Drug distributor that paid $20M fine exits opioid sales because of costs of legal risks

Troubled drug distributor RDC of Rochester, New York, will no longer sell controlled drugs. (Image by Dimitris Vetsikas from Pixabay)

A New York drug distributor will no longer sell opioids, saying the legal costs associated with them are just too high. Those costs, of course, include the $20 million the company paid to defer federal criminal charges and the costs after two of its execs were charged last year with felonies for the company’s opioid sales practices.

Rochester Drug Co-operative (RDC) announced Tuesday that the legal risks tied to distributing “Control and Narcotic Pharmaceuticals (CII-CV)” far outweigh the small amount of revenue it garners from their sales. 

“The ever-increasing expenses associated with the legal and regulatory compliance for this segment of drugs are simply not sustainable,” the company said in a statement. “We are grateful for the loyalty and patience our customers have shown as we have worked through this decision.”

RELATED: DOJ indicts 2nd opioid distributor for role in illegally pushing pills despite warning signs

The Justice Department in April 2019 filed felony criminal charges against the company, its former CEO Laurence Doud III and its former Chief Compliance Officer William Pietruszewski for unlawfully distributing oxycodone and fentanyl and conspiring to defraud the Drug Enforcement Administration.

The two men face up to 15 years in prison each on conspiracy charges while the company received a five-year deferred prosecution in exchange for paying a $20 million penalty and making changes to its business. 

RELATED: McKesson paying record $150M to settle with feds over opioid sales

While RDC’s revenues from opioids may now be marginal, that was not always the case. 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.

After nailing RDC, the feds went after the former president of distributor Miami-Luken, Anthony Rattini, along with a former compliance officer and two pharmacists. They were charged with illegally distributing opioids at the height of the nation’s addiction crisis. That came even after the company closed in 2018.

The big players also have not escaped financial impact. McKesson agreed to pay a record $150 million civil penalty in early 2017, while Cardinal Health paid $44 million for similar violations of the Controlled Substances Act. Both Cardinal and AmeriSourceBergen reached settlements with West Virginia for a combined $36 million. Dozens of civil cases have also been filed against opioid drugmakers and distributors.

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