A compounding company that marketed treatments for Thoroughbred racehorses recently pleaded guilty in federal court, and one of the company’s executives faces federal charges in an alleged scheme involving fake prescriptions to facilitate distribution.
U.S. Attorney for the Southern District of New York Damian Williams and Christie Curtis, acting assistant director in charge of the Federal Bureau of Investigation’s New York field office, announced on July 9 that US Compounding, a subsidiary of DMK Pharmaceuticals Corporation, pleaded guilty to multiple counts of fraud before U.S. District Judge Arun Subramanian, and a former USC executive, Sam Glover, was charged in an Indictment with conspiracy to violate the Food, Drug, and Cosmetic Act.
Under the plea agreement, USC agreed to pay a forfeiture payment of approximately $4.2 million and a criminal fine of up to $16.9 million. According to federal court documents, DMK Pharmaceuticals filed for Chapter 11 bankruptcy in February in Delaware Bankruptcy Court.
According to the release, Glover was arrested and his case will initially go before a federal judge in the Eastern District of Arkansas. Glover, 45, of Arkansas, is charged with one count of conspiracy to violate the FDCA, which carries a maximum sentence of five years in prison.
“Distributing prescription drugs with fake prescriptions is wrong and illegal,” Williams said. “Today’s corporate resolution, and the indictment of Sam Glover, an executive who oversaw and allegedly perpetuated the scheme, reflect this office’s commitment to holding accountable those who seek to violate laws designed to ensure that drugs distributed across the United States are safe, necessary, and legal.”
“US Compounding, Inc. and its former CEO Sam Glover allegedly engaged in multiple frauds and violations of the Food, Drug, and Cosmetic Act by falsifying prescriptions,” Curtis said. “Despite extensive scrutiny by company members who suspected the prescriptions were unverified, company management continued to authorize the claims and reap the profits. This investigation is part of a broader FBI effort to ensure that both individuals and organizations that create complex fraud schemes are not allowed to continue their illegal arrangements and profit from their deception.”
The release does not document the alleged use of compounded drugs, other than noting an alleged illegal arrangement with a veterinarian to create fake prescriptions to justify shipping prescription drugs directly to consumers, including consumers in the Southern District of New York, which the release says is a violation of the Food, Drug, and Cosmetic Act.
BloodHorse reached out to a spokesperson for the U.S. Attorney’s Office, but she declined to provide further details about the release.
BloodHorse also left a message with a phone number they believe belongs to Glover based on documents and voice messages but did not immediately receive a response.
US Compounding has been involved in marketing products for horse racing. A 2011 Arkansas Democrat Gazette article quoted a company founder, Eddie Glover, who in another article in that newspaper was identified as Sam Glover’s father, as saying that US Compounding formulated drugs for animals “from your kitten to a racehorse at Churchill Downs and everything in between.”
A 2017 press release from Adamis Pharmaceuticals Corporation, which considered US Compounding a subsidiary and later renamed DMK Pharmaceuticals, noted that US Compounding had “developed a unique compound for the treatment of ulcers in horses.” The release noted that a pair of Breeders’ Cup winners had used the product, and said the ulcer treatment was being marketed for racehorses, as well as horses in virtually every other sport.
Dr. Dennis J. Carlo, identified in the release as Adamis’ president and CEO at the time, stated in the release, “This new compound is the first product in an expansion of our veterinary product line. Please note, since the Breeders’ Cup, two other horses using our product have won their respective races, one of which set a track record.”
While Carlo appears to be alluding to performance benefits in that quote, the case, based on the details available so far, appears to center on alleged misconduct in the distribution of these mixed substances that were marketed to compete with other permitted but regulated drugs in the sport.
The U.S. Attorney’s Office for the Southern District of New York alleges that an illegal arrangement with a veterinarian allowed a salesperson to create fake prescriptions to justify shipping prescription drugs directly to consumers. The charges date back to 2015.
