The Tainted Corporations Dominating
the Opioid Industry
By Phil Mattera for the Dirt Diggers Digest
The database, known as the
Automation of Reports and Consolidated Order System, or ARCOS, is compiled by
the U.S. Drug Enforcement Administration.
It was made public by the federal judge in Cleveland overseeing a massive lawsuit brought by nearly 2,000 localities against opioid manufacturers and distributors.
It was made public by the federal judge in Cleveland overseeing a massive lawsuit brought by nearly 2,000 localities against opioid manufacturers and distributors.
A detailed analysis of the database by
the Washington Post shows that the industry has been heavily concentrated in
the hands of fewer than a dozen large corporations.
These companies are among the defendants in the Cleveland case and are increasingly being targeted for their role in generating an epidemic that has caused hundreds of thousands of deaths.
These companies are among the defendants in the Cleveland case and are increasingly being targeted for their role in generating an epidemic that has caused hundreds of thousands of deaths.
The claims by the corporations that
they are not to blame for the crisis is made harder to swallow by the fact that
they each have a history of involvement in other types of corporate misconduct.
That history, taken from their entries in Violation
Tracker, is summarized below.
The Post analysis of ARCOS shows
that just six companies distributed three-quarters of the 76 billion oxycodone
and hydrocodone pills that saturated the country in the period from 2006 to
2012.
McKesson Corporation, which accounted for 18.4 percent of the pills, has accumulated more than $400 million in total penalties, more than half of which comes from False Claims Act cases.
For example, in 2012 it paid $190
million to settle federal allegations that it reported inflated drug pricing
information for a large number of prescription drugs, causing Medicaid to
overpay for those medications. The company paid another $151 million to settle related
allegations brought by 28 state attorneys general in a case not yet in
Violation Tracker (but will be added in an expansion later this year).
Walgreens (16.5 percent) is now part
of Walgreens Boots Alliance, which has total penalties of $589 million. Nearly half of that comes
from a $269 million settlement of False Claims Act allegations of improper
billing for insulin pens. In 2013 Walgreens paid $80 million in a Controlled
Substances Act case.
Cardinal Health (14 percent) has
more than $195 million in penalties, the largest
portion of which includes four cases involving violations of the Controlled
Substances Act. Among its other controversies: a $35 million settlement with
the SEC of allegations it engaged in fraudulent accounting and a $26.8 million
settlement with the Federal Trade Commission concerning anti-competitive
practices.
AmerisourceBergen (11.7 percent) has
accumulated $899 million in penalties, including a
$625 million False Claims Act settlement and a $260 million criminal penalty
for distributing misbranded oncology drugs.
CVS (7.7 percent) has $850 million in penalties, more than
half of which comes from 15 False Claims Act cases. Another $183 million
resulted from Controlled Substances Act matters.
Rounding out the list of major
distributors is Walmart (6.9 percent), which has accumulated $1.6 billion in penalties, 90 percent
of which resulted from wage and hour cases.
According to the Post analysis,
three companies accounted for 88 percent of opioid production during the
2006-2012 period.
SpecGx, a subsidiary of
Mallinckrodt, accounted for the largest portion, 37.7 percent. Mallinckrodt
has $139 million in penalties, including a
$100 million antitrust settlement and a $35 million Controlled Substances Act
settlement.
Actavis Pharma (34.6 percent) is now
owned by Teva Pharmaceuticals, which has more than $2 billion in penalties, most of which
comes from cases involving allegations that another subsidiary, Cephalon,
engaged in anti-competitive practices and marketed drugs for purposes not
approved by the Food and Drug Administration.
The last big manufacturer is Par
Pharmaceutical (15.7 percent), a subsidiary of Endo International, which has
total penalties of $287 million, including a $192 million
settlement for marketing of drugs for unapproved purposes.
Purdue Pharma, which is often the
leading target of criticism for the opioid crisis, showed up in the ARCOS
database as producing only 3 percent of output.
Given the involvement of these
companies in all kinds of corporate misconduct, it is highly unlikely that they
were blameless in bringing about the opioid epidemic.
Chances are that the lawsuit in Cleveland will result in substantial increases in their penalty totals.
Chances are that the lawsuit in Cleveland will result in substantial increases in their penalty totals.