In a new attack on the pharmaceutical industry’s involvement in opioid overdose deaths, the Justice Department has filed felony criminal charges against a New York drug distributor and two of its executives and is warning the rest of the industry to beware.
Rochester Drug Co-Operative (RDC), its former CEO Laurence F. Doud III, and its former Chief Compliance Officer William Pietruszewski were charged in New York for unlawfully distributing oxycodone and fentanyl, and conspiring to defraud the DEA.
The two men face up to 15 years in prison each on conspiracy charges. The company, however, agreed to pay a $20 million penalty, acknowledge its involvement in illicit acts and to make changes in its operations. In exchange, the feds will defer prosecution for five years and drop the charges if RDC complies with terms of the deal.
In filing the charges, the feds declared they were prepared to take on companies and executives that divert controlled substances into the wrong hands for the wrong reasons.
“Today’s charges should send shock waves throughout the pharmaceutical industry reminding them of their role as gatekeepers of prescription medication,” DEA Special Agent in Charge Ray Donovan said in a statement. “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.”
The charges come about a week after federal prosecutors filed charges against 60 doctors, pharmacists and other medical professionals for allegedly pushing opioids in the hard-hit Appalachia region.
Documents filed with the RDC case say that from 2012 to 2016, the distributor's sales of oxycodone tablets grew 800% to 42.2 million. Sales of the synthetic opioid fentanyl increased about 2,000% to 1.3 million doses from just 63,000 doses in the same time period. The documents say Doud’s compensation more than doubled during that time to more than $1.5 million.
The information filed in the case said the two men ignored “red flags” and warnings from their own employees. They directed employees to sell opioids to pharmacies whose practices were a tip-off that they were engaged in questionable sales, things like “dispensing to out-of-state patients; and filling controlled substances prescriptions issued by practitioners acting outside the scope of their medical practice.” It says RDC frequently brought on pharmacy customers that had been terminated by other distributors.
While the DOJ has beefed up its efforts in the fight against opioid abuse as overdose deaths have skyrocketed in recent years, this case serves as a new milestone in that effort. Other drug distributors have been slapped with civil penalties for their opioid sales practices but this is the first ever felony criminal charges levied against a distributor and its executives.
McKesson in 2017 agreed to a $150 million civil payment and was ordered to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for failing to report suspicious sales to the DEA. Cardinal Health agreed to pay $44 million for similar violations of the Controlled Substances Act. Cardinal and AmerisourceBergen also settled a case brought by the state of West Virginia. Other state litigation is still working its way through the courts.
The feds and state prosecutors have also won guilty pleas from executives and employees of Insys for the marketing of its Subsys fentanyl spray which included visits to strip clubs for doctors who sales reps believed would aggressively prescribe the highly addictive drugs for off-label uses.