Drug Distributor And Former Execs Face First Criminal Charges In Opioid Crisis
Former Rochester Drug Co-Operative CEO Laurence Doud III, facing criminal charges stemming from the opioid crisis, leaves the federal courthouse in Manhattan on Tuesday.
Kathy Willens/AP
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Kathy Willens/AP
A major pharmaceutical distribution company and two of its former executives are facing criminal charges for their roles in advancing the nation’s opioid crisis and profiting from it.
Rochester Drug Co-Operative Inc., one of the nation’s 10 largest pharmaceutical distributors in the U.S., its former CEO Laurence Doud III and former chief of compliance William Pietruszewski were charged with conspiracy to distribute controlled narcotics — oxycodone and fentanyl — for non-medical reasons and conspiracy to defraud the United States.
RDC and Pietruszewski are also charged with willfully failing to file suspicious order reports to the Drug Enforcement Administration.
Between May 2012 and November 2016, the company received and filled over 1.5 million orders for controlled substances from its pharmacy customers. However, it reported only four suspicious orders to the DEA. According to the complaint, the company failed to report at least 2,000 suspicious orders.
“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 for the Southern District of New York Geoffrey Berman said in a statement. “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.”
Geoffrey Berman, U.S. Attorney for the Southern District of New York, speaking at a news conference announcing charges against Rochester Drug Co-Operative Inc.
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Mary Altaffer/AP
Pietruszewski, 53, pleaded guilty last week. Doud, 75, surrendered to authorities and pleaded not guilty in federal court in Manhattan on Tuesday.
Both executives face maximum sentences of life in prison and a mandatory minimum prison term of 10 years on the drug trafficking charges. They face a maximum five years in prison on the charge of defrauding the government.
The Rochester, N.Y.,-based company is a middleman between drug manufacturers and local independent pharmacies. It supplied more than 1,300 pharmacies and earned $1 billion per year during the relevant time period.
According to the U.S. Attorney’s statement:
“From 2012 to 2016, RDC’s sales of oxycodone tablets grew from 4.7 million to 42.2 million — an increase of approximately 800 percent — and during the same period RDC’s fentanyl sales grew from approximately 63,000 dosages in 2012 to over 1.3 million in 2016 — an increase of approximately 2,000 percent. During that same time period, Doud’s compensation increased by over 125 percent, growing to over $1.5 million in 2016.”
The company has agreed to pay a $20 million fine and submitted to three years of independent compliance monitoring.
“Today’s charges should send shock waves throughout the pharmaceutical industry reminding them of their role as gatekeepers of prescription medication,” said DEA Special Agent in Charge Ray Donovan.
“We made mistakes,” company spokesman Jeff Eller said in a statement. “RDC understands that these mistakes, directed by former management, have serious consequences. We accept responsibility for those mistakes. We can do better, we are doing better, and we will do better.”
Rochester Drug Cooperative Faces Federal Criminal Charges Over Role In Opioid Epidemic
NPR’s Audie Cornish talks with Gary Craig, a Democrat and Chronicle reporter, about the first major pharmaceutical distributor to face federal criminal charges over its role in the opioid epidemic.
AUDIE CORNISH, HOST:
Today Rochester Drug Cooperative became the first pharmaceutical distributer to face federal criminal charges for its role in the opioid epidemic. RDC is charged with conspiring to distribute drugs and defrauding the federal government. The charges are a result of a two-year investigation that began after it was found that RDC ignored pill limits for pharmacies and catered to doctors who over-prescribe.
Gary Craig is an investigative reporter with the Democrat and Chronicle newspaper in Rochester, N.Y. Welcome to the program.
GARY CRAIG: Thanks for having me.
CORNISH: Give us some background on the lawsuit that led to the two-year investigation. What were the red flags for the Drug Enforcement Administration?
CRAIG: Well, it – you know, it appears the criminal and civil investigation began back in 2017. And you know, what they discovered according to court papers – and RDC has pretty much admitted to this – is that clear warning signs from the pharmacies that RDC distributes to – clear warning signs that they were just sort of excessively pushing out opioids were ignored by RDC or, even when highlighted internally by compliance officers, were not brought to the attention of DEA as required.
CORNISH: What does that mean? What kind of signals are we talking about?
CRAIG: There’s a number of them that the federal prosecutors mentioned, things like excessive purchases with cash in some pharmacies, purchases from well out of the region of the pharmacies. And these are opioid purchases we’re talking about – excessively high percentages of sales of fentanyl patches and opioid oxycodone painkillers from some pharmacies and some of the larger pharmacies that RDC dealt with. So those are some of the things that the feds highlighted.
CORNISH: Two RDC executives face charges. What are they accused of?
CRAIG: Basically sort of being players in this whole, you know, alleged kind of ignorance or willing ignorance, I should say, of RDC’s role in the opioid epidemic, the things we talked about – you know, just sort of closing your eyes to pharmacies that were obviously pushing painkilling prescription meds onto the streets in big numbers. And the allegations are that the former CEO, Larry Doud, and former compliance officer were key in allowing this to happen internally and just ignored all the signs. One has pleaded guilty and is cooperating. And Doud is facing the criminal charges.
CORNISH: You’ve talked a lot about the pharmacies here. And so I’m wondering, what about them? And what about the doctors making the orders? Are they being held accountable?
CRAIG: Well, it’s an interesting relationship. The Rochester Drug Cooperative, as the name obviously implies, is a cooperative. Its very members – sort of voting members, et cetera – are the 1,300 pharmacies to which it distributes medications. So the New York attorney general last month filed lawsuits against a number of pharmaceutical manufacturers and RDC as well, claiming that this sort of breeds almost an incestuous relationship where when your very members or the people who are your entity itself are the ones that are selling the pharmaceuticals, you have less of a willingness to basically do the right thing.
CORNISH: Is this a sign of things to come? I mean, is this setting an important precedent in terms of this being criminal charges?
CRAIG: I would think so. You know, as they clearly highlighted at the news conference today – the federal authorities in Manhattan – that this is the first of its kind. And obviously they’ve turned a corner with law enforcement as far as making this decision that instead of solely pursuing these things civilly, they’re going to now pursue criminally. So I would assume that we would see other federal prosecutions of a similar nature.
CORNISH: Gary Craig is an investigative reporter with the Democrat and Chronicle newspaper. Thanks so much.
CRAIG: Thank you.
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