$33,000 fine for selling medicines over internet

Wallace Waugh

A father-and-son pair illegally sold more than $10 million worth of pharmacy-only medicines over the internet before the Ministry of Health finally caught up with them and brought them to court.

It is estimated the drugs had cost Iain Waugh and his father Wallace just $2.5 million on the wholesale market.

The medicines were sold over the internet under the company name Ink Media Ltd.

Other companies that were part of the Ink Media group and were run by the Waughs included Ink Electronic Media Ltd and Standard 304 Ltd.

However, the exact profits of the companies were unknown, said Judge Neil MacLean during sentencing at the Hamilton District Court yesterday.

Ink Media continues to sell medicines through its internet site www.unitedpharmacies.com.

Only Wallace Waugh, 69, appeared at yesterday's sentencing.

His son, Iain Waugh, is thought to be in China. He was also missing during the court hearing last year. A warrant is out for his arrest and he faces many more charges on his return.

Waugh junior's sentencing on the charges for which he has already been convicted is set down for 26 May.

While a jail term for Waugh senior was not sought by Crown Solicitor Mike Heron yesterday, a substantial fine for more than 80 charges was.

Judge MacLean fined Wallace Waugh and Ink Media a total of $33,000. Court costs for 86 charges were ordered, totalling $11,180.

After the sentencing, Waugh refused to answer questions about whether he regretted his actions.

He told the Herald that the Ministry of Health had tried and failed three times to get a conviction before the latest court hearing. He said he would appeal.

The judgment handed down by Judge MacLean shows the medicines were sold to individuals in overseas markets without prescription. The orders were distributed from a Fijian base to many countries, including Australia and the United States.

Wallace and Iain Waugh illegally sold and advertised drugs on the internet between November 2002 and August 2003.

Included in their list of goods were Ventolin inhalers, Xenical and Argentinian-sourced Proscar.

Many medicines were bought from ZZ Pharmacy, a licensed pharmaceutical wholesaler.

The relationship between ZZ Pharmacy and the Waugh-run Ink Media was described by an employee of ZZ Pharmacy as "sizeable, averaging perhaps $100,000 a month."

During yesterday's hearing Mr Heron described the operation as a "money-making venture" in which the Waughs had knowingly and deliberately broken the law.

He said aggravating factors included the premeditation and planning of a large-scale operation, the risk to consumers and the threat to the regulatory integrity of other countries as well as of New Zealand.

"The actions were cynical and deliberately mercenary."

Judge MacLean summarised the men's attitude as one of "chancing their arm". He said although the risks to the public were theoretical they were nevertheless real.

A sudden drug recall would be impossible to trace to purchasers because no prescriptions existed. Proscar, if it came into contact with pregnant women, presented risks of birth defects to the newborn.

CASE 'SENDS MESSAGE'

Medsafe, a regulatory arm of the Ministry of Health, says buying medicines over the internet was not a victimless crime because it was potentially "very dangerous" to the health of patients to use prescription drugs without medical advice or supervision.

Medsafe's principal technical specialist Dr Stewart Jessamine said the sentencing sent a message to New Zealand suppliers that irrespective of where their website was situated, or where the medicines were ultimately supplied from, if the route of supply originated in a New Zealand entity and the sale took place in New Zealand, it was an offence under New Zealand law and offenders might be prosecuted.

"Medsafe will continue to prosecute those found to be committing similar offences." Dr Jessamine said.