First major drug distribution company, former CEO, criminally charged in opioid crisis

April 23, 2019, 4:02 PM UTC / Updated April 23, 2019, 4:55 PM UTC

By Tom Winter

In a first in the fight against the opioid crisis, a major drug distribution company and its former CEO are facing criminal charges.

Rochester Drug Co-operative was charged Tuesday with narcotics conspiracy and conspiracy to defraud the United States.

Laurence Doud III, the former CEO of the company, was charged with narcotics conspiracy and conspiracy to defraud the Drug Enforcement Administration. He is accused of distributing tens of millions of oxycodone, fentanyl, and other opioids that Rochester’s own compliance department allegedly found had no legitimate need for them.

“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,” prosecutors said in the indictment.

When Doud was questioned by a fellow company executive about ending a relationship with a pharmacy who was allegedly becoming one of the nation’s largest dispensers of the highly addictive opioid spray Subsys, he told the executive: “Kill it and Die!”

The U.S. Attorney’s Office for the Southern District of New York also filed a lawsuit against Rochester Drug Co. Tuesday seeking “penalties and injunctive relief.”

Rochester Drug Co-Operative announced they have entered into a plea agreement in the criminal case and have agreed to settle the civil case and pay a $20 million fine.

“We made mistakes … and RDC understands that these mistakes, directed by former management, have serious consequences,” Jeff Eller, a spokesperson for Rochester Drug Co-operative, said in a statement. “We accept responsibility for those mistakes. We can do better, we are doing better, and we will do better.”

“One element of the opioid epidemic is a dramatic increase in the volume of prescriptions for opioids and all narcotics,” Eller said. “From 2012 to 2017, we did not have adequate systems in place nor were our compliance team and practices rigorous enough to provide adequate controls and oversight over the increased demand for narcotic drug products from pharmacies.”

A new management team was put in place at Rochester Drug Co-operative in 2017, and “began making significant changes with a focus on implementing a world-class compliance program,” the company’s statement said.

The U.S. Attorney’s Office for the Southern District of New York is expected to hold a news conference regarding the charges on Tuesday afternoon.

This is a developing story. Check back for updates.