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Pharmaceutical Executives Indicted on Drug Trafficking Charges

The former CEO and Chief Compliance Officer of a pharmaceutical distributor were recently indicted by federal authorities for conspiracy to distribute controlled substances.
On April 23, 2019, the Department of Justice announced that Rochester Drug Co-Operative Inc.'s former CEO had been indicted on one count of conspiracy to distribute controlled substances and one count of conspiracy to defraud the United States. The company's former Chief Compliance Officer plead guilty to conspiracy to distribute controlled substances, conspiracy to defraud the United States, and willfully failing to file reports of suspicious orders with the DEA.

This is the first time that executives of a pharmaceutical distributor have been charged with drug trafficking related to the opioid epidemic. The charges against the executives carry a mandatory minimum prison term of ten years.

Rochester Drug Co-Operative, one of the ten largest pharmaceutical distributors in the United States, entered into a settlement agreement to settle civil claims, as well as a deferred prosecution agreement to settle criminal charges, brought against the company.

As part of the settlement the company admitted that it:
  • Did not implement adequate systems to detect, investigate and report suspicious orders of controlled substances;
  • Ignored red flags indicating that certain customers were likely dispensing controlled substances for other than legitimate medical purposes;
  • Failed to act on knowledge that a high percentage of certain pharmacy customers were from out-of-state and engaged in cash transactions; and
  • Disregarded information that customers were filling prescriptions in quantities or dosages that were higher than accepted medical standards.
The charges in this case indicate that where the facts warrant prosecution, the DOJ will bring criminal charges against corporate executives who are responsible for the inappropriate distribution of opioids, even where the pharmaceuticals themselves were prescribed by physicians.
Kenneth C. Pickering and Catherine G. Curley are members of Mirick O'Connell's Government and Internal Investigations Practice Group.

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