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When it comes to Opioids, DOJ’s Gloves are Off

In a growing trend, the Department of Justice (DOJ) indicted two corporate executives and two licensed pharmacists for drug distribution. This is the second time in 2019 that DOJ acted to hold opioid distributors and manufacturers criminally liable for contributing to the drug crisis.

2019 Criminal Prosecutions

The indictment alleges that an Ohio-based drug manufacturer sold millions of hydrocodone pills to various pharmacies and physicians. The charges are Conspiracy to Distribute and Dispense a Controlled Substance, in violation of Title 21, United States Code, Section 846. DOJ alleged that the company ignored red flags that their customers were under investigation by the Drug Enforcement Administration (DEA) and/or diverting thousands of pills illegally.

In the first case brought by prosecutors this year, the chief executive officer and the chief of compliance were named in a criminal indictment that alleged both executives ignored DEA regulations and distributed opioids to pharmacies and providers that were selling and illegally distributing them. Prosecutors had previously investigated, and civilly fined, the corporation.

Prior Actions

Historically, DOJ used civil and administrative fines and penalties to enforce laws against drug manufacturers. Under federal law, wholesalers are required to report and monitor their sales of controlled substances. Typically, when DEA suspected wrongdoing or other non-compliance, they would investigate the corporation, evaluate their records, and a civil suit and/or fine would be negotiated. In rarer instances, criminal charges were brought against doctors, pharmacists, and other direct distributors for diverting drugs and/or defrauding Medicare in the process. Those prosecutions typically emphasized the federal fraud, rather than the drug distribution.

In 2007, the DOJ settled claims against Purdue Pharma, alleging that the company misled regulators, doctors, and others about the risk of addiction to their flagship medication, OxyContin. The company paid a fine, and three executives pled guilty to misdemeanor charges and were required to pay personal fines over $30 million. Based on the pleas, the Department of Health and Human Services excluded the executives from federal health care programs for twelve years. While the settlement at the time seemed sufficiently aggressive, lawmakers now admit that criminal charges should have been filed against the executives. Purdue continued selling OxyContin, and thousands of patients overdosed and/or died after the settlement.

DOJ, and in particular the U.S. Attorney’s Offices in Ohio and West Virginia, have been forced to consider alternative, and aggressive, responses in the fight against opioid-related deaths and overdoses. In Ohio alone, approximately 5,000 people die from opioid overdoses per year. DEA’s “360 Strategy” to respond to the opioid crisis emphasizes that traditional law enforcement techniques alone cannot stem the tide of drugs into communities, and that prescription opioids, such as hydrocodone, oxycodone, and others, have significantly contributed to the rise in heroin, fentanyl, and other drugs’ popularity.

As a result, community leaders face increasing pressure to hold responsible corporate executives and other actors who have significantly contributed to the proliferation of pills and the opioid addictions crippling towns across America. Criminal prosecutions carry significant penalties and seek to penalize specific corporate actors, rather than the corporations themselves, which has lasting impact beyond DOJ’s traditional strategy.

Conclusion

DOJ is pulling all the punches when it comes to combating the opioid crisis. Expect to see more criminal prosecutions of this kind as they aggressively combat opioid and heroin addiction. Corporations and executives can avoid getting hit by fines, civil investigations, and/or criminal prosecutions by going on the offensive, and implementing effective compliance programs designed to prevent criminal behavior and federal law enforcement intervention.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

Marisa T. Darden Squire Patton Boggs Cleveland Government Investigation and White Collar Crime
Principal

Marisa is a former Assistant United States Attorney and was an Assistant District Attorney in the New York County District Attorney’s Office. She was the lead prosecutor on investigations and prosecutions of criminal matters involving complex factual and legal issues, including allegations of money laundering, fraud and violations under the Controlled Substances Act and New York law. Marisa has successfully tried more than 15 complex criminal cases to verdict, including matters surrounding to the opioid crisis, and has argued before the Sixth Circuit Court of Appeals.

Marisa began...

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