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Wednesday, July 24, 2019

Meet the corporate drug pushers (spoiler: CVS, Wal-Mart and Walgrens among them)

The Tainted Corporations Dominating the Opioid Industry
By Phil Mattera for the Dirt Diggers Digest

The release of a previously confidential database is providing insights into the opioid industry analogous to what would be contained in the secret accounts of all the Mexican drug cartels.

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.

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.

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.