Fed Case Against Opioid Maker Falters, $35 Million Settlement Reached

By Kelly Burch 04/06/17

The oxycodone drugmaker had nearly 44,000 violations of federal policy, allegedly due to turning a blind eye to suspicious ordering.

Hand about to bang gavel on sounding block in the court room.

One of the government’s largest investigations of a drug manufacturer has been settled for a $35 million fine and no admission of wrongdoing by the company, despite a six-year investigation that spanned five states. 

Mallinckrodt Pharmaceuticals, which manufactures pills containing fentanyl, morphine and oxycodone, had nearly 44,000 violations of federal policy that could have resulted in $2.3 billion in fines, according to internal documents obtained by The Washington Post. The fact that the case was closed for a fraction of that and the company took no public accountability for contributing to the spread of opioids highlights the difficulty of prosecuting Big Pharma, according to law enforcement officials who spoke with The Post

Federal law requires drug manufacturers to “know their customers” and alert the DEA of any suspicious ordering. Although Mallinckrodt pills made it into the hands of medical professionals who were prescribing illegally, the company said that it was not responsible for those orders because they had occurred after Mallinckrodt had sold the pills to wholesalers. 

“When you get to the manufacturing level, it’s hard to prove that they knew what was happening,” one law enforcement official said. “But they were making the product, they were selling it to the country’s largest distributors, and they had a responsibility under the law to detect and report orders that were suspicious. These orders were beyond suspicious.”

From 2008 to 2012, 66% of all oxycodone sold in Florida came from Mallinckrodt Pharmaceuticals, in part due to the company's lack of due diligence in following federal regulations, according to an investigation by the Drug Enforcement Administration (DEA).

“Mallinckrodt’s response was that ‘everyone knew what was going on in Florida but they had no duty to report it,’” according to an internal summary of the case prepared by federal prosecutors and obtained by The Post.

“They just weren’t taking this seriously, and people were dying,” said a former law enforcement official who spoke anonymously because the case is pending. “People were dying all over the place. It wasn’t their kids, their wives, their husbands, their brothers. It was some hillbilly in Central Florida, so who cares?”

In a statement, the company maintained that it had done everything it was required to do.

“Mallinckrodt has long been a recognized leader in developing and sharing best practices related to the prevention of opioid diversion and misuse, and has continuously invested significant resources to address this serious drug epidemic,” the statement said. “We are proud of the programs and initiatives we’ve developed to ensure appropriate use of pain medication and, most importantly, to deter such medications from ending up in the wrong hands.”

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Kelly Burch writes about addiction and mental health issues, particularly as they affect families. Follow her on TwitterFacebook, and LinkedIn.