Now, for the first time, federal authorities are bringing the same kind of felony drug-trafficking charges against a major pharmaceutical distributor and two of its former executives for their role in fanning the crisis.
The government’s novel tactic was expected to reverberate through the pharmaceutical industry, where large corporations and senior executives have long escaped criminal culpability for the epidemic of overdoses from prescription painkillers, like oxycodone.
The company, Rochester Drug Cooperative, or RDC, was charged Tuesday in federal court with conspiring to distribute drugs and defrauding the government.
But it entered into an agreement under which the government will hold off on prosecuting the company itself on the charges as long as it pays a $20 million fine, complies with the controlled substances law and submits to five years of supervision by an independent monitor.
As part of the agreement, the company, the nation’s sixth-largest distributor, admitted in court papers that it intentionally violated federal narcotics laws by shipping dangerous, highly addictive opioids to pharmacies, knowing that the prescription medicines were being sold and used illicitly.
The two former company officials were also charged with conspiring to distribute drugs and defrauding the government. One of the former executives pleaded guilty last week and is cooperating with prosecutors; the other was expected to appear in U.S. District Court in Manhattan to face the charges later Tuesday.
“This prosecution is the first of its kind,” said Geoffrey S. Berman, the U.S. attorney in Manhattan. “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.”
Overdoses on prescription opioids have taken more than 200,000 lives in the last two decades, according to the Centers for Disease Control and Prevention.
The charges stem from a two-year Drug Enforcement Administration investigation 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.
Recent 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.
It was not immediately clear whether other distributors were under investigation.
But Ray Donovan, who leads the New York office of the DEA, said the criminal charges against RDC should remind other distributors “of their role as gatekeepers of prescription medication.”
“The distribution of lifesaving medication is paramount to public health,” he said. “Similarly, so is identifying rogue members of the pharmaceutical and medical fields whose diversion contributes to the record-breaking drug overdoses in America.”
John Kinney, acting chief executive of RDC, which operates in 10 states, appeared on behalf of the company before Judge Naomi Reice Buchwald of U.S. District Court in Manhattan.
Kinney signed the deferred prosecution agreement, in which the company effectively admitted committing the crimes. The agreement, along with a civil settlement, or consent decree, were approved by Reice Buchwald.
Together, the agreement and the decree will allow the company to continue operating and set standards and oversight of its conduct, 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 pharmaceutical distributors accountable, and the lawsuits brought by state attorneys general say that despite signing consent decrees and paying fines, the companies have continued to ship thousands of doses of opioids to troubled pharmacies.
The two former RDC officials charged in the case are 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.
Doud, 75, of New Smyrna Beach, Florida, surrendered to DEA agents Tuesday morning and was expected to appear in federal court in Manhattan. He is charged with one count of conspiracy to distribute controlled substances, one count of conspiracy to defraud the United States and one count of failing to file suspicious order reports.
Pietruszewski, 53, of Oak Ridge, New Jersey, pleaded guilty Friday to the same charges and is cooperating with prosecutors, according to people briefed on the matter.
Doud last year sued Rochester Drug Cooperative, alleging in court papers that the company had wrongfully fired him and that other executives were conspiring to blame him for the conduct that was the subject of the criminal investigation.
“Mr. Doud is being framed by others to cover up their wrongdoing,” one of his lawyers, Robert C. Gottlieb, said in a statement Tuesday. “The government has it all wrong. He will fight these charges to his last breath and he will be vindicated.”
This article originally appeared in The New York Times.