In the rise of online-based service industries like internet retailers and online pharmacies, business is booming for express couriers like FedEx, but not without a cost. The delivery service giant FedEx has been indicted in the Northern District of California for activity stemming from certain deliveries made in connection with online-based retail. The Drug Enforcement Administration (DEA) and the Federal Drug Administration (FDA) allege that FedEx conspired to traffic controlled substances and mislabeled prescription drugs from online pharmacies that operated under inconspicuous names.
One such online pharmacy retailer was shut down in 2003 when its owner, Vincent Chhabra, was arrested for illegal operations. Despite the owner’s arrest, the indictment alleges that offshoots of his organization, specifically RxNetwork, continued to operate illegally. Not only did the offshoots continue their illegal operations, but FedEx continued to partner with these offshoots. While it is legal for internet pharmacies to exist, these pharmacies are regulated by the DEA like any other brick-and-mortar pharmacy.
According to the U.S. Attorney, had FedEx done its due diligence in investigating the offshoot organizations, it would have connected the offshoots with the original illegal companies. Among other things, they also maintain that FedEx should have more closely reviewed company names and the shipping and billing addresses associated with RxNetwork. The indictment also claims that workers knowingly witnessed the illegal fulfillment of pharmacy vendors’ orders directly on premise.
Stakeholders at FedEx, however, tell a different tale. They claim protection under the Controlled Substances Act, which dismisses liability of all common contract carriers that are acting within the lawful course of business. They also keep all online pharmacy accounts on credit restrictions since it is difficult to identify which vendors may be operating illegally, and are committed to refusing to do business with any illegal vendors found on a DEA-provided list. FedEx also claims that the task of identifying illegally run offshoots of previously identified criminal pharmacy operations would require an extensive metadata analysis, which is outside of FedEx’s normal scope of work. As for their response to visiting illegally operating fulfillment centers? The day-to-day operations of packaging and shipping have no role in identifying an operation as illegal. The only way to identify operations as illegal is to identify the invalid prescriptions upon which the orders themselves were based.
FedEx is not the only commercial delivery organization coming under scrutiny. However, other commercial express delivery organizations, such as UPS, have avoided indictments by signing “non-prosecution agreements” and paying the Justice Department to the tune of $40 Million.The result of FedEx’s pending lawsuit will surely be a case study on the relationship between the DEA and commercial organizations, such as FedEx.
One such online pharmacy retailer was shut down in 2003 when its owner, Vincent Chhabra, was arrested for illegal operations. Despite the owner’s arrest, the indictment alleges that offshoots of his organization, specifically RxNetwork, continued to operate illegally. Not only did the offshoots continue their illegal operations, but FedEx continued to partner with these offshoots. While it is legal for internet pharmacies to exist, these pharmacies are regulated by the DEA like any other brick-and-mortar pharmacy.
According to the U.S. Attorney, had FedEx done its due diligence in investigating the offshoot organizations, it would have connected the offshoots with the original illegal companies. Among other things, they also maintain that FedEx should have more closely reviewed company names and the shipping and billing addresses associated with RxNetwork. The indictment also claims that workers knowingly witnessed the illegal fulfillment of pharmacy vendors’ orders directly on premise.
Stakeholders at FedEx, however, tell a different tale. They claim protection under the Controlled Substances Act, which dismisses liability of all common contract carriers that are acting within the lawful course of business. They also keep all online pharmacy accounts on credit restrictions since it is difficult to identify which vendors may be operating illegally, and are committed to refusing to do business with any illegal vendors found on a DEA-provided list. FedEx also claims that the task of identifying illegally run offshoots of previously identified criminal pharmacy operations would require an extensive metadata analysis, which is outside of FedEx’s normal scope of work. As for their response to visiting illegally operating fulfillment centers? The day-to-day operations of packaging and shipping have no role in identifying an operation as illegal. The only way to identify operations as illegal is to identify the invalid prescriptions upon which the orders themselves were based.
FedEx is not the only commercial delivery organization coming under scrutiny. However, other commercial express delivery organizations, such as UPS, have avoided indictments by signing “non-prosecution agreements” and paying the Justice Department to the tune of $40 Million.The result of FedEx’s pending lawsuit will surely be a case study on the relationship between the DEA and commercial organizations, such as FedEx.
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