Drug execs charged in major opioid case
For the first time, federal prosecutors go after a distributor.
Federal prosecutors Tuesday unveiled the first criminal charges against pharmaceutical executives that accuse them of illegally diverting opioids.
The former chief executive and the head of compliance at a major U.S. drug distributor are accused of a narcotics conspiracy.
Laurence F. Doud III, who spent 25 years as CEO of Rochester Drug Cooperative, and William Pietruszewski orchestrated a scheme to distribute high volumes of oxycodone, fentanyl and other highly addictive opioids to pharmacies knowing the drugs would be sold to people who had no medical need for them, prosecutors said. Doud, 75, and other executives pressed ahead with the sales to increase revenue and boost their salaries, the prosecutors said.
“Why did they do it? The answer is greed,” U.S. Atty. Geoffrey Berman said at a news conference in New York.
Pietruszewski pleaded guilty Friday and agreed to cooperate with prosecutors, according to court records. The company, which bills itself as the nation’s seventhlargest drug distributor, is criminally charged with a narcotics conspiracy. It will pay a $20-million penalty, and prosecutors agreed to dismiss the case after five years if the company stays out of trouble.
Doud pleaded not guilty Tuesday at a hearing. He was released on $500,000 bond.
“Mr. Doud is being framed,” his lawyer Robert Gottlieb said in a statement.
The issue of opioids is a major problem in the country and Doud takes it seriously, Gottlieb said. But, he said, the government is being manipulated by people who are hoping to hide their misdeeds.
The case is not the first against an opioid company executive. Insys Therapeutics founder and ex-CEO John Kapoor is awaiting a Boston jury’s verdict on charges alleging he oversaw a scheme to bribe doctors to boost sales of the company’s top-selling opioid painkiller.
Officials said the new charges were a major step in the U.S. crackdown on those who have fueled the nation’s prescription opioid epidemic, which has prompted a 33% surge in overdose deaths in the 10 years leading up to 2017, at a rate of more than 17,000 annually, according to the Centers for Disease Control and Prevention. Still, Berman faced questions about why the company was allowed to enter a deferred-prosecution agreement rather than being required to plead guilty.
“We believed RDC could be reformed,” Berman said. He said a guilty plea could have risked licenses that may have forced the company out of business, causing hundreds of employees to lose their jobs.
The privately held company based in Rochester, N.Y., buys pharmaceuticals from manufacturers and sells them to retail pharmacies. It covers 10 states in the Northeast from Maine to Pennsylvania and has more than $1 billion in annual revenue.