Pharma Execs Face Drug Trafficking Charges Over Opioid Crisis

By - April 30, 2019
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Federal law enforcement has long tried to crush the opioid crisis in the US with tough criminal charges for street dealers and drug cartel leaders who traffic in dangerous drugs such as fentanyl and oxycodone. (Nyt.com)

For the first time this month, federal agents are bringing similar federal drug trafficking charges against a pharmaceutical distributor, as well as two of its ex-executives for their role in spreading the drug crisis.

Execs Allegedly Shipped Millions of Highly Addictive Opioids to Suspicious Pharmacies

Federal prosecutors allege the former executives at Rochester Drug Cooperative ignored warnings and shipped tens of millions of fentanyl products and oxycodone pills to pharmacies around the country they knew were illegally distributing the drugs. Sales for the companies skyrocketed, as did the pay for the CEO. (cnn.com)

Geoffrey Berman, the US attorney in Manhattan, who announced the federal charges last week at a news conference, asked why they did it. “Greed,’ was his answer.

Berman noted this was the first federal drug case of its kind and would do all in his power in his office to fight the opioid epidemic, from dealers at the street level to executives who distribute drugs illegally from the boardroom.

Days of Execs Avoiding Criminal Consequences for OD’s May Be Over

The new tactic of the federal government is going to send waves through the pharmaceutical industry, where big corporations and top executives usually skirt criminal responsibility for the large number of overdoses in the country from prescription painkillers, such as oxycodone.

Last Tuesday, federal prosecutors charged Rochester Drug Cooperative (RDC), as a corporate entity that had conspired to distribute drugs, and conspired to defraud the US and failed to file suspicious order reports.

However, the company entered an agreement where the US government will hold off prosecuting the corporation on the federal charges, if it pays a $20 million fine, fully complies with US controlled substances laws, and agrees to five years of supervision by a monitor chosen by the feds.

As part of the tentative agreement, the company – which is the country’s sixth-largest distributor – admitted in federal court documents that it purposely violated federal drug laws by sending highly addictive and dangerous opioids to pharmacies, knowing full well the drugs were sold and use in a illicit manner.

A spokesman for the company, Jeff Eller, conceded it has made mistakes. Eller said RDC grasps that the mistakes, directed by former executives, have serious criminal consequences.

The two ex-company officials – Laurence Doud III and William Pietruszewski – also have been charged with conspiring to distribute narcotics and defrauding the US government.

Pietruszewski, 53, from Oak Ridge NJ, who was chief compliance officer, also has been charged with not filing reports to federal authorities about suspicious orders for controlled substances. He pleaded guilty this month and is in full cooperation with federal prosecutors.

Doud, 75, the ex-CEO, pleaded not guilty last week in US District Court in Manhattan. He was released on a bond of $500,000. If he is convicted, Doud faces at least a 10 year prison sentence and a possible term of life in prison.

Federal Charging Documents Illustrate Executive Greed

The federal charging documents released during the court appearance showed how RDC was primarily driven by Doud’s greed. As CEO, he ramped up the sales of oxycodone pills nine fold over just 48 months. Sales soared from 4.7 million 2012 to 42.2 million on 2016.

Fentanyl sales increased even more in the same years, to 1.3 million doses from only 63,000 doses. And Doud’s compensation was closely tied to the sales, more than doubling to at least $1.5 million.

Doud’s attorney, Robert Gottlieb, indicated other former executives at the pharma company were using his client as a scapegoat for his own misdeeds. Gottlieb said Doud is essentially being framed by other guilty parties to hide their own wrongdoing. He also said Doud will fight the charges aggressively and he will eventually be vindicated.

DEA Investigation Started Two Years Ago

Overdoses for prescription opioids in the last 20 years have taken at least 200,000 lives, per the Centers for Disease Control and Prevention.

The serious federal drug charges related to a two-year DEA investigation that started after RDC violated the terms of the civil settlement it agreed to three years ago. The company said in the civil case that it has not reported for years thousands of suspicious orders for opioids from many pharmacies, many of which broke rules for order limits and worked with doctors who operated pill mills.

Further, civil lawsuits in 2018 and 2019 that were brought by state attorneys general in Vermont, New York and Washington state accuse Rochester and large drug distributors – Cardinal Health, McKesson and AmerisourceBergen – of designing systems to evade federal drug regulators.

At the news conference last week, Berman would not talk about whether other drug distributors were being investigated. But Ray Donovan, who is leading the NY office of the DEA, noted the criminal charges against RDC should tell other distributors to not abuse their role as the gatekeepers of prescription drugs. Donovan added that distributing lifesaving drugs is vital to the public health. Also, it is important to pinpoint rogue members of the pharmaceutical and medical industries whose illegal activities is leading to record breaking overdoses in the US.

John Kinney, who is acting CEO of RDC, based in Rochester NY, operates in 10 US states and has 200 employees. He appeared on behalf of the company last week in front of Judge Naomi Reice Buchwald of the US District Court in Manhattan.

Kinney signed the deferred prosecution proposal, where the company essentially admitted it has committed the crimes. The agreement and the civil settlement, which are known as a consent decree, were approved by the judge.

Together, the agreement and decree allow the firm to continue its operations and to establish standards and oversights of company conduct.

State and federal authorities have long struggled to keep pharmaceutical distributors accountable for the opioid overdose epidemic. The suits that were brought by state attorneys general say that even though the companies have signed consent decrees and are paying heavy fines, they are still sending thousands of opioid doses to suspicious pharmacies.

References

Opioid Crisis Drug Trafficking Rochester. (2019). Retrieved from https://www.nytimes.com/2019/04/23/nyregion/opioid-crisis-drug-trafficking-rochester.html

Drug Distributors Charged. (2019). Retrieved from https://www.cnn.com/2019/04/23/health/drug-distributors-charged-bn/index.html

 

Geoffrey G. Nathan, Esq.

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