FedEx is in hot water with the U.S. government for allegedly conspiring to traffic controlled substances and misbranded prescription drugs sold by illegal Internet pharmacies.
For its alleged role in trafficking drugs from online pharmacies, the Department of Justice on July 17 asked a federal grand jury in San Francisco to indict FedEx Corp., FedEx Express, Inc., and FedEx Corporate Services, Inc., which the federal grand jury did.
FedEx maintains that it is innocent and plans to plead not guilty in a San Francisco federal court on July 29.
If found guilty, FedEx could be fined upwards of $820 million for its involvement in drug trafficking. (The final financial penalty could ultimately be much higher, as the $820 million does not include what FedEx may be forced to pay to victims, nor does it take into account what the company may lose as a result of asset forfeiture.)
According to the indictment, the DOJ alleges that FedEx has been asked to not help illegal pharmacies distribute illegal substances since 1998, when some Internet pharmacies began selling controlled substances and prescription drugs to those without a valid prescription or who had not met face-to-face with a physician — a violation of federal and state laws.
In 2004, FedEx created an Online Pharmacy Credit Policy, which required online pharmacies to first obtain approval from the Credit Department before FedEx would pick up packages from or deliver them to these pharmacies. FedEx reasoned that the policy was necessary to ensure that the pharmacies were not shut down by the government before the shipping company could be paid.
While FedEx points to these policies as proof that the company did not knowingly help traffic drugs, the DOJ argues that FedEx, which transports more than 10 million packages a day, could have done more to ensure that illegal Internet pharmacies were not using its shipping services. Further, the DOJ argues that Congress told FedEx it was “delivering drugs to dealers and addicts” in 2004, but the company made no changes.
According to a statement released by Patrick Fitzgerald, senior vice president of marketing and communications for FedEx, the courier has cooperated and worked with law enforcement agencies throughout the past 42 years, including the FBI, the Department of Homeland Security, the Drug Enforcement Administration, and other federal, state and local law enforcement teams “around the world to help stop illegal drug activity and bring criminals to justice,” including “combatting rogue internet pharmacies.”
In fact, Fitzgerald says FedEx has “repeatedly requested that the government provide us a list of online pharmacies engaging in illegal activity,” so that the company can immediately stop shipping services to these companies. “So far the government has declined to provide such a list,” he noted.
“We want to be clear what’s at stake here: the government is suggesting that FedEx assume criminal responsibility for the legality of the contents of the millions of packages that we pick up and deliver every day,” Fitzgerald said. “We are a transportation company — we are not law enforcement. We have no interest in violating the privacy of our customers. We continue to stand ready and willing to support and assist law enforcement. We cannot, however, do the job of law enforcement ourselves.”
While FedEx maintains its innocence in knowingly aiding online pharmacies transport controlled substances and prescription drugs, and while it has expressed privacy concerns about knowing the contents of all packages for each customer, U.S. Attorney Melinda Haag argues FedEx employees knew exactly what was going on.
“This indictment highlights the importance of holding corporations that knowingly enable illegal activity responsible for their role in aiding criminal behavior,” Haag said.
DEA Special Agent in Charge Jay Fitzpatrick agreed with Haag, explaining that the DEA is committed to eradicating pharmaceutical drug abuse in the United States — an issue that affects millions of Americans — and hopes that the indictment sends “a strong message that corporations that participate in illegal activity risk investigation and prosecution.”
Philip J. Walsky, acting director for the FDA’s Office of Criminal Investigations, applauded the grand jury’s decision as well, saying that if it wasn’t for FedEx, the number of people who would have been able to access controlled substances and prescription drugs would have been greatly reduced.
“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,” Walsky said.