SALT LAKE CITY — The owner of a Utah pharmacy who bought a falsely labeled shipment of chloroquine from China that he intended to sell to the state as a controversial treatment for COVID-19 avoided prison Monday.
A federal judge in Salt Lake City sentenced Daniel K. Richards, the CEO of Draper-based Meds in Motion, to three years probation after he pleaded guilty in January to one misdemeanor count of receipt of misbranded drugs in interstate commerce in U.S. District Court. Magistrate Judge Daphne Oberg also imposed a $10,000 fine.
Also, Meds in Motion pharmacies in Draper, Millcreek and St. Mark's Hospital were closed as of April 2, according to a recording on the company's phone number. All prescriptions are being transferred to its Holladay location, which will be filled until the remaining inventory is depleted. Meds in Motion will no longer fill new prescriptions.
Richards admitted in a plea agreement to receiving 50 kilograms of chloroquine around April 8, 2020, according to court documents. The product was falsely labeled as boswellia serrata extract, a resin taken from the bark of the boswellia tree grown in India, North Africa and the Middle East used to treat inflammation.
The manufacturer of the drug, which is not named in the court documents, is not registered with the Food and Drug Administration. Also, the label on the drugs did not include adequate directions for use.
Richards' attorney, Greg Skordas, earlier said the misdemeanor charge came as the result of months of negotiation with the Department of Justice.
Early in the coronavirus pandemic, hydroxychloroquine was being touted as a potential treatment for COVID-19 and many state leaders were understandably anxious to get Utah on top of the issue by trying to obtain enough to help the entire state, Skordas said.
"A lot of very knowledgeable people wanted the state to be prepared once the drug received approval, but we now know that never came. No one thought they were breaking any laws. These people thought they were saving lives," Skordas said in January.
Then-President Donald Trump touted and took hydroxychloroquine as a protection against the coronavirus, despite warnings from his own government that it should only be administered for COVID-19 in a hospital or research setting due to potentially fatal side effects.
Utah bought $800,000 worth of the anti-malarial drug from Meds in Motion in April 2020, a deal that soon raised red flags among pharmacists, medical professionals and some state lawmakers. The left-leaning Alliance for a Better Utah filed a price-gouging complaint against the pharmacy over the 20,000 doses it sold to the state.
After an internal review of the deal, the state determined that a supply of chloroquine/hydroxychloroquine was no longer prudent, and sought and received a refund from Meds in Motion.
Richards said at the time that the transaction was done in good faith and that the sale was legal, and accusations of price gouging were unfounded. He said the state would have been given a more than 50% discount in the custom-compounded drugs.
Meds in Motion spent close to $1 million stockpiling chloroquine and hydroxychloroquine. Richards said at the time that the pharmacy planned to take a loss and donate the medication to charity to address a worldwide shortage of anti-malarial medications in developing countries, including Africa.