CANARX Executive Arrested Over Alleged Illegal Drug Import Scheme
U.S. authorities charged two brothers who run CANARX, a Canadian drug supplier to employer health plans, with smuggling and illegal drug importation.
Federal authorities have arrested a senior official of CANARX, a Canadian company that supplies prescription drugs from overseas to American workers through their employers’ health plans. Prosecutors accuse him and his brother of running a scheme to illegally import medicines into the United States, CNBC reported Wednesday, citing court records.
John Thomas Howard, the company’s treasurer and a director, was arrested Sunday on smuggling and conspiracy charges, according to CNBC. Court records filed Tuesday also charge him with illegal drug importation and with introducing misbranded drugs into interstate commerce. His brother, Bob Howard, who is CANARX’s president and also a director, is wanted in the same investigation and had not been taken into custody, the network reported. Neither man has entered a plea.
Joseph Morris, CANARX’s general counsel, told CNBC that “the Howards deny all the charges against them, will defend vigorously, and expect to be vindicated in court.”
What the government alleges
The criminal complaint covers a period of more than nine years, from Feb. 22, 2017, to April 15, 2026, according to CNBC. The charges rest on an affidavit from Dustin Dobbs, a special agent in the Food and Drug Administration’s Office of Criminal Investigations, the agency’s law enforcement arm. The affidavit says there is “probable cause to believe” the company illegally brought prescription drugs into the country.
CNBC’s report did not say which medicines were involved, how many shipments investigators examined, or how much money the alleged scheme generated. The court records it described did not name the federal court where the case was filed.
How the business works
CANARX was founded in 2002 and is based in Windsor, Ontario, just across the border from Detroit. It describes itself as the first international prescription provider for the United States and says it sources drugs from Canada, the United Kingdom, Australia and New Zealand.
The company is one of a group of businesses known as alternative funding programs, or AFPs. These firms pitch employers on cutting the cost of expensive specialty medicines, often by obtaining the drugs abroad, where prices are lower, and mailing them directly to patients in the U.S. Federal officials have said the practice is illegal and can put patients at risk.
The FDA spelled out its concerns in a warning letter to the company dated Feb. 26, 2019, and addressed to Gregory Anthony Howard of CanaRx Services Inc. The agency said the company acted as a broker between foreign pharmacies and employer-sponsored health plans. According to the letter, CANARX took an employee’s U.S. prescription and had it reissued by a foreign doctor. A contracted foreign pharmacy then filled it and shipped it to the patient.
The FDA said the arrangement effectively swapped FDA-approved drugs for unapproved versions. It noted that the company’s invoices warned patients that their medicines “may appear to be different in size, shape or color.” The agency listed several risks:
- Unapproved drugs could be weaker or stronger than labeled, or contaminated with unknown ingredients.
- Some products carried different brand names or doses than their U.S. versions, raising the chance of medication errors.
- Foreign versions fall outside U.S. recall systems, leaving patients with little recourse if something goes wrong.
- Some of the drugs treat serious illnesses such as HIV, cancer and hepatitis.
According to CNBC, Morris responded at the time that CANARX was not misleading patients, though the company agreed to stop importing drugs that must be given by a doctor. The FDA seized shipments in 2023 that it said were potentially misbranded and counterfeit, the network reported.
A wider legal fight over imported drugs
The criminal case adds to pressure the company already faces from drugmakers. Gilead Sciences, the California-based maker of the HIV drug Biktarvy, has a pending civil lawsuit accusing CANARX and other companies of illegally importing its medicine. CNBC reported that CANARX has not responded to the suit.
According to the Partnership for Safe Medicines, an advocacy group that opposes unregulated drug importation and tracks the case, Gilead filed suit in December 2024. Gilead said it discovered the alleged supply chain after a patient filling an HIV prescription through insurance received medicine mailed from a pharmacy in Turkey. The original defendants included Meritain Health, a health plan administrator, and ProAct, a pharmacy benefit manager. The group said Gilead added CANARX and several of its executives to the case in September 2025, alleging they also served as alternative funding programs. In June 2025, a federal judge wrote that sourcing drugs internationally through such programs was not legal, the group said, and the case has since gone to the U.S. Court of Appeals for the Fourth Circuit.
A Gilead spokesperson told CNBC the company “has taken strong legal action to protect patients and the integrity of the U.S. medicines supply chain.”
What comes next
John Thomas Howard is expected to answer the charges in federal court, and the government is still seeking his brother. The case could worry employers that have turned to alternative funding programs to control fast-rising specialty drug costs. Federal regulators say people generally cannot import prescription drugs from other countries, apart from narrow exceptions such as some personal-use cases where a drug is unavailable in the United States. An FDA spokesperson told CNBC last year that “in most circumstances, a person cannot import prescription drugs from other countries into the U.S.”
