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Opioid distributor’s first-of-its-kind criminal trial opens in NYC

Prosecutors say that greed motivated a former drug distribution executive's pattern of ignoring red flags and continuing to work with bad pharmacies.

MANHATTAN (CN) — A trial kicked off Tuesday in the case against a former drug company executive who is facing unprecedented drug trafficking charges that position him as helping to fuel the deadly opioid epidemic. 

Laurence F. Doud, former CEO of the distribution company Rochester Drug Cooperative Inc., is accused of illegally selling oxycodone and fentanyl to pharmacies, directing employees to ignore red flags pointing to shady practices, and lying to the U.S. Drug Enforcement Agency about his company’s drug safety controls.

In his opening argument, Assistant U.S. Attorney Thomas Burnett said Doud “put sales over safety,” flouting DEA standards and failing to report bad pharmacies to maintain his bottom line.

“He knew that people across the country were dying from opioids,” Burnett said. “But the defendant, he broke the rules. Why? Greed.” 

Doud, 78, faces one count of conspiracy to distribute controlled substances, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years, and one count of conspiracy to defraud the U.S., which carries a maximum prison term of five years. 

The charges marked the first criminal drug distribution charge against a pharmaceutical wholesaler and its executives, federal prosecutors said in April 2019 when the charges were unsealed. 

According to DEA policies, distributors must have internal protocols to identify suspicious orders from pharmacies — those of unusual quantities or frequencies, for example — and report them to the agency.   

Employees claimed to have those controls in place. But under Doud’s close watch, they were illusory, prosecutors allege. 

“Those policies? They weren’t worth the paper they were printed on,” Burnett said. 

In April 2019, Rochester Drug paid a $20 million fine and agreed to independent monitoring under a five-year deferred prosecution agreement

The company’s former compliance officer, William Pietruszewski, pleaded guilty to a narcotics conspiracy, defrauding the government, and failure to report suspicious pharmacy orders. He is expected to testify against Doud in the coming weeks. 

Defense attorney Derrelle Janey said his client is falsely accused of the federal charges, and that “countless” pharmacies were shut down under Doud’s watch. 

“You will hear, you will read, you will learn, and come to know that the accusation that Larry Doud is a drug dealer is absurd,” Janey, of The Janey Law Firm LLP, told jurors. “You will decide what really happened based on the evidence.”

Rejecting the government’s argument that avarice drove Doud to keep opioids flowing to bad pharmacies, Janey said the former CEO’s bonuses came not from controlled substances, but drugs like albuterol, used to treat asthma, and the cholesterol-lowering medication Lipitor. 

Janey’s plea to jurors alluded to the heavy sentences his septuagenarian client faces if convicted. 

“I only request that you take it seriously,” he said. “Larry Doud requests that you take it seriously. Because his life is at stake.” 

Among the witnesses prosecutors will call in the anticipated three-week trial are a pharmacy owner and government cooperator who illegally sold drugs he purchased from the distributor; a witness who was addicted to narcotics, and bought the drugs from another pharmacy client without any medical need; and a Rochester Drug compliance department employee. 

First to take the stand on Tuesday was Ruth Carter, a former DEA agent of 31 years, who outlined the responsibilities of drug distributors who deal in Schedule II narcotics like oxycodone and fentanyl. 

“These drugs are similar to heroin,” Carter said during direct examination. “In fact, heroin is a semi-synthetic opioid that’s made from the poppy plant, and so is oxycodone.”

Carter said that when she first started at the DEA, the drugs were unknown to most people. 

Today, the substances are household names because they have contributed to a significant — and increasing — percentage of the nearly one million deaths from drug overdoses between 1999 and 2020, according to data from the Centers for Disease Control and Prevention

Wholesalers are supposed to look for signs of diversion, or opioids moving from the legitimate supply chain into illicit markets, Carter explained. It’s up to businesses to put their own policies in place and report suspicious activity to the DEA. 

Red flags can include one or two doctors writing a significant amount of prescriptions; a pharmacy dispensing higher than normal amounts or proportions of opioids; pharmacy customers paying in cash; and pharmacies dispensing greater amounts of higher doses of opioids. 

“Just one red flag should be a concern,” Carter said. 

On cross examination, Janey questioned whether the DEA could be more clear in its expectations of distributors and raised the point that it’s the agency that sets quotas of opioids based on data from manufacturers. 

During a break, U.S. District Judge George Daniels told Janey that the DEA’s competency was irrelevant. 

“The DEA could have been doing the lousiest job,” said the Clinton-appointed judge, “but that does not affect whether or not your client is guilty of the charges.” 

Testimony will continue on Wednesday in the Southern District of New York.

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