First-Ever Criminal Charges Filed Against Drug Distributor and Executives from Opioid Crisis
New York company to pay $20 million in penalties; two executives facing life in prison over charges of intentionally trafficking in millions of pain pills and defrauding the DEA.
Federal authorities last month said they are, for the first time, using statutes aimed at drug cartels and traffickers of street drugs to bring felony criminal charges against a pharmaceutical company’s former CEO and its chief compliance officer, and against the drug company itself.
One of the former executives pleaded guilty before charges were announced.
The charges—part of the battle against the nation’s deepening opioid epidemic—came as federal prosecutors alleged that the two men personally profited while hiding from the government an
800 percent increase in prescription pain pill sales—often to “suspicious” people.
Federal prosecutors with the U.S. Attorney’s office for Manhattan said in a press conference that the Rochester Drug Cooperative (RDC), the nation’s sixth-largest distributor, did not report a 2,000 percent increase in fentanyl sales, which led to at least one executive bonus of $1.5 million in 2016.
Authorities said their investigation showed that the New York-based company shipped tens of millions of oxycodone pain relievers and fentanyl products from 2012-2017, “distributing dangerous, highly addictive opioids,” while knowing that the drugs were “being sold and used illicitly.”
The Justice Department is alleging that the company and its top executives ignored red flags, dispensing highly abused controlled substances in amounts consistently higher than medical standards allowed, often to “practitioners outside the scope of their medical practice” as well as to “very suspicious” and out-of-state patients, while accepting “a high percentage of cash for controlled substances.”
The executives were fully aware that RDC was violating federal narcotics laws, the government alleges, and conspired to defraud the Drug Enforcement Agency (DEA) during a four-year period (2012-2016) which saw an increase in oxycodone sales from 4.7 million pills annually to 42.2 million, and in fentanyl sales from 63,000 doses to 1.3 million pills.
As reported in Freedom in 2018 (Almost Heaven, Almost Hell), America’s opioid crisis has surpassed epidemic proportions. Nearly 50,000 people died from opioid overdoses in the U.S. in 2017, according to published reports. While street opiates like heroin and fentanyl led to the majority of overdoses and deaths in recent years, the tragedy began with a calculated attack on trusting patients, when pharmaceutical manufacturers intentionally misled doctors into prescribing highly addictive pain pills, as Freedom reported.
But sharing in responsibility for this national wave of death were drug distributors as well—the middle men—who provided pills in the millions to small community pharmacies, and disregarded the unexplained spikes in demand without reporting the significant proliferation to federal authorities. While last month brought a day of reckoning for RDC and the two executives who face charges, the move by federal prosecutors indicates the existence of more criminal investigations potentially involving other companies and executives.
“Today’s charges should send shock waves throughout the pharmaceutical industry reminding them of their role of gatekeepers of prescription medication,” the statement said. “The distribution of life-saving medication is paramount to public health; similarly, so is identifying rogue members of the pharmaceutical and medical fields whose diversion contributes to the record-breaking drug overdoses in America.”
RDC has agreed to a $20 million fine as a resolution to some of the criminal charges against the company, as well as a significant strengthening of its monitoring and reporting procedures, authorities noted. RDC also admitted in writing that it intentionally violated federal laws, and knew the drugs were being sold and used illicitly.
“We made mistakes,” a company spokesman said in a statement. “And RDC understands that these mistakes, directed by former management, have serious consequences.”
William Pietruszewski, 53, the former chief compliance officer, and Laurence F. Doud III, 75, who had served as CEO of the company, were each charged individually with conspiring to distribute drugs and with defrauding the government. Pietruszewski pled guilty to charges last month and is cooperating with government.
Doud, who had previously been fired by RDC, pled not guilty and was led off in handcuffs after surrendering to DEA agents. He faces two charges, one carrying a mandatory minimum sentence of 10 years in prison, with a maximum life sentence. He was released on a $500,000 bond.
The government’s allegations paint a picture of unmitigated greed on Doud’s part, leading to the octupling of sales of oxycodone from 2012 to 2016, and a 20-fold increase in fentanyl sales in the same period. Doud’s personal bonus doubled as a result to more than $1.5 million in 2016.
His attorney claims others at the company have made Doud out as a scapegoat. “He will fight these charges to his last breath,” Doud’s attorney said.
Though civil lawsuits have been filed against RDC—as well as against the nation’s three largest distributors (Cardinal Health, McKesson and AmerisourceBergen)—authorities involved in this case declined to comment on any other investigations or pending charges.
Despite more than 200,000 deaths in the last two decades attributed to the opioid epidemic, criminal charges and civil lawsuits have been slow to develop and those that have been filed have moved slowly through the courts, with many ending in undisclosed settlements.
Hundreds of lawsuits have been filed against Purdue Pharma, the makers of OxyContin, the number one selling pain pill for years. But last month, Purdue agreed to pay $270 million to fund addiction research and treatment, as well as legal fees, two years after the state of Oklahoma sued multiple drug manufacturers, including Purdue, for aggressive marketing and deceptive claims about addiction. The original complaint sought $20 billion and the case continues against the other defendants.
Part of that settlement will go to a new National Center for Addiction Studies and Treatment at Oklahoma State University. An additional $75 million for the center will come directly from the Sackler family, the controversial philanthropic family that owns Purdue Pharma.
More than 1,600 cases against nearly two dozen defendants—including Purdue and other drug manufacturers and distributors—are currently being heard in a Multidistrict Litigation case in Ohio, with numerous attorneys on both sides currently negotiating settlements. One of the lead plaintiff attorneys, Paul T. Farrell Jr., profiled in the recent Freedom series on the opioid crisis, issued a statement with his co-counsel that said in part:
“We have long alleged that Purdue Pharma ignited today’s epidemic by starting the disturbing practice of deceptive opioid marketing, convincing both doctors and the American public to trust that these drugs were safe and virtually non-addictive,” he said. “Purdue’s wrongdoing, however, does not stand alone.”