Feds Arrest CANARX Treasurer in Illegal Prescription Drug Scheme

By Grace Kim

Federal agents arrested the treasurer of Canadian prescription supplier CANARX on Sunday, charging him with smuggling and conspiracy in what prosecutors call a long-running scheme to illegally import prescription drugs into the United States.

John Thomas Howard, treasurer and a director of CANARX, faces four charges: smuggling, conspiracy, introducing misbranded drugs into interstate commerce, and illegal drug importation, according to court records filed Tuesday and the arrest warrant. No plea has been entered.

His brother and co-target remains at large. Bob Howard, CANARX's president and a fellow director, is wanted in the federal investigation, according to an affidavit from Dustin Dobbs, a special agent with the FDA's Office of Criminal Investigations. He has not yet been taken into custody.

The takeaway: the criminal case puts the two top officials of a company that marketed itself as "the safest" of its kind squarely in federal crosshairs.

What does the affidavit allege?

The complaint covers conduct from Feb. 22, 2017, through April 15, 2026 — a window of more than nine years. The FDA's investigation, per Dobbs' affidavit, found "there is probable cause to believe that (CANARX) illegally imported or caused the illegal importation of prescription drugs into the United States …."

The affidavit does not name the specific medications the agency believes were illegally imported.

Why does CANARX matter?

CANARX was featured in a CNBC investigation last year that examined alternative funding programs, or AFPs — companies that have spread across the U.S. as drug costs climb. The investigation found these firms have penetrated the country's healthcare system by offering high-cost specialty drugs at lower prices through private and public employers. In some cases, employers require staff to use an AFP.

AFPs often obtain medications overseas and ship them directly to patients. Federal authorities have said that practice is illegal and poses safety risks. CNBC traced drugs moving from abroad to the U.S. through a supply chain the pharmaceutical companies that make the medications never authorized.

The short version: CANARX sits at the center of a business model built on shipping foreign drugs straight to American patients.

What has the company said?

CANARX, founded in 2002 and based in Windsor, Ontario, described itself on its website as the first international prescription provider for the U.S. and the safest such program in the industry. The company said it sources medications from Canada, the United Kingdom, Australia and New Zealand.

General counsel Joseph Morris told CNBC in a statement: "The Howards deny all the charges against them, will defend vigorously, and expect to be vindicated in court."

In an interview during last year's CNBC investigation, Morris said the medicines shipped to U.S. patients come from highly regulated countries, and that CANARX was operating legally.

How long has the FDA been on CANARX's case?

Years — and the paper trail is specific:

• In 2019, the FDA sent CANARX a warning letter saying it was operating "in a manner that substitutes the FDA-approved drugs prescribed by the U.S. healthcare provider with unapproved drugs." Morris responded by arguing CANARX was not misleading patients, but agreed the company would stop importing drugs that require administration by a doctor.
• In 2023, the agency seized medication shipped by CANARX that it said was potentially misbranded and counterfeit, according to an email sent to a patient that CNBC obtained.

The bottom line: Sunday's arrest escalates years of regulatory friction into a criminal case.

Is the import model itself legal?

That's the central question for all AFPs. The FDA allows Americans to import medications for individual use in some cases, if the drug is not available domestically — the basis on which AFPs built their direct-to-patient shipping models.

But an FDA spokesperson told CNBC last year that "in most circumstances, a person cannot import prescription drugs from other countries into the U.S. ... as substitutes for FDA-approved drugs."

Is there other litigation?

Yes. In a separate pending civil suit, Gilead Sciences accused CANARX and other companies of illegally importing Biktarvy, its HIV medication. A Gilead spokesperson told CNBC on Wednesday the company "has taken strong legal action to protect patients and the integrity of the U.S. medicines supply chain. We welcome the government's efforts to hold accountability to those whose conduct may put patients at risk." CANARX has not responded to the Gilead lawsuit.

With one Howard brother in custody, another wanted, and a criminal complaint stretching to April 2026, the case now threatens to define the legal boundaries of the entire alternative funding industry.