Utah pharmacist gets probation for illegally importing drug that officials wanted to use for COVID-19

The Draper executive shipped chloroquine and hydroxychloroquine falsely labeled as herbal extract for his no-bid contract with the state.

A Utah pharmacist will not serve prison time for illegally importing an antimalarial drug the state had planned to buy as part of a controversial coronavirus treatment plan.

Dan Richards, CEO of the Draper-based Meds in Motion, in January pleaded guilty to importing hydroxychloroquine and chloroquine from a vendor that wasn’t registered with U.S. drug regulators, in shipments that were falsely labeled as an herbal supplement.

A federal judge on Monday sentenced Richards to three years’ probation, as well as $10,000 in fines and the cost of destroying the unused hydroxychloroquine, up to $30,000.

Richards was poised to sell millions of dollars worth of hydroxychloroquine to the state last spring, as the drug was gaining “hype” as a possible coronavirus cure, said prosecutor Ruth Hackford-Peer.

“There’s no doubt he’s made some terrible decisions, and criminal ones at that,” Hackford-Peer said. “But it does appear that he had a good heart in doing so and thought he would be helping the people of the state of Utah.”

At the time, “the state of Utah was anxious to procure [the drug] by hook or by crook,” said Richards’ defense attorney, Greg Skordas.

Richards had begun to promote the malaria drug to state officials as a possible coronavirus treatment in early March, even before a prominent bitcoin investor penned an argument for its use in coronavirus cases, which was then amplified by Elon Musk and broadcast by Fox News.

It also was before a renowned French microbiologist released a small and controversial study claiming a hydroxychloroquine cocktail cured 100% of the trial subjects.

And it was before President Donald Trump began to extol hydroxychloroquine as a “miracle” cure, leading to a nationwide run on the 86-year-old drug.

“I do not want to wait and see what happens, but would rather try our best to have some course of action,” Richards wrote to Utah health officials, in a March 12 email that launched the multimillion-dollar deal that would later fall apart and land Richards in federal court.

By late March, Richards had secured an $800,000 no-bid state contract for hydroxychloroquine. Richards and other business executives initially proposed to dispense the drug to patients identified and tested through TestUtah, which Orem-based company Nomi Health had launched under a separate no-bid contract with the state at about the same time. Nomi’s founder, Mark Newman, also sat on the board of directors of Richards’ pharmacy.

The state backed off the plan to create a prescription-free “standing order” for hydroxychloroquine after objections from medical experts and new research showed possible risks of using the drugs to treat coronavirus.

But state lawmakers set aside another $8 million for a second, larger drug buy from Richards.

That purchase was canceled after the Food and Drug Administration formally warned against the use of the drug for the coronavirus, due to possible health risks and a lack of evidence it was effective in treating the virus — and about the same time as federal investigators seized 500 kilograms of hydroxychloroquine and 50 kilograms of chloroquine Richards had planned to use for the state’s orders, Skordas has said.

“Unfortunately, the manner in which he procured that was inappropriate,” Skordas said at Monday’s sentencing.

Richards ordered the drugs from a Chinese supplier that was not registered with the FDA. On Monday, he pointed to state guidelines that require compounding pharmacies to “first attempt to use compounds manufactured from an FDA-registered facility” but also advises that “compounders should use their professional judgment” as to product quality if a chemical isn’t available from a registered supplier.

“As we were going through this in real time and there were lots of things moving, this was my ‘professional judgment,’” Richards said of his decision to order the drugs from an unregistered vendor. “I saw that and acted.”

But he also imported the drugs in shipments that were falsely labeled Boswellia serrata extract.

The herbal extract, otherwise known as Indian frankincense, is used to reduce inflammation and to treat arthritis, asthma and inflammatory bowel disease.

Skordas said later testing confirmed the drugs were “FDA-quality” hydroxychloroquine and chloroquine and argued they should be shipped to countries at risk of malaria outbreaks. But Hackford-Peer said federal regulators hadn’t confirmed the quality and the drugs would have to be destroyed at Richards’ expense.

Skordas again stressed that Richards acted at the behest of state officials. Emails obtained by The Salt Lake Tribune show that state Senate President Stuart Adams and the boss of the Utah Inland Port Authority networked with customs brokers after one of Richards’ hydroxychloroquine shipments was held up by inspectors in San Diego.

But that particular shipment was different from the one that was illegally mislabeled, and there’s no indication in the communications that state officials knew that earlier shipments to Richards had been branded as herbal supplements.

“He was dong some work for some very prominent state and local officials who were anxious to [acquire the drug],” Skordas said Monday. “At the time, everyone in the country, from the president down, felt that hydroxychloroquine had the potential to do some pretty miraculous things.”

Richards refunded the money the state had spent on the drugs, and the shipment that led to the federal charges didn’t make its way to patients.

“There was no financial or health harm to the public on the back end of this,” acknowledged U.S. District Court Magistrate Daphne A. Oberg.

Under the conditions of his probation, Richards must open all of his financial dealings to federal agents. State regulators last month placed Richards’ license under probation for five years.