Manitoba regulator loses appeal to revoke internet pharmacy pioneer's licence again

A man whose pioneering internet pharmacy business collapsed following allegations of selling unapproved and counterfeit drugs in the U.S. has been allowed to hold on to his Manitoba pharmacy licence.

Manitoba's highest court ruled last week there was "no basis" to interfere with the ruling of a lower court judge who reinstated Kristjan Thorkelson's pharmacy licence in 2022.

Thorkelson's licence to practise was cancelled by the council to the College of Pharmacists of Manitoba in 2019, two years after he was among six Canadians arrested and targeted for extradition to the United States over a drug investigation involving the distribution of allegedly counterfeit drugs. 

Thorkelson and several of his companies, including Montana Healthcare Solutions and Canada Drugs, were charged in 2014 with selling and importing $78 million US worth of unapproved, mislabelled and — in two cases — allegedly counterfeit cancer drugs to doctors across the U.S.

Last year, Thorkelson's pharmacy licence was reinstated by a Manitoba Court of King's Bench judge who found the revocation was an "extreme penalty" that did not fit the circumstances. The college later appealed that decision.

In a written decision issued Aug. 9, Manitoba Court of King's Bench Associate Chief Justice Shane Perlmutter and two other judges upheld the lower court's decision and dismissed the college's appeal with costs.

Thorkelson has been licensed as a pharmacist since 1991 and owned several companies that were collectively known as the CanadaDrugs.com Group of Companies — which, at its height, became the world's largest international pharmacy business, the 2022 King's Bench decision said.

The scandal that ultimately brought the company crashing down involved River East Supplies Ltd. — a licensed wholesale pharmacy in the United Kingdom that was among the companies Thorkelson owned — and a quantity of the cancer drug Avastin that it bought from a company in Denmark.

Companies shuttered

River East resold the drug to a clinic in the U.S., which shortly after reported the drug "appeared suspect." An investigation by the U.S. Food and Drug Administration concluded some of the Avastin had no active ingredient.

While the Medicines and Healthcare Products Regulatory Agency in the U.K. and Health Canada both concluded no action was needed, the U.S. Department of Justice in 2015 filed an indictment in the District Court of Montana against Thorkelson and his companies, charging them with smuggling, international money laundering and conspiracy.

Thorkelson's lawyers later arranged a plea deal, in which their client pleaded guilty to one charge of misprision — meaning an offender knew a felony crime had been committed but didn't tell authorities and took steps to conceal it. 

That charge stemmed from an email Thorkelson wrote to employees of CanadaDrugs.com on March 8, 2012, in which he wrote "CanadaDrugs.com … has absolutely no connection to selling and offering Avastin given that CanadaDrugs.com has never offered that product for sale."

There was no evidence that anyone at River East had reason to believe the Avastin was defective.

Thorkelson was sentenced to five years of probation, including six months of house arrest, and agreed to pay a fine of $250,000, restitution of $30,000 and other costs.

Three of his companies — CanadaDrugs.com, River East, and Rockley Ventures — paid a fine of $5 million and restitution of $29 million to the U.S. Marshall's Service. The companies also surrendered their domain names and ceased operations.

Appeal decision

In its appeal to Manitoba's highest court this year, the college of pharmacists asked the appeal court to examine whether the original judge made errors in law, including by conflating the council's administrative authority with its disciplinary authority and by considering the penalty imposed on Thorkelson by the U.S. court. 

It also appealed the $8,000 in costs it was ordered to pay, which was well above the requested amount of $2,505.

While that figure amounted to an error in principle because the judge awarded the higher amount "without first alerting counsel of her inclination to do so" or asking for submissions on that decision, the appeal court judges said it still used "a principled and defensible approach" given the complexity and amount of preparation needed for the case.

Thorkelson also filed a cross appeal, requesting an examination of whether his American conviction was relevant to whether he was suitable to be a pharmacist. That appeal was not decided, since Thorkelson was successful overall, the decision said. 

Tyler Kochanski, a lawyer for Thorkelson, said in an email his client is "very pleased" with the appeal court's decision but will not be commenting on it.

Anja Sadovski, a spokesperson for the College of Pharmacists of Manitoba, said in an email the college respects the court's decision and has nothing to add.