The former CEO of the nation's sixth-largest pharmaceutical distributor was perp-walked in handcuffs on Tuesday after he was indicted on two counts of criminal conspiracy related to drug trafficking in opioids.
75-year-old Laurence Doud III became the first pharma CEO in the United States to face prosecution linked to the opioid crisis, after he was accused along with another company executive of ignoring red flags while pushing massive hauls of powerful painkillers to pharmacies across the United States, reports ABC News. Doud faces a mandatory minimum of 10 years in prison if convicted.
CEO CHARGED: Federal prosecutors charged Rochester Drug Cooperative, one of the nation's largest opioid distributors, and two of its former executives Tuesday, with the company's former chief executive Laurence Doud III being taken into DEA custody. https://t.co/YiCUoIQCit pic.twitter.com/i12pP0NQwj— World News Tonight (@ABCWorldNews) April 23, 2019
"This prosecution is the first of its kind: executives of a pharmaceutical distributor and the distributor itself have been charged with drug trafficking, trafficking the same drugs that are fueling the opioid epidemic that is ravaging this country. 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," said US Attorney Geoffrey S. Berman in a statement.
The U.S. Attorney's Office for the Southern District of New York charged Rochester Drug Cooperative (RDC), one of the country's largest distributors of opioids, with "knowingly and intentionally" violating federal narcotics laws "by distributing dangerous, highly addictive opioids to pharmacy customers that it knew were being sold and used illicitly," according to a press release.
RDC was also charged with failing to properly report thousands of suspicious orders of oxycodone, fentanyl and other controlled substances to the Drug Enforcement Agency (DEA), officials said -ABC News
Doud reportedly encouraged his sales team to sign new pharmacies up as customers with virtually no oversight or background investigations - picking up competitors' rejects as he pitched RDC as "the knight in shining armor" for independent pharmacies, according to the indictment.
"Under the direction of Doud, RDC supplied tens of millions of oxycodone, fentanyl, and other dangerous opioids to pharmacy customers that its own compliance personnel determined, and reported to Doud, was dispensing these drugs to individuals who had no legitimate medical need for them," reads the court document, which notes that Doud pocketed 'millions of dollars' as the company more than quadrupled sales of controlled substances between 2012 and 2016.
RDC has been under investigation for years by the DEA for failing to comply with pharmaceutical reporting laws, and has previously paid to settle claims that it failed to report opioid thefts.
During the 2012 - 2016 time period, RDS filled over 1.5 million orders for controlled substances, yet only submitted four suspicious orders to the DEA according to court filings. There were, in reality, over 2,000 suspicious orders during that time period.
Also charged is RDC's former chief of compliance, William Pietruszewski.
RDC agreed to a $20 million penalty and entered into a deferred prosecution agreement which will allow the company to continue operations subject to three years of independent compliance monitoring. If all terms are adhered to, the company will avoid prosecution.
"We made mistakes. RDC understands that these mistakes, directed by former management, have serious consequences," said company spokesman Jeff Eller in a statement.
"One element of the opioid epidemic is a dramatic increase in the volume of prescriptions for opioids and all narcotics. With that dramatic volume increase came an increase in our business, resulting in an increase in orders we should have identified as suspicious order, which we failed to report to DEA."