescription medications.”
While the logistical and privacy concerns make dealing with tougher requirements for vetting carried packages a problem, those issues are not likely to get FedEx any leeway. In 2013 UPS signed a non-prosecution agreement and was fined $40 million for similar allegations.
To top it off, federal prosecutors said on July 25 that they intended to present a “superseding indictment” that would add new charges on top of those already listed.