In a first-of-its-kind prosecution in Big Pharma, the feds have hit two former executives at a large opioid distributor with criminal charges.
Rochester Drug Co-operative’s former CEO Laurence Doud II and chief compliance officer William Pietruszewski are now the first distributor bigwigs to face criminal penalties in the onslaught of lawsuits and investigations currently facing major pharmaceutical companies.
Doud’s company — which was also criminally charged with narcotics conspiracy and conspiracy to defraud the U.S. — managed to distribute millions of opioid drugs to independent pharmacies despite its smaller size from 2012 through March 2017, according to the U.S. Attorney's Office of the Southern District of New York. The government is also suing the company on allegations that it knowingly skirted the Drug Enforcement Administration’s requirement that distributors report suspicious drug orders. The companies are required by federal law to watch for sudden, large orders, cash payments and shady pharmacies.
“Today’s charges should send shockwaves throughout the pharmaceutical industry reminding them of their role as gatekeepers of prescription medication,” DEA Special Agent in Charge Ray Donovan said in a news release. According to indictments unsealed Tuesday, compliance officers at the company alerted executives that the drugs were sent to pharmacies that were acting shadily and giving drugs to people without medical need for them. The company kept going anyway, despite one employee warning the operation was a “DEA investigation in the making.”
Although Rochester Drug Co-operative is one of the 10th-largest pharmaceutical distributors in the U.S., three companies also connected to opioid distribution — Cardinal Health, McKesson and AmerisourceBergen — ship more than 90 percent of the country’s drug supply to pharmacies and hospitals. Those companies are facing new civil suits in New York, Vermont and Washington State that accuse them of evading regulators and circumventing DEA rules, which all three companies have denied doing, according to the New York TImes.
Rochester Drug Co-operative was founded in 1905 and works with nearly 1,300 Northeastern community retail pharmacies, according to its website.
Doud and Pietruszewski face a mandatory 10-year sentence, and up to life in prison. Pietruszewski agreed to plead guilty, and Doud is scheduled to appear in court later Tuesday. Meanwhile, the U.S. Attorney’s Office will defer prosecution against the company on an agreement that it pay a $20 million fine. (For context, the Rochester, New York-based company drew an estimated $2 billion in revenue in 2017, according to the Drug Channels Institute.)
“This prosecution is the first of its kind: executives of a pharmaceutical distributor and the distributor itself have been charged with drug trafficking, trafficking the same drugs that are fueling the opioid epidemic that is ravaging this country,”U.S. Attorney Geoffrey S. Berman said in a press release. “Our office will do everything in its power to combat this epidemic, from street-level dealers to the executives who illegally distribute drugs from their boardrooms.”
More than 70,000 people died from drug overdoses in 2017, although the bulk of those overdoses resulted from illicit, synthetic opioids like fentanyl. Opioid prescriptions, under strict scrutiny in recent years, have declined.
In a statement, the company acknowledged it “made mistakes.”
“We accept responsibility for those mistakes. We can do better, we are doing better, and we will do better,” Jeff Eller, spokesperson for the company, said in an emailed statement. The company has been under new management since 2017.