Covetrus will pay $23.5M to settle criminal charge of animal drug misbranding
Photo / William Hall
Covetrus, which has its global headquarters in Portland's East End, on Monday pleaded guilty to a federal criminal charge involving misbranded veterinary prescription drugs.
One of the world's largest veterinary pharmacies and suppliers, Portland-based Covetrus, will pay over $23 million to settle a federal criminal charge that the company sent misbranded prescription drugs to customers throughout the U.S. for nearly three years.
Covetrus' North American subsidiary on Monday pleaded guilty in an Abingdon, Va., courtroom to a single misdemeanor count of "causing the introduction and delivery of misbranded veterinary prescription drugs into interstate commerce."
Under an agreement with the U.S. attorney for the Western District of Virginia, Covetrus will pay a $1 million fine, another $1 million for costs of state investigation help and $21.5 million in forfeitures for the misbranded products.
In addition, Covetrus will be on probation for up to three years and must follow certain compliance measures against future violations.
The agreement still has to be approved by a judge at a May 8 sentencing.
Endangering animals, and humans
From March 2019 to December 2021, according to court documents, Covetrus shipped prescription animal drugs from wholesale locations to users who were not authorized to receive the medications.
The court filings did not describe the types of drugs that were sent, their quantity or who the unauthorized recipients were — although they included personal accounts, according to the charging document.
The U.S. attorney's office said the Covetrus shipments were "misbranded" under federal law because their labeling did not contain required directions for use by a layperson. Prescription drugs sent to a licensed veterinarian are exempt from that requirement. In its daily operations, Covetrus sends medications to vets as well as unlicensed users such as pet owners, so the appropriate labeling is essential.
The federal restrictions "not only protect animals from the potential harms of prescription drugs, but are, in part, to prevent overuse," which can lead to drug-resistant forms of disease, the document said. In addition, unauthorized use of medications in some animals can put drug residue into the food chain, endangering human health.
In response to questions from Mainebiz, a Covetrus spokesperson would not provide details about the case but said in a statement, "We fully cooperated with the U.S. Attorney’s office, and we are committed to complying with federal and state laws related to prescription veterinary medication.
"Covetrus’ mission is to help veterinarians drive better financial and clinical outcomes, and doing so in a way that is compliant with all federal and state laws."
George Scavdis, a special agent in charge at the Food and Drug Administration, which led the investigation, said in a news release, “The FDA recognizes the importance of controlling the prescription drug supply for animals. The careless or uncontrolled distribution of prescription animal drugs poses a danger not only to the medicated animals but to the U.S. public health by increasing the risk that humans will become resistant to antibiotics that we unknowingly consume through our food supply."
U.S. Attorney Christopher R. Kavanaugh said, “The United States Attorney’s Office for the Western District of Virginia takes the distribution of misbranded prescription drugs seriously ... Today’s result demonstrates my Office’s commitment to holding those companies and corporations accountable when they seek to profit by breaking the law.”
More about Covetrus
The misbranding and illegal shipping at Covetrus began just weeks after the company launched and went public in February 2019.
Covetrus was formed from a merger of Portland startup Vets First Choice, which provided veterinary drugs and pharmacy technology, and the animal-health supply business of Henry Schein Inc., of Melville, N.Y. The Schein subsidiary later became the North American business of Covetrus Inc., and is based in Dublin, Ohio.
Soon after its start, the company underwent a series of leadership changes, including the resignations of David Shaw and son Benjamin Shaw, who, together, had co-founded Vets First Choice in 2010.
In 2022, Covetrus was acquired for $4 billion by a pair of private equity firms, Clayton, Dubilier & Rice, headquartered in New York, and San Francisco-based TPG Capital. At the time, Covetrus had a market capitalization of roughly $2.7 billion and had reported 2021 revenues of $4.58 billion.
Those numbers made Covetrus the largest public company based in Maine, and No. 643 among the largest in the U.S., according to Fortune magazine.
Today Covetrus provides a range of animal-health products, technology and services, operating as a private company from newly built headquarters in Portland's East End. According to its website, Covetrus has more than 5,700 employees and 100,000 veterinary customers worldwide. The CEO is Ben Wolin.
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