Feds claim drug crisis win with narcotics indictment of former pharma boss

In what is being touted as a first-ever indictment of its kind in the ongoing drug crisis, a pharmaceutical company and its former CEO are facing federal charges for allegedly diverting opioid medication and defrauding the Drug Enforcement Agency.

Upstate New York-based Rochester Drug Co-operative and two former executives — 75-year-old former CEO Laurence Doud and former chief compliance officer William Pietruszewski — were indicted on criminal charges Tuesday, according to the U.S. Attorney's Office for the Southern District of New York.

"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," U.S. Attorney Geoffrey Berman said in a Department of Justice news release. "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."

According to the indictment, Doud and RDC knowingly sold powerful painkiller medications to pharmacies from 2012 to 2017, knowing they were being distributed illegally.

As a manufacturer and seller of controlled substances, RDC is required by federal law to maintain a system to report suspicious orders to the DEA.

However, even when RDC's own compliance personnel said that pharmacy customers were showing signs of diverting drugs, the company continued to sell opioids to them for the sake of profit, prosecutors said. The company and its former executives are also accused of, among other things, hiding those "red flags" from the DEA for fear that they would lose buyers.

"Doud and other members of senior management instructed RDC employees to contravene its policies and DEA regulations so that the Company could continue doing business with customers Doud knew were likely diverting controlled substances, and to increase Doud's compensation," the federal indictment states.

RDC has agreed to a deal with prosecutors where it will pay $20 million in penalties for its actions, submit to being independently monitored, and enhance its controlled substance compliance department.

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

Federal authorities are heralding the news as a big step forward in addressing America's rampant opioid crisis.

"Today's charges should send shock waves throughout the pharmaceutical industry reminding them of their role as gatekeepers of prescription medication," DEA Agent in Charge Ray Donovan said of the charges. "The distribution of life-saving medication is paramount to public health; similarly, so is identifying rogue members of the pharmaceutical and medical fields whose diversion contributes to the record-breaking drug overdoses in America."