On July 18, the United States Attorney’s Office for the Southern District of Ohio announced that a federal grand jury in that district had indicted the Ohio-based pharmaceutical distributor Miami-Luken and four individuals on a charge of conspiring to distribute controlled substances (i.e., hydrocodone). The four individual defendants included Anthony Rattini, Miami-Luken’s former president; James Barclay, Miami-Luken’s former compliance officer; Devonna Miller-West, a pharmacist who owned and operated Miller-West Pharmacy in Oceana, West Virginia; and Samuel “Randy” Ballengee, a pharmacist who owned and operated Tug Valley Pharmacy in Williamson, West Virginia.
According to the indictment, which was unsealed after the individual defendants’ arrests on July 18, Rattini, Barclay, and Miami-Luken, which reportedly “supplied pharmaceuticals to more than 200 pharmacies in Ohio, West Virginia, Indiana and Tennessee,”
sought to enrich themselves by distributing millions of painkillers to doctors and pharmacies in rural Appalachia, where the opioid epidemic was at its peak.
The distributor and its officials allegedly continued to distribute millions of pills to Westside, Tug Valley and other pharmacies even after being advised by the DEA of their responsibilities as a wholesaler to ensure drugs were not being diverted and to report suspicious orders.
The U.S. Attorney’s Office also stated that Miami-Luken and its officials
filled suspicious orders placed by Miller-West, Ballengee and others.
For example, Rattini, Barclay and Miami-Luken allegedly ignored obvious signs of abuse by distributing more than 2.3 million oxycodone pills and 2.6 hydrocodone pills to Miller-West’s pharmacy in a town of approximately 1,394 people.
Ballengee’s pharmacy allegedly received more than 120,000 painkiller pills from Miami-Luken in one month. From 2008 through 2014, Miami-Luken distributed more than 6 million hydrocodone pills to Tug Valley Pharmacy.
In addition, Miami-Luken “allegedly provided another 2.2 million pills from 2012 through 2014 to another pharmacy that had been cut off from other wholesalers.” The company’s sales efforts from 2008 until 2015 resulted in generating more than $173 million in consolidated sales per year, and receiving more than 70 percent of its profits from wholesale distribution.
Note: Many observers of the pharma sector have been concerned about the extent to which opioid-related litigation would seek to target distributors and pharmacies for contributing to the opioid crisis across the country. This indictment, along with the recent federal indictment of and resolution with Rochester Drug Co-Operative (RDC), indicates the approach that the Justice Department is apparently taking with regard to criminal charges against those two segments of the supply chain.
In both cases, the Justice Department is seeking to hold accountable specific distributor firms not merely for having distributed opioid drugs in large volumes, but having done so despite specific evidence that the firms knew that certain pharmacies posed a high risk of illegal diversion. In Miami-Luken’s case, that knowledge allegedly included specific reminders from the Drug Enforcement Administration about avoiding involvement in illegal diversion, knowledge of “red flags” about particular pharmacies, and continuing to fill suspicious orders from certain pharmacies. In RDC’s case, that knowledge included direction by its senior management to supply dangerous opioids “to pharmacy customers that its own compliance personnel determined were dispensing those drugs to individuals who had no legitimate medical need for them,” distribution of controlled substances “to those pharmacies even after identifying ‘red flags’ of diversion,” and frequently bringing on “pharmacy customers that had been terminated by other distributors.”
Both cases also involve indictment of the former chief compliance officers of the companies in question. That fact indicates the Justice Department’s interest in signaling to pharma chief compliance officers the consequences of failing to report suspicious orders and choosing to ignore diversion “red flags,” such as termination of pharmacies by other distributors, in the interest of maintaining or increasing sales.
Dipping Through Geometries 