In 2011, Google paid a $500,000,000 fine to the U.S. Government for violating the Controlled Substances Act by promoting and to a degree knowingly facilitating the sale of prescription drugs online without a prescription. The company agreed to sign a nonprosecution agreement with the U.S. Government following a long grand jury investigation in Rhode Island in which Google produced over 4,000,000 documents. We don’t know the details, but based on some news reports it seems hard to believe that top Google executives did not appear before the grand jury.
When Eric Schmidt testified at the Senate Antitrust Subcommittee on CSPAN, the issue was so sensitive that he refused to answer questions about the nonprosecution agreement posed by Senator John Cornyn. (A Google tactic made even more bizarre because the nonprosecution agreement itself is a public document–read it here.) Schmidt later claimed to have been confused by Senator Cornyn’s quesitons. Right. Sure looked to many people like Schmidt took the 5th on CSPAN. Whether Google is out of the drugs business is something of an open question right now, particularly if you ask Mississippi Attorney General Jim Hood and some other state attorneys general.
Of course connecting suppliers and users is only part of the online market place for dope. FedEx is now indicted for being the next leg of the delivery network for online pharmacies. FedEx, of course, denies it in a statement that boils down to the kind of denial of red flag knowledge that we hear every day from Google’s massive piracy operation. Of course, it’s not like the cops haven’t heard this one before. Just like Google, the FedEx indictment looks like the product of major sting operations run against FedEx over a long period of time.
The most interesting part of this is that Google was allowed to buy their way out of an indictment, perhaps a testimonial for spending big bucks on a Washington lobby shop run by DC insiders. Remember, Google was being celebrated at the White House for all the good things they were doing for online drug safety at the very moment the government was negotiating the nonprosecution agreement. FedEx, however, got indicted.
The government’s story about FedEx is quite simple and in its own way is very similar to Google’s: It’s about money. In an excellent piece about the FedEx story in the Daily Beast, Abby Haglage writes:
In 2004, the DEA estimated that FedEx had 200 registered online pharmacies. By 2010, it had more than 600. As early as the mid-2000s, the indictment reveals, employees in multiple states had allegedly expressed concerns to management about the dangers of delivering addictive pills. According to the investigation, deliverymen and women reported being “stopped on the road by Internet pharmacy customers demanding packages of pills” and “[being] threatened if they insisted on delivering a package to the address instead of giving the package to the customer who demanded it.” Others claimed that customers were “doctor shopping” and expressed concern that some of them had “overdosed and died.”
And this is the story about online pharmacies that has yet to be told in both cases. It is simply impossible to believe that there have not been deaths, possibly many deaths, from this syndicate. The leadership in these public companies like Google and FedEx are accused of similar acts: Knowingly instructing their employees to participate in a criminal enterprise for profit. To my knowledge, no one has investigated any deaths from this enterprise except for Senators Diane Feinstein and Jeff Sessions.
Right about the time Google was being investigated by a federal law enforcement task force, Senator Diane Feinstein introduced Ryan’s Bill in 2008 named in honor of Ryan Haight, co-sponsored with Senator Jeff Sessions. The bill got the full backing of President George W. Bush who said:
Unfortunately, many young Americans do not understand how dangerous abusing medication can be. And in recent years, the number of Americans who have died from prescription drug overdoses has increased.
One of the factors behind this trend is the growing availability of highly addictive prescription drugs online. The Internet has brought about tremendous benefits for those who cannot easily get to a pharmacy in person. However, it has also created an opportunity for unscrupulous doctors and pharmacists to profit from addiction.
One victim of such a doctor was Ryan Haight. The young man from California was only 18 when he overdosed on pain killers that were illegally prescribed over the Internet. With only a few clicks of the mouse, Ryan was able to get a prescription from a doctor he had never met and have the pills sent to his front door. The doctor who wrote Ryan’s prescription had previously served time in prison for illegally dispensing controlled substances.
The government, of course, has to make it’s case against FedEx. Based on the facts alleged in the FedEx indictment, it looks like there were a lot of FedEx employees who were in on it and it went quite high up the chain–just like the Google case. The U.S. Attorney for Rhode Island told the Wall Street Journal:
“Larry Page knew what was going on,” Peter Neronha, the Rhode Island U.S. Attorney who led the probe, said in an interview. “We know it from the investigation. We simply know it from the documents we reviewed, witnesses that we interviewed, that Larry Page knew what was going on.”
The Daily Beast also reports based on the FedEx indictment:
In a move that the DEA and FDA suggest shows both knowledge of the illicit online pharmacy industry and awareness of its potential for boom and bust, FedEx established an “Online Pharmacy Credit Policy.” This required all online pharmacies to provide FedEx with a security deposit, bank letter of credit, and to be subjected to “limited credit terms.”
FedEx (meaning somebody in a position to establish FedEx policies) made sure that FedEx had a good chance of collecting their fees even if the DEA shut down an online pharmacy operation. I would imagine that FedEx executives involved in that decision making are a fairly narrow bunch of names.
Instead of targeting the companies, FedEx re-structured the delivery plan, according to investigators. A senior vice president of security reportedly launched an initiative that allowed delivery people to leave packages from “problematic shippers” at a station where the consumer could pick them up. But shielding the employees from potentially dangerous encounters didn’t change the nature of the business, the federal agencies say. FedEx was still willingly aiding in the distribution of controlled substances without the need for a prescription from a qualified physician. Over the course of the nine-year probe, FDA and DEA agents claim they repeatedly ordered prescriptions—varying from weight-loss medication to erectile dysfunction pills—using an online questionnaire only.
In other words, FedEx is accused of engaging in exactly the behavior that Ryan’s Bill was designed to stop. And the government was involved in a sting against FedEx that overlapped with the Rhode Island grand jury’s investigation of FedEx.
The government is looking for $1.6 billion from FedEx–3x what it got from Google for the other part of the racket. Since both are interdependent on each other, it seems that the government has gotten used to the idea that when corporations go bad, don’t be shy about the money.
And it is, in the end, just about the money.
Speaking of money, the good news for the U.S. Attorney for the Northern District of California is that there’s a good chance that most of whatever fine FedEx ends up paying will stay in her jurisdiction. That will help law enforcement level the playing field against the next target in this area. That may help cover the cost of investigating the deaths that have occurred from this unholy alliance among pharmacies, Google and shippers.
In a press release, Philip J. Walsky, Acting Director, FDA’s Office of Criminal Investigations summed it up:
Illegal Internet pharmacies rely on illicit Internet shipping and distribution practices. Without intermediaries, the online pharmacies that sell counterfeit and other illegal drugs are limited in the harm they can do to consumers. 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.