FedEx trial over illicit drug dispensing opens in San Francisco

After a nine-year DEA/FDA investigation, and after two years of legal wrangling from when the original indictment was filed, the trial between FedEx and the US Dept. of Justice has begun. That lengthy span of time is worth noting because current federal law, as expressed in the recently passed Ensuring Patient Access and Effective Drug Enforcement Act, supersedes some of the issues at stake in the case, including calling for coordination between DEA and drug distributors instead of DEA’s traditional arrest-first, ask-questions-later practices.

The original indictment, filed in 2014, charged FedEx with knowingly handling the delivery of illegally dispensed controlled substances, primarily from illicit online pharmacies, over a period beginning in 2004. Around when the charges were first made, UPS was hit with similar action, but paid a $40-million fine as part of a “non-prosecution agreement.” At the time of the indictment, FedEx vowed that it would fight the charges. FedEx could be liable for a fine of over $1.6 billion.

The feds’ case includes charges that FedEx set up an “online pharmacy credit policy” to monitor shipments from online pharmacies that continually were shut down by DEA actions and then moved to other locations, and that the company was repeatedly warned both by law authorities and internal staff that illegal dispensing of controlled substances (including Schedule III and IV drugs but not, apparently, Schedule II narcotics like opioids) was going on. FedEx will contend that it was working hand in hand with DEA to shut down certain online pharmacies over the period, and also that “common carrier” provisions of the Controlled Substances Act absolve carriers like FedEx from liability for the criminal acts of others.

DEA has maintained for years that carriers as well as distributors and online and brick-and-mortar pharmacies have a responsibility to ensure that controlled substances are being properly dispensed; and that “suspicious order monitoring systems” be set up to carry this out. Industry has complained that it is unwittingly being deputized as law enforcement agents, and that it could better control illicit drug distribution if DEA told it what businesses to avoid. The Ensuring Patient Access law is intended to bring the two sides closer together in handling prescription drug abuse; how this will play out in practice remains to be seen.

(6/20 update: this case has now been dismissed; see update here.)