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How federal case against drug distributor could change opioid fight

Amid the ongoing opioid epidemic, drug manufacturers, doctors and pharmacists have all come under fire. But it's a drug distributor, a company called RDC, at the center of a new federal criminal case that equates its business operations with illegal drug trafficking. William Brangham talks to The Washington Post’s Lenny Bernstein about whether the new charges could change the opioid business.

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  • Judy Woodruff:

    During the opioid epidemic, there's been a lot of attention on the drug manufacturers, the doctors and pharmacists who prescribe the pills, but one of the crucial players are the distributors, the big companies who make sure pills are shipped and delivered.

    William Brangham explains that, for the first time, one of these companies is facing federal criminal charges.

  • William Brangham:

    That's right Judy.

    The U.S. attorney in Manhattan announced yesterday that a company called Rochester Drug Co-Operative, or RDC, which is a wholesaler, repeatedly ignored red flags and sent tens of millions of addictive opioid pills and fentanyl products to pharmacies that were then distributing those drugs illegally.

    Prosecutors say that RDC, and two of its former executives, knew full well what was going on and shipped the drugs anyway from roughly 2012 through 2017.

    Here's Ray Donovan, the DEA Special agent in charge of this case.

  • Ray Donovan:

    RDC swept customers' red flags under the rug when releasing orders. RDC was more loyal to customers, i.e., the pharmacies, than to the public health when not reporting suspicious orders or customers.

    In fact, one employee compared some of their customers' requests for extremely large orders of controlled substances as sticks of dynamite, waiting for the DEA to light the fuse.

  • William Brangham:

    Lenny Bernstein has covered the opioid crisis and what led to it for The Washington Post. He was also part of a Peabody Award-winning investigation into how the DEA had been stymied by the drug industry in its attempt to address this crisis. He joins me from the Post newsroom now.

    Lenny, thank you very much for being here.

    I'm really struck by this indictment. This is really the federal government saying that one of these pharmaceutical distributors is, in essence, a drug trafficking operation.

  • Lenny Bernstein:

    Absolutely.

    That's what they're saying. They're saying they conspired to sell drugs for other than medical purposes, to sell them illegally, that they were acting sort of like a small drug cartel.

    This is a warning. This is a shot across the bow of these distributors, that, if we can prove this against RDC — and, already, the company has said it will not dispute the charges — we might be able to do it against others.

  • William Brangham:

    Before we get into the mechanics of the case, can you remind us sort of the role that these wholesalers and distributors play in the supply chain of drugs in America?

  • Lenny Bernstein:

    Sure.

    The simplified version is, the manufacturers are at the top of the supply chain. They make the pills. The distributors are the middlemen. They take them from the manufacturers and they bring them to the pharmacies, where people go with their prescriptions from their doctors to purchase the opioids, to purchase the prescriptions.

    The companies that make up the distributors, the distributor community, there are only a few hundred of them, and three of them are gigantic. They're all on the top 15 of the Fortune 500 list, and they control about 85 percent to 90 percent of drug distribution in this country.

    And that's McKesson, Cardinal Health, and AmerisourceBergen. RDC is the sixth largest in the country.

  • William Brangham:

    And these companies, in that role, in that middle role that they play, they're supposed to be flagging suspicious orders.

    So, if suddenly one pharmacy is asking for way more opioids than they had ever asked for before, they're supposed to say, hey, let's alert the authorities.

  • Lenny Bernstein:

    Yes, the 1970 law that set this up was very smart. It said, the distributors are the gatekeepers. They have their eyes on the pharmacies. They can see, like you said, when someone is ordering 10,000 pills one month and 50,000 pills the next, that that is a red flag.

    They can see, when they look at their records, that 60 percent of the people who come into a particular pharmacy are buying with cash, or that people are coming from out of state and traveling to a pharmacy, say, in West Virginia, and buying millions, collectively, millions of pills and taking them back to — taking them back to their homes.

    So it's a good system when it works.

  • William Brangham:

    And so RDC is accused — and I know they have admitted to some of this — that they simply ignored these obvious red flags.

  • Lenny Bernstein:

    Yes, more than ignored.

    I mean, first of all, it took them a long time to set up any semblance of a monitoring system. Then, when some of these red flags came in, they either turned their head or, the allegation is, that their CEO said, look, forget it. It's not important. This is a big account. We want these pills to go down there.

    And, of course, it doesn't take your viewers to understand why. Bonuses are dependent on that kind of commerce. Profits are dependent on that kind of commerce. So, you — if you're going to do this in a corrupt fashion, you ignore those red flags.

    On occasion, there are companies that will tell pharmacies, you know, that order is pretty large. Maybe we ought to raise your threshold, so we don't have to report this to the DEA. Or, hey, why don't we cut that order into two pieces, so it won't be large enough for the DEA — for to us report it to the DEA or for the DEA to notice?

  • William Brangham:

    As your reporting and others' reporting has shown, it's not just a problem with RDC. Many of these distributor and wholesaling companies have had these same problems.

    Why has this been such a tough nut to crack?

  • Lenny Bernstein:

    I think that brings us sort of full circle to how you started this off, which is this.

    Even if you find one of these fine one of these companies civilly $40 million, $50 million, in the case of McKesson, $150 million, this is a small amount if the company has $150 or $200 billion in net cap.

    It's a huge company. And some of these costs can be viewed as the cost of doing business. Now, for the first time, the government is saying, OK, now we're going to bring a criminal charge against some of your executives.

    And I remember one investigator saying to us very specifically, guys in expensive suits don't do well in jail. And they are clearly trying to — a new tactic to scare these guys and to make them toe the line.

  • William Brangham:

    Well, we will have to see if a former CEO going off in handcuffs actually changes behavior.

    Lenny Bernstein of The Washington Post, thank you so much.

  • Lenny Bernstein:

    My pleasure.

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