Ottawa Citizen

THE PROBLEM PILL PUSHERS

Little-known makers of generic drugs played central role in U.S. opioid crisis, documents reveal

- AARON C. DAVIS, SHAWN BOBURG AND ROBERT O’HARROW

Douglas Boothe was the leader of a little-known generic-drug maker seven years ago when federal agents approached his company with an urgent plea: Slash production of an addictive pain medication that was fuelling a national crisis.

Boothe “wasn’t interested” and rejected the Drug Enforcemen­t Administra­tion’s (DEA) request that Actavis voluntaril­y cut its supply of oxycodone to U.S. pharmacies, according to exhibits unsealed recently in a landmark lawsuit that accuses drug companies of recklessly distributi­ng billions of addictive pain pills despite glaring signs of abuse.

Now, Boothe is among a crop of figures from the generic-drug industry whose decisions during the height of the country’s opioid epidemic have been thrust into the national spotlight after the release of the documents.

Drugmaker Purdue Pharma and its owners, the Sackler family, have for years borne the brunt of public criticism for inventing and deceptivel­y marketing one of the most well-known opioid painkiller­s, OxyContin, in the 1990s. But the records show that by 2006, as the death rate accelerate­d, a handful of obscure generic-drug manufactur­ers were selling the bulk of opioid pills flooding the country.

The documents and a DEA database that tracks every opioid pill sold in the United States from 2006 through 2012 are being made public a year after The Washington Post and the owner of the Charleston Gazette-Mail in West Virginia began pushing for their release. The database provides a road map of accountabi­lity for these sales. It attributes the vast majority of the 76 billion opioid pills produced and shipped from 2006 through 2012 to three companies that are now controlled by large multinatio­nal drugmakers: SpecGx, a subsidiary of Ireland-based Mallinckro­dt; Par Pharmaceut­ical, owned by Endo Pharmaceut­icals, also in Ireland; and Actavis, part of Israel-based Teva Pharmaceut­ical Industries.

The records show how these and other generic-pain-pill makers rushed to gain market share as the nation’s deadliest drug epidemic spun out of control. The records also reveal some of the manufactur­ers were warned by auditors or regulators that they were not meeting federal requiremen­ts for detecting suspicious orders.

Boothe, Actavis’ chief executive in those years, denied culpabilit­y in a deposition unsealed July 23. Although federal law compels companies to monitor the pattern, frequency and amounts of drug orders, Boothe emphasized Actavis could not control how its drugs were ultimately used.

“Once it goes outside of our chain of custody, we have no capability or responsibi­lity or accountabi­lity,” Boothe said in the November deposition.

Boothe has not responded to voice mails, text messages or calls in recent days, or to messages left with his assistant at an Illinois drug company, Akorn, where he is now chief executive. Teva, Mallinckro­dt and Endo declined to comment for this story.

In statements to The Post for its stories about the newly unsealed documents, the drug companies have issued multiple defences of their actions during the crisis. They contend they were trying to sell legal painkiller­s to legitimate patients who had prescripti­ons. They also blamed the crisis on overprescr­ibing by physicians and on corrupt doctors and pharmacist­s who worked in “pill mills” that handed out drugs with few questions asked.

The companies further asserted they should not be held responsibl­e for the actions of those who abused the drugs and that the DEA had all the informatio­n it needed to block pills from reaching the black market.

POPULAR NARCOTICS

By 2004, eight years after it had been introduced, OxyContin had mushroomed into the most frequently prescribed narcotic for moderate to severe pain in the U.S. For Purdue, it had been an era of enormous profitabil­ity as the exclusive producer of the drug, which earned the company more than US$1 billion ($1.3 billion) a year.

But in several court rulings, federal judges in New York and Washington that year invalidate­d a Purdue patent on OxyContin for misreprese­nting to regulators how effective the drug was at lower doses. The decisions helped clear the way for generics manufactur­ers to compete for market share years earlier than they might have otherwise. Although Purdue would ultimately prevail on appeal, the dam had broken; generics began pouring into the market.

Typically, generic-drug companies are able to produce less-expensive versions of a patented drug only long after its introducti­on, by which time its risks and benefits are well known. In the case of OxyContin, however, those risks were very much in dispute. In 2007, Purdue and several current and former executives pleaded guilty in federal court and agreed to pay a total of US$635 million to settle charges they had fraudulent­ly marketed OxyContin as a drug that was less addictive than other narcotics and that had few side effects.

Since the landmark fine for deceptive marketing, opioid manufactur­ers have faced few penalties. Mallinckro­dt became the first in 2017, paying US$35 million to settle DEA complaints it did not adequately work to detect suspicious opioid orders.

Three years before Purdue’s settlement, the Food and Drug Administra­tion approved the first generic versions of OxyContin, known as oxycodone hydrochlor­ide. Among the early drugmakers to win approval for a generic was Amide Pharmaceut­ical, a privately held company in Little Falls, N.J., with 200 employees.

With its approval in hand, and constructi­on of a manufactur­ing plant underway to make billions of pills a year, Amide became the target of a buyout by what was then Actavis, a company based in Europe. Announcing the purchase in 2005, Actavis boasted that Amide would give the company an “important foothold in the U.S. market … to generate significan­t opportunit­ies to drive revenue growth.”

Months later, Actavis bought a second New Jersey generics company and installed one of its executives, Boothe, as the head of the companies’ combined generics division.

Actavis’ sales of the generic version of OxyContin and other drugs containing oxycodone grew from 559 million in 2006 to more than 1.1 billion in 2012, according to the DEA database. Its sales of hydrocodon­e, another opioid pain reliever, rose from 2.2 billion to nearly 3 billion.

Even as their sales of opioids surged, the generic drugmakers maintained a low profile.

“We weren’t really a household name — none of us,” Nancy Baran, Actavis’ head of customer service in those years, said in a recent interview. “Generics are not advertised on TV. No one ever hears your name.”

Inside the DEA’s headquarte­rs near the Pentagon in Northern Virginia, however, Actavis and Mallinckro­dt would eventually bubble up on the radar of agents frustrated with their inability to curb the steep increase in prescribed opioids. The DEA had tried going after unscrupulo­us doctors, but each case took months to stop a single bad actor.

“We kept trying to work our way back up the chain, to the source,” Barbara Boockholdt, then the chief of the regulatory section for DEA’s Office of Diversion Control, said in an interview.

In 2011, Boockholdt walked across the hallway at DEA headquarte­rs to an office that handles the agency’s drug-ordering database and asked for reports on the nation’s largest opioid manufactur­ers.

“I was shocked; I couldn’t believe it, Mallinckro­dt was the biggest, and then there was Actavis,” Boockholdt said. “Everyone had been talking about Purdue, but they weren’t even close.”

Agents in Boockholdt’s office analyzed the supply chains, tracing oxycodone from Actavis’s plants in New Jersey to Walgreens and other pharmacies in Florida, some selling a million doses a year. They put together a presentati­on that ran more than 100 pages, a document that was made public on July 23.

On Sept. 12, 2012, executives from Actavis were led into a room on the sixth floor of the DEA’s headquarte­rs. There, one of Boockholdt’s deputies began by talking about how Florida was having, on average, 11 fatal overdoses a day.

Then the lights were dimmed, and Boockholdt ticked through 60 charts and graphs showing that Actavis had sent nearly 240 million pills to Florida during the previous 30 months.

Actavis officials were taken aback, the court records show. Michael Clarke, the company’s vice-president for ethics and compliance, testified in a deposition it felt like DEA officials were treating Actavis like “street dealers.”

Boockholdt told Baran, Actavis’ head of customer service, that she needed to send people to South Florida to get to know the company’s customers.

The exchange is included in a 200-page internal memorandum, made public in July, in which Boockholdt memorializ­ed that Actavis had been put on notice to monitor its sales more closely.

Baran assured the DEA that “to the best of its ability” Actavis would do so, the memo says.

In October, a month after the meeting in Virginia, the DEA came knocking at the company’s headquarte­rs in Morristown, N.J., seeking dramatic action — a 30 per cent to 40 per cent voluntary reduction in the company’s production of oxycodone, Clarke testified.

He and another executive took the request to Boothe, a Princeton University and Wharton business school graduate who had been a vice-president of Xerox before converting to a career in pharmaceut­icals. Across the Atlantic, Actavis’ parent organizati­on was in disarray, controlled by Deutsche Bank after its billionair­e owner had defaulted on loans. Boothe held firm, Clarke testified.

“You know, he wasn’t interested in voluntaril­y reducing our quota, particular­ly by 30 or 40 per cent, without understand­ing that there was something else to be had,” Clarke said. Clarke declined to comment for this story.

WARNINGS

Boockholdt and the DEA had already summoned executives of the largest oxycodone manufactur­er — Mallinckro­dt — to the agency’s headquarte­rs for a similar warning a year earlier. The Aug. 23, 2011, meeting became known among federal agents as the “earthquake meeting,” occurring the day of a rare magnitude-5.8 temblor in the Washington region.

DEA officials showed the company the hundreds of millions of doses of oxycodone Mallinckro­dt was shipping to distributo­rs and the number of arrests being made for oxycodone possession and sale in those areas, Boockholdt said.

It wasn’t the first such indication of concern the company had received from the DEA.

Four months earlier, in April 2011, a top company compliance officer had distribute­d a training document saying a DEA representa­tive in St. Louis had referred to the company in a conversati­on as “the kingpin within the drug cartel.”

The database lists Mallinckro­dt subsidiary SpecGx as the maker of just over 2 billion pills that were shipped to Florida. Nationwide, the company would produce 28.9 billion pills during the years covered by the database — more than 80 for each person in the country.

After the meeting with DEA officials, Mallinckro­dt briefly reduced shipments, Boockholdt told The Post. But Mallinckro­dt’s output of opioid pills soon ramped back up, Boockholdt said.

At the time, Mallinckro­dt was also failing to shore up its own system for tracking suspicious orders, according to recently released documents, which the company had fought to keep sealed.

Karen Harper, a senior manager for controlled substance compliance, testified in a deposition that she told her superiors in 2008 Mallinckro­dt was not capable of detecting suspicious orders and that its systems needed to be upgraded.

By 2016, while the company was in then-confidenti­al negotiatio­ns with the Justice Department for failing to report suspicious orders, Mallinckro­dt consolidat­ed its specialty generic business in a new subsidiary registered in Delaware, called SpecGx LLC — the entity credited in the DEA database with Mallinckro­dt’s opioid sales.

The next year, the company agreed to pay a US$35 million penalty, acknowledg­ing “certain aspects of Mallinckro­dt’s system to monitor and detect suspicious orders did not meet the standards” set by the DEA.

Mallinckro­dt announced in April it plans to change its name to Sonorant Therapeuti­cs, spinning off Mallinckro­dt Inc. as a separate company for its generics business. It said in federal filings that liabilitie­s arising from opioid litigation would “remain with Mallinckro­dt Inc. or its subsidiari­es following the separation.”

The company’s outside spokesman, Daniel Yunger, said Mallinckro­dt declined to comment for this story.

We weren’t really a household name — none of us. Generics are not advertised on TV. No one ever hears your name.

AUDITING

The other large manufactur­er of generic opioids listed in the database, Par Pharmaceut­ical, did not even have a system to detect sales orders that had the hallmarks the government associated with drug diversion, according to an outside auditing firm whose reports were made public at the end of July.

“There is no suspicious ordering monitoring system in place,” the auditors wrote in May 2010, referring to a reporting mechanism required by the DEA.

“A program must be instituted based on customers’ sales volumes, seasonal fluctuatio­ns, etc., with a firm statistica­l analysis as the basis for such a program,” wrote the auditors from the firm BuzzeoPDMA.

Par did not act on that advice for years, records show. Instead, employees inside Par’s sales department were responsibl­e for monitoring orders, according to company documents and an executive at Par’s current parent company, Endo Pharmaceut­icals.

By 2006, Par had more than 700 employees and was describing itself as “the world’s sixth largest manufactur­er and distributo­r of generic pharmaceut­icals,” according to archived versions of its website.

Its annual revenue had grown to more than US$1 billion by 2012, documents show.

As late as 2015, though, the outside auditors still had concerns about Par’s oversight of opioid sales.

A lawyer in the case pressed Stephen Macrides, Endo’s senior vice-president of global supply chain, on why Par notified the DEA of no suspicious orders between 2010 and 2015.

“If an order was deemed suspicious, it would have been reported to the DEA,” Macrides said.

He did not respond to messages seeking comment.

Par was acquired for US$8 billion by Endo, an Irish company that also manufactur­ed opioids. Steven Rich, Alice Crites and Julie Tate contribute­d to this report. Washington Post

 ?? TOBY TALBOT/FILES ?? More than 28,000 Americans died from overdosing on opiates in 2014. That’s 78 people per day. The sale of drugs such as OxyContin has quadrupled since 1999, and so has the number of people dying from an addiction to them. Court documents released in the U.S. suggest that generic drug companies played a significan­t role in deepening the crisis.
TOBY TALBOT/FILES More than 28,000 Americans died from overdosing on opiates in 2014. That’s 78 people per day. The sale of drugs such as OxyContin has quadrupled since 1999, and so has the number of people dying from an addiction to them. Court documents released in the U.S. suggest that generic drug companies played a significan­t role in deepening the crisis.
 ?? DREW ANGERER/FILES ?? Purdue Pharma, the maker of OxyContin, and its owners, the Sackler family, are facing hundreds of lawsuits across the U.S. for the company’s alleged role in the opioid overdose epidemic.
DREW ANGERER/FILES Purdue Pharma, the maker of OxyContin, and its owners, the Sackler family, are facing hundreds of lawsuits across the U.S. for the company’s alleged role in the opioid overdose epidemic.
 ?? DOMINICK REUTER/AFP/FILES ?? A needle, spoon, and narcotics bag are seen near a heroin encampment in North Philadelph­ia. Railroad gulch as it is known, is ground zero in that city’s opioid epidemic. Known by locals as El Campanento, the open-air drug market and heroin encampment is populated by addicts.
DOMINICK REUTER/AFP/FILES A needle, spoon, and narcotics bag are seen near a heroin encampment in North Philadelph­ia. Railroad gulch as it is known, is ground zero in that city’s opioid epidemic. Known by locals as El Campanento, the open-air drug market and heroin encampment is populated by addicts.
 ?? SPENCER PLATT/FILES ?? Hypodermic needles litter the ground in the South Bronx in New York City. Drug makers are finding themselves under increased legal scrutiny as hundreds of lawsuits have been filed against them.
SPENCER PLATT/FILES Hypodermic needles litter the ground in the South Bronx in New York City. Drug makers are finding themselves under increased legal scrutiny as hundreds of lawsuits have been filed against them.

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