U.S. federal authorities have charged two top executives of Windsor, Ontario-based CANARX with smuggling and conspiracy, alleging the company illegally imported prescription drugs into the United States.
John Thomas Howard, the firm’s treasurer, was arrested on Sunday, while his brother, Bob Howard, remains wanted by federal investigators.
- Federal prosecutors allege a multi-year scheme involving the illegal importation of misbranded prescription medications from foreign jurisdictions into the U.S. market.
- The case targets the “Alternative Funding Program” (AFP) business model, which has faced increasing scrutiny for bypassing authorized pharmaceutical supply chains to reduce employer costs.
- The criminal complaint covers activities from February 22, 2017, through April 15, 2026, as regulators increase enforcement against offshore drug procurement.
The arrest, detailed in court records filed Tuesday, follows a long-running investigation by the Food and Drug Administration’s Office of Criminal Investigations. Special agent Dustin Dobbs stated in an affidavit that there is probable cause to believe CANARX orchestrated the illegal importation of prescription drugs. Beyond conspiracy and smuggling charges, John Thomas Howard faces counts of introducing misbranded drugs into interstate commerce, according to CNBC.
The company, which began operations in 2002, positioned itself as an intermediary for private and public employers seeking to lower costs for specialty medications. By sourcing drugs from Canada, the United Kingdom, Australia, and New Zealand, CANARX provided an alternative to domestic pricing structures. However, federal regulators have repeatedly challenged the legality of these supply chains, arguing they lack the authorization required for U.S. market distribution.
In 2019, the FDA issued a warning letter to the company regarding the substitution of FDA-approved drugs with unapproved foreign alternatives. While general counsel Joseph Morris argued at the time that the company operated legally, the FDA seized shipments in 2023 that it identified as potentially misbranded or counterfeit, CNBC reported.
The legal pressure on the firm extends beyond federal criminal charges. Gilead Sciences has initiated a civil lawsuit against CANARX and other entities, alleging the illegal importation of Biktarvy, a medication used for HIV treatment. “The company has taken strong legal action to protect patients and the integrity of the U.S. medicines supply chain,” a Gilead Sciences spokesperson stated on Wednesday.
| Date | Event |
|---|---|
| 2002 | CANARX founded in Windsor, Ontario. |
| Feb 2017 – Apr 2026 | Period covered by the federal criminal complaint. |
| 2019 | FDA issues warning letter regarding unapproved drug substitution. |
| 2023 | FDA seizes shipments identified as potentially misbranded/counterfeit. |
| Nov 2026 | John Thomas Howard arrested on smuggling and conspiracy charges. |
“The Howards deny all the charges against them, will defend vigorously, and expect to be vindicated in court,” Joseph Morris told CNBC.
The FDA has maintained that, in most circumstances, individuals and companies cannot import prescription drugs from other countries to serve as substitutes for FDA-approved medications. The outcome of the charges against the Howards may address the legality of how companies like CANARX operate offshore procurement programs.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
