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By Tom Winter and Elisha Fieldstadt
In a national first in the fight against the opioid crisis, a major drug distribution company, its former chief executive and another top executive have been criminally charged in New York.
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 U.S., and willfully failing to file suspicious order reports.
Laurence Doud III, the company’s former chief executive, and William Pietruszewski, the company’s former chief compliance officer, are individually charged with conspiracy to distribute controlled substances and conspiracy to defraud the U.S. Pietruszewski is also charged with willfully failing to file suspicious order reports with the Drug Enforcement Administration, or DEA.
Both Doud, 75, and Pietruszewski, 53, face life in prison. Doud will appear in court Tuesday, and Pietruszewski pleaded guilty last Friday, Geoffrey S. Berman, U.S. attorney for the Southern District of New York, said.
The U.S. attorney’s office also filed a lawsuit against Rochester Drug Co-Operative on Tuesday seeking “penalties and injunctive relief.”
“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,” Berman said. “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.”
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Between 2012 and 2016, Rochester Drug Co-Operative is accused of distributing tens of millions of doses of oxycodone, fentanyl and other opioids to pharmacies that its own compliance department found had no legitimate need for them.
Prosecutors said Rochester Drug Co-Operative went against the DEA and its own policies and distributed drugs to pharmacies that were “filling controlled substances prescriptions issued by practitioners acting outside the scope of their medical practice, under investigation by law enforcement, or on RDC’s ‘watch list.'”
Rochester Drug Co-Operative “distributed controlled substances to those pharmacies even after identifying ‘red flags,'” a statement from the U.S. attorney said. And at Doud’s direction, the company took on pharmacies that had been terminated by other distributors.
Rochester Drug Co-Operative’s own employees “described some of the company’s customers as ‘very suspicious,’ and even characterized particular pharmacies as a ‘DEA investigation in the making’ or ‘like a stick of dynamite waiting for [the] DEA to light the fuse,'” the statement said.
And executives at Rochester Drug Co-Operative purposefully kept suspicions of pharmacies’ illegal activity from the DEA, fearing investigations into the pharmacies and potentially losing customers, according to a criminal complaint.
The company identified about 8,300 “potentially suspicious ‘orders of interest,’ including thousands of oxycodone orders,” between 2012 and 2016, but only reported four, the U.S. attorney said.
In that time, Rochester Drug Co-Operative’s sales of oxycodone tablets grew almost nine-fold, from 4.7 million to 42.2 million, prosecutors said. Their fentanyl sales grew from approximately 63,000 dosages in 2012 to more than 1.3 million in 2016.
In that same time, Doud’s compensation ballooned to $1.5 million a year.
“Doud cared more about profits than the laws intended to protect human life,” Berman said.
Rochester Drug Co-Operative announced it has entered into a plea agreement in the criminal case and a settlement in the civil case. The company has agreed to admit to the accusations, submit to supervision by an independent monitor, reform its compliance program and pay a $20 million fine.
“We made mistakes … and RDC understands that these mistakes, directed by former management, have serious consequences,” Jeff Eller, a spokesperson for Rochester Drug Co-Operative, said in a statement. “We accept responsibility for those mistakes. We can do better, we are doing better, and we will do better.”
“One element of the opioid epidemic is a dramatic increase in the volume of prescriptions for opioids and all narcotics,” Eller said. “From 2012 to 2017, we did not have adequate systems in place nor were our compliance team and practices rigorous enough to provide adequate controls and oversight over the increased demand for narcotic drug products from pharmacies.”
A new management team was put in place at Rochester Drug Co-Operative in 2017, and “began making significant changes with a focus on implementing a world-class compliance program,” the company’s statement said.