Ex-CEO charged in New York, becomes 1st drug executive indicted in opioid crisis

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Tuesday, April 23, 2019
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Kemberly Richardson reports on the criminal case against a drug co. CEO stemming from opioids.

NEW YORK CITY (WABC) -- One of the nation's largest distributors of opioids has entered into a non-prosecution consent decree with the US Attorney's office for the Southern District of New York, which accused the company, Rochester Drug Cooperative (RDC), of failing to properly report thousands of suspicious orders of oxycodone, fentanyl and other controlled substances.

At the same time, the company's former chief executive, Lawrence Doud, has been placed under arrest by federal drug agents. Doud is the first pharmaceutical executive associated with the nation's opioid crisis to face a criminal charge of diverting drugs for an illegitimate purpose.

The indictment unsealed Tuesday alleges Doud ordered subordinates to ignore red flags about certain pharmacy customers to maximize company revenues and his own pay, which more than doubled between 2012 and 2016 as the company's sales of drugs like oxycodone and fentanyl skyrocketed.

RDC agreed to a deferred criminal prosecution agreement, admitted to a detailed statement of facts, and consented to three years of independent compliance monitoring by an expert who will report regularly to the U.S. Drug Enforcement Administration.

Additionally, RDC will pay a $20 million fine to the federal government over a five-year period. If RDC complies with the terms of the agreement, it will not be prosecuted for its conduct during the relevant period.

"We made mistakes, and RDC understands that these mistakes, directed by former management, have serious consequences," RDC spokesperson Jeff Eller said. "We accept responsibility for those mistakes. We can do better, we are doing better, and we will do better."

In the nation's opioid epidemic, RDC is a middleman that buys controlled substances from manufacturers and sells them to individual pharmacies. As one of the nation's 10 largest drug distributors, it delivers to more than 1,300 pharmacies.

Along the way, federal prosecutors said it ignored certain pharmacies that were placing suspicious orders.

"RDC was well aware that many of its largest pharmacy customers exhibited red flags associated with the diversion of controlled substances, but failed to report these customers or their orders to the DEA as required," court records said.

RDC was among the drug distributors named last month in a civil lawsuit by the New York Attorney General's office, which alleged fraud, willful misconduct, and gross negligence.

Between 2010 and 2018, the company sold more than 143 million oxycodone pills to customers in New York alone, the attorney general's lawsuit said.

The DEA has been investigating for years whether RDC failed to comply with pharmaceutical reporting laws. The company has previously paid to resolve claims it failed to properly report the theft of opioids.

According to court records, from 2012 to 2016, RDC filled more than 1.5 million orders for controlled substances from its pharmacy customers but reported just four suspicious orders to the DEA.

In reality, federal prosecutors said, there were at least 2,000 suspicious orders in those four years.

"During this period, RDC shipped large quantities of opioids to pharmacies that RDC knew exhibited dispensing patterns that suggested the pharmacies were dispensing controlled substances for illegitimate medical purposes," court records said. "They did not report suspicious orders or pharmacy customers to the DEA because they did not want to risk losing revenue from these customers."


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