For First Time, Pharmaceutical Distributor Faces Federal Criminal Charges Over Opioid Crisis

The charges against the wholesaler, Rochester Drug Cooperative, and two of its former executives marked a new tactic for prosecutors in tackling the epidemic of addiction to prescription painkillers.

For the first time, a major pharmaceutical distributor is facing federal criminal charges over its role in the opioid crisis that has ravaged the United States.

The company, Rochester Drug Cooperative, which is the nation’s sixth-largest distributor, was charged on Tuesday with conspiring to distribute drugs and defrauding the federal government. Two former company officials were also charged in the case, which was brought by the United States attorney’s office in Manhattan.

The criminal charges leveled at the drug distributor and its former executives marked a new tactic for the government in tackling the nation’s epidemic of addiction to prescription painkillers, like oxycodone.

Prosecutors applied the same criminal statutes to charge the distributor and its former executives as have been used against illicit street dealers and cartel chiefs who traffic in fentanyl and oxycodone.

The charges stem from a two-year investigation by the federal Drug Enforcement Administration that began after the company violated the terms of a civil settlement.

The company had admitted in the civil case that it had for years failed to report thousands of suspicious opioid orders from pharmacies, many of which flouted order limits and catered to doctors who ran pill mills.

In the last two decades, more than 200,000 people have died in the United States from overdoses involving prescription opioids, according to the Centers for Disease Control and Prevention. Roughly 200,000 more have died from overdoses involving illegal opioids like heroin.

Recent civil lawsuits brought by state attorneys general in New York, Vermont and Washington State have accused Rochester and the nation’s three largest distributors — Cardinal Health, McKesson and AmerisourceBergen — of brazenly devising systems to evade regulators.

John Kinney, the acting chief executive of the Rochester Drug Cooperative, or RDC, which operates in 10 states, appeared on behalf of the company at a brief court proceeding on Tuesday morning before Judge Naomi Reice Buchwald of United States District Court in Manhattan.

Mr. Kinney signed a deferred prosecution agreement, in which the company effectively admitted to committing the crimes. The agreement, along with a civil consent decree, were both approved by the judge.

Together, the agreement and the decree will allow the company to continue operating and set standards for its conduct, as well as providing for continued oversight, according to a court document.

“We made mistakes,” Jeff Eller, a spokesman for the company said in a statement, “and RDC understands that these mistakes, directed by former management, have serious consequences.”

State and federal authorities have struggled to hold the distributors accountable, and the lawsuits say that despite signing consent decrees and paying fines, the companies have continued to ship thousands of doses of opioids to troubled pharmacies.

It was not immediately clear whether other distributors were under investigation.

The two former Rochester officials also charged in the case were Laurence F. Doud III, who had served as chief executive, and William Pietruszewski, the former chief of compliance, several people with knowledge of the matter said.

Mr. Doud was expected to surrender to D.E.A. agents and to appear in United States District Court in Manhattan later Tuesday.

Robert C. Gottlieb, a lawyer for Mr. Doud, said he would not comment until he had had a chance to review the charges against his client. Mr. Pietruszewski’s lawyer could not immediately be reached for comment.

Geoffrey S. Berman, the United States attorney for the Southern District of New York, and Ray Donovan, the special agent in charge of the Drug Enforcement Administration’s New York Field Division, were expected to formally announce the charges at a news conference later on Tuesday.

April 23, 2019

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