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 Rochester Drug Co-operative Inc (RDC), one of the 10 largest U.S.
drug distributors, agreed to pay a $20 million fine and enter a
five-year deferred prosecution agreement to resolve charges it
turned a blind eye to thousands of suspicious orders for opioids.
"We made mistakes," RDC spokesman Jeff Eller said in a statement.
"We accept responsibility for those mistakes."
Two former RDC executives were also charged, including Laurence Doud,
who had been its chief executive for more than 25 years. He was
accused of conspiring to distribute illegal narcotics, and
conspiring to defraud the United States.
Doud, 75, of New Smyrna, Florida, pleaded not guilty at an afternoon
hearing in Manhattan federal court and was released on $500,000
bail.
His lawyer, Derrelle Janey, said Doud "is not the culprit here. We
intend to fully defend against these charges."
Former compliance chief William Pietruszewski, 53, of Oak Ridge, New
Jersey, separately pleaded guilty to three criminal counts and
agreed to cooperate with prosecutors.
The case marks a new U.S. effort to curtail the growing number of
people addicted to opioids, including oxycodone and other
prescription painkillers.
Opioids, including prescription painkillers and heroin, played a
role in a record 47,600 U.S. overdose deaths in 2017, according to
the U.S. Centers for Disease Control and Prevention.
"This country is in the midst of a prescription drug abuse
epidemic," U.S. Attorney Geoffrey Berman said at a Manhattan news
conference. "This epidemic has been driven by greed. As alleged,
Doud cared more about profits than the laws intended to protect
human life."
'RED FLAGS' ALLEGEDLY IGNORED
Hundreds of lawsuits by state and local governments accuse
drugmakers such as Purdue Pharma of deceptively marketing opioids,
and distributors such as AmerisourceBergen Corp, Cardinal Health Inc
and McKesson Corp of ignoring that they were being diverted for
improper uses.
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These defendants, as well as RDC, were among those named last month
in a lawsuit by New York Attorney General Letitia James alleging
widespread fraud.
In Tuesday's settlement, RDC admitted to violating narcotics laws
from January 2012 to March 2017 by distributing oxycodone, fentanyl
and other controlled substances to pharmacy customers despite
internal "red flags" that they would be used improperly.
Berman said the red flags included dramatic increases in order
sizes, pharmacy customers paying in cash and prescriptions filled by
doctors under investigation by law enforcement or on an RDC "watch
list."
Prosecutors said RDC identified about 8,300 potentially suspicious
"orders of interest," including for oxycodone, from 2012 to 2016,
but reported just four to the federal Drug Enforcement
Administration.
Berman said this lax oversight enabled RDC to boost sales of
oxycodone tablets more than 800 percent and fentanyl dosages roughly
2,000 percent over that period, while Doud's pay more than doubled,
to more than $1.5 million.
"RDC was, in Doud's own words, the knight in shining armor for
pharmacies that had been cut off by other distributors," Berman
said.
The deferred prosecution agreement allows RDC to keep operating,
subject to three years of independent compliance monitoring, and
avoid prosecution if it complies with the terms.
Doud led RDC from September 1991 through April 2017, according to
court papers.
He faces a mandatory minimum of 10 years in prison on the drug
conspiracy charge. His next hearing is scheduled for May 8.
(Reporting by Jonathan Stempel in New York and Nate Raymond in
Boston; Editing by Richard Chang, Tom Brown and Cynthia Osterman)
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