The government said the executives and the company failed to comply with its legal obligation to report thousands of suspicious orders of controlled substances to the DEA.
The government war on the opioid crisis has taken a new tack. On Tuesday, the government brought criminal charges against two former executives at the Rochester Drug Co-Operative, Inc. (RDC), one of the 10 largest pharmaceutical distributors in the United States for their roles in distributing opioid medications.
The government filed charges against Laurence F. Doud III, the company’s former chief executive officer and William Pietruszewski, the company’s former chief compliance officer, for unlawfully distributing oxycodone and fentanyl, and conspiring to defraud the Drug Enforcement Agency. The government said the executives and the company failed to comply with its legal obligation to report thousands of suspicious orders of controlled substances to the DEA. These are the first ever felony criminal charges filed against a distributor and its executives over the illegal distribution of controlled substances, the government said.
According to the government charges, from 2012 through March 2017, RDC violated federal narcotics laws by distributing dangerous, highly addictive opioids to pharmacy customers that it knew were being sold and used illicitly. The government said the distribution of the opioids were done at the direction of senior management, including Doud and Pietruszewski. RDC, the government charged, supplied “large quantities of oxycodone, fentanyl and other dangerous opioids” to pharmacy customers that the company’s own compliance personnel determined were “dispensing those drugs to individuals who had no legitimate medical need for them.” The drugs were distributed to those pharmacies even after warning flags were raised about the enormous quantities being sold that were amounts consistently higher than accepted medical standards. In addition, and at Doud’s direction, RDC frequently brought on pharmacy customers that had been terminated by other distributors, the government said.
In its allegations, the government said RDC employees described some of the company’s customers as “very suspicious” and said that some of the pharmacies distributing the large amounts of opioids were a “DEA investigation in the making.” Despite those concerns, the company, at the direction of Doud the government said, increased its sales of oxycodone and fentanyl exponentially.
“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 government said in a statement.
Additionally, the government said RDC took steps to conceal the increased distribution of opioids and other controlled substances from the DEA and other law enforcement agencies. The company made the decision to not “investigate, monitor or report to the DEA pharmacy customers that it knew were diverting controlled substances for illegitimate use,” the government said. Also, the government said RDC opened new customer accounts without conducting due diligence and supplied those customers, some of whom had been terminated by other distributors, with dangerous controlled substances.
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, said RDC agreed to accept responsibility for the company’s conduct and stipulated to the accuracy of the charges. RDC will pay a $20 million penalty, reform and enhance the company’s Substances Act compliance program and submit to supervision by an independent monitor. If the company complies with the agreement, the government has agreed to defer prosecution for a period of five years, after which time the government will seek to dismiss the charges.
Doud has been charged with one count of conspiracy to distribute controlled substances and one count of conspiracy to defraud the United States. He faces 15 years in prison. Doud intends to fight the charges brought against him, CNN reported.
Pietruszewski was charged with one count of conspiracy to distribute controlled substances, one count of conspiracy to defraud the United States and one count of willfully failing to file suspicious order reports with the DEA. He pled guilty to these charges, pursuant to a cooperation agreement, the government said.
