Feds level first-ever charges against pharmaceutical distributor exec over opioid crisis

NEW YORK - A former CEO of Rochester Drug Co-Operative has been indicted on what federal prosecutors say are the first-ever charges against a drug company executive stemming from the opioid crisis.

The indictment alleges that Ex-CEO Laurence Doud III aimed to maximize his own pay along with company revenues by ordering subordinates to ignore red flags about certain customers, therefore putting the customers in danger.

Doud and other top executives "made the deliberate decision" not to investigate, monitor or alert federal regulators about pharmacy customers they knew were providing oxycodone, fentanyl and other opioids to people who wanted them for non-medical uses, the indictment alleges.

Doud's lawyer, Derrelle Janey, said the former executive intends to "fully defend" himself against the charges. Doud, who retired in 2017, alleged in a lawsuit last year that Rochester Drug Co-Operative tried using him as a scapegoat for its legal and regulatory troubles.

Back in 2015, the United States filed and settled a civil lawsuit with Rochester Drug Co-Operative after RDC admitted and accepted responsibility for a number of violations of the Controlled Substances Act, including an allegation that the company was not accurately reporting purchase orders for “substances with a high potential for abuse” to the Drug Enforcement Administration, as required by law.

The lawsuit was announced by Preet Bharara, then the United States Attorney for the Southern District of New York, James J. Hunt, the Special Agent-in-Charge of the New York Field Division of the DEA, and William J. Bratton, the Commissioner of the New York City Police Department, and the settlement was approved in Manhattan federal court in the form of a consent order.

The company was ordered to pay $360,000 in fines and to correct the record-keeping reports that it was obligated to send to the DEA.

At the time, DEA Special Agent Hunt said, “The Controlled Substances Act is the cornerstone of preventing prescription drug diversion and drug abuse. Today’s announcement has a dual purpose; to remind pharmaceutical distributors of their reporting requirements, and to reiterate law enforcement’s ongoing efforts to curtail opioid abuse throughout our nation.”

Now, federal prosecutors are making good on that promise.

An indictment charging Rochester Drug Co-Operative was also unsealed Tuesday.

The Rochester, New York-based company said it has reached a deferred prosecution agreement, will pay a $20 million fine to resolve a civil complaint, and consented to three years of independent compliance monitoring.

The company is one of the nation's 10 largest distributors of pharmaceutical products, with more than 1,300 pharmacy customers and over $1 billion in revenue per year. The company says the vast majority of its customers are small, independent pharmacies.

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

Another former company executive, William Pietruszewski, who was chief of compliance, reached a cooperation agreement with prosecutors.

The Associated Press contributed to this report.

This story was reported from Los Angeles.