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The embattled CEO convicted of illegally importing anti-malarial drugs to treat Utahns with COVID-19 has stepped away from his pharmacy business — which is about to surrender the license for its last retail location in the wake of last year’s controversy.
Dan Richards, founder of Draper-based Meds in Motion, told the state pharmacy board in late May that the business was shifting to a new owner and that he was no longer employed there. And though he was unsure what his next career move will be, he’ll have to remain under the watchful eyes of state regulators while his professional license hangs in the balance.
Meanwhile, the business he once led continues to shrink, and the drugs on which he staked his money and reputation are about to be destroyed.
It’s part of the ongoing fallout from Richards’ push last year to import barrels of hydroxychloroquine and chloroquine, malaria medications that President Donald Trump and others touted as a potential coronavirus miracle cure — even though there was scant evidence to support these claims and many reasons for caution.
At one point, Richards teamed up with a group of powerful state officials on a plan to make his drugs available to coronavirus patients across Utah and even sold them $800,000 worth of the medication.
The state backpedaled from the drugs and from Richards as evidence mounted that the hydroxychloroquine and chloroquine were ineffective in treating hospitalized COVID-19 patients and could cause serious side effects. Officials ultimately cancelled the initial order from Meds in Motion and received a refund.
Repercussions from this imploded plan and Richards’ subsequent criminal prosecution seem to have devastated Meds in Motion, which was operating four pharmacies across the state. Three of those locations have already closed, and a landlord for one of those pharmacies is suing Meds in Motion for alleged nonpayment of rent.
Recently, the chain surrendered the last of its pharmacy licenses and notified state regulators that its Holladay store, the only Meds in Motion location left standing, would close July 1.
A phone call to the listed number for Meds in Motion went to a recorded message, and the store was closed when a reporter visited this week, although a sign posted on the entryway said it would reopen after lunchtime.
Barry Kallander, president of a Massachusetts-based company that guides businesses through “distressed and special situations,” signed the paperwork surrendering the licenses. Reached by phone, he declined to comment on the pharmacy closures.
However, state court records indicate that a California-based skin care company called Musely agreed to buy the vestiges of the Meds in Motion enterprise and intended to open its own pharmacy location.
The plan was to move Meds in Motion equipment and chemicals to the new Musely pharmacy in early June, with employee training conducted throughout the month. Meds in Motion’s final day in business was scheduled for Friday, under a tentative schedule attached to the signed agreement.
But the fate of that business transition is unclear, since Meds in Motion this week filed a lawsuit in 3rd District Court claiming Musely missed a scheduled payment for the Utah pharmacy chain.
The business deal indicates that Musely was supposed to pay Meds in Motion a base amount of $355,000 in three installments — although that total would be adjusted upward to account for the additional purchase of goods and downward for the lingering debt that Meds in Motion is carrying.
Meds in Motion’s lawsuit claims that Musely “failed and refused” to make a second payment totaling $140,000 and demands damages totaling $362,000.
Musely has not yet filed a response to the allegations, and a representative declined to comment on the pending case.
Can Richards donate the drugs?
During their late May meeting with Richards, state pharmacy board members pressed him about his intentions for the hydroxychloroquine and chloroquine powder — which was confiscated by federal authorities during last year’s criminal investigation.
Richards in January pleaded guilty to illegally receiving drugs that were mislabeled as an herbal supplement, and a federal judge later ordered him to spend up to $30,000 to destroy the medication.
However, his attorney in April told The Salt Lake Tribune that Richards was still hoping federal officials would release the 1,210 pounds of hydroxychloroquine and chloroquine so he could compound the raw powder into pills or tablets and donate it to malaria-stricken nations.
The pharmacy board’s chairwoman, Carrie Dunford, expressed concern during the May meeting that neither Richards nor Meds in Motion is authorized to prepare medicine on this massive scale.
“We really want to make sure that the compounding laws and rules in this state and country are followed. And that was definitely not in congruence with either,” said Dunford, referring to the reports that Richards might prepare and export the drugs.
And, Dunford noted, Richards can’t afford another misstep given the tenuous state of his pharmacy license — which is under threat of suspension or revocation if he violates his five-year probation.
“I want to make sure you’re aware that those are the consequences if something like that does happen,” Dunford said. “Because that is a pretty heavy penalty.”
During the hearing, Richards called reports that he wanted to compound and donate the drugs “fake news” and said he was interested in giving them to someone else who was authorized to prepare the medication.
“We were never planning on making anything,” he told the board. “If anything, we were going to say, ‘Here’s the powder. You take it, and do with it what you will.’”
That assertion does not line up with statements made to The Tribune by Richards’ attorney, Greg Skordas, who said his client was hoping to salvage the drugs for his humanitarian plan.
“[I]t is probably no more expensive for him to compound the Hydroxychloroquine and have it delivered to Africa than pay what the Government is expecting to charge him to have it all destroyed,” Skordas wrote in an email.
In a subsequent interview, the attorney also said the medication is “available, and it can easily be compounded and shipped.” Skordas continued, ”And we’re willing to do that at our expense.”
Skordas this week did not respond to questions from The Tribune about the discrepancy between his statements and Richards’ comments during the pharmacy board meeting.
Where are the drugs now?
Richards told the pharmacy board in May that his efforts to salvage his drugs from the federal government have been unsuccessful and that the medication was “set to be destroyed probably within a month.”
Federal authorities last week handed over the hydroxychloroquine and chloroquine to a company called Trilogy MedWaste for disposal, a spokesman for the Utah U.S. Attorney’s Office told The Tribune. The company is getting ready to transport the drugs to Amarillo, Texas, where they’ll be destroyed.
Richards gambled at least $355,000 on the drugs, he has previously reported through Skordas, between the costs of buying, importing and testing them.
In addition to this financial loss, a federal judge sentenced Richards to three years of probation, slapped him with a $10,000 fine and told him to pay the drug disposal costs.
State regulators fined him another $5,750 and gave him a long list of probation requirements — telling him he must tell regulators about any employment change and complete six hours of coursework, among other things. He must follow these stipulations for five years if he wants to keep his pharmacy license.
During May’s meeting, Richards asked the Utah State Board of Pharmacy for advice in taking the next steps in his career, given these strictures. Board members said the job market for pharmacists is competitive right now but suggested he might look for employment in consulting, research or other jobs that don’t involve the traditional behind-the-counter role of a pharmacist.
But Richards told the pharmacy board that getting hired will be challenging, since under the terms of his probation, a designated supervising pharmacist must monitor him on the job. And yet, he can’t work off his probation unless he’s able to remain employed as a pharmacist, he said.
“And so what do I do here?” he said. “I’m kind of stuck in a cosmic loop.”
— Tribune reporter Taylor Stevens contributed to this report.