Department of Justice officials announced Tuesday that for the first time a drug distribution company and two executives will be charged for their role in the unlawful distribution of opioids like oxycodone and fentanyl.
Rochester Drug Co-operative, one of the top 10 largest drug distributors in the United States, was charged Tuesday with conspiracy to violate narcotics laws, conspiracy to defraud the USA, and willfully failing to file suspicious order reports.
Pietruszewski, the company's former chief compliance officer, cooperated with prosecutors and pleaded guilty to three criminal counts.
Doud, 75, surrendered to authorities and pleaded not guilty in federal court in Manhattan on Tuesday. But it has agreed to accept responsibility for its actions, pay a $20 million fine, reform its controlled substances compliance program and allow itself to be supervised by an independent monitor, according to the prosecution agreement released by Berman's office. The company also faces a civil charge of failure to file suspicious order reports. Doud will appear in court Tuesday, and Pietruszewski pleaded guilty last Friday, Geoffrey S. Berman, U.S. attorney for the Southern District of NY, said.
Jeff Eller, a spokesman for the company, said in a news release that "we made mistakes, and RDC understands that these mistakes, directed by former management, have serious consequences".
Eller said that Doud left in April 2017 and Pietruszewski in July 2018.
Doud's lawyer said he intends to "fully defend" himself against the criminal charges. "Mr. Doud is being framed".
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Doud's attorney did not return a request for comment Wednesday morning. Doud acted out of greed, Berman suggested, pointing out that the executive's salary more than doubled during the years of the alleged crimes.
Around 47,600 people died in 2017 from an opiate overdose in the United States, according Centers for Disease Control and Prevention figures.
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. Distributors are responsible for monitoring and reporting any unusual amount, pattern or frequency of orders by drugstores - signs that drugs are being diverted to the black market.
The U.S. Attorney's Office for the Southern District of NY has filed a separate suit pursuing "penalties and injunctive relief" from the company.
In an early criminal case, federal charges were brought against Purdue Pharma, manufacturer of OxyContin. Berman accused Doud of ordering RDC to supply pharmacy clients with opioids without due diligence.
Rochester is privately-held, and competes with drug distributors including publicly-traded AmerisourceBergen Corp, Cardinal Health Inc and McKesson Corp. All have settled cases with the DEA since 2007, including an agreement that resulted in a $150 million fine against McKesson, the sixth-largest USA company on the 2018 Fortune 500 list.
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.
"For at least half a decade, RDC distributed risky, highly addictive opioids to pharmacy customers that its senior management, including Laurence F. Doud, the defendant, knew were being sold and used illicitly", according to the grand jury indictment of Doud.
RDC admitted to violating federal 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.
Of almost 1.5 million orders for narcotics placed between 2012 and 2016, the company flagged only four as suspicious, according to court documents.
Between May 2012 and November 2016, the company received and filled over 1.5 million orders for controlled substances from its pharmacy customers.
Doud replied: "I don't think this is going to end well". An auditor described the situation in an email as a "DEA investigation in the making".
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