Pharma execs charged in $1.3 billion drug scheme

 Pharma execs charged in $1.3 billion drug scheme


Photo: Jeff Lagasse/Healthcare Finance News

Five pharmaceutical distributor executives and five pharma sales representatives have been charged by the Department of Justice for the unlawful distribution of about 70 million opioid pills and 30 million doses of other prescription drugs  worth more than $1.3 billion on the black market.

The charges were unsealed in the Southern District of Texas, Southern District of Florida, Eastern District of Missouri and Eastern District of North Carolina. Three Houston-area pharmacy operators were also charged in the Southern District of Texas for their role in the schemes. 

Nine of the 10 individuals charged have pleaded guilty, according to the DOJ.

WHAT’S THE IMPACT?

According to court documents, the opioids that were allegedly distributed – oxycodone, hydrocodone and hydromorphone – were available in numerous strengths and forms, but the distributors allegedly sold the drugs almost exclusively in their most abused, most powerful immediate-release pill forms – in other words, the ones that sold for the most money on the black market.

The distributors also allegedly sold prescription-drug potentiators – alprazolam, carisoprodol and promethazine with codeine syrup – known for their reputation of enhancing the high from the opioids. The distributors allegedly charged their Houston customers far more for the drugs than what a legitimate pharmacy could or would pay.

As alleged in the charging documents, the defendants mostly targeted pill-mill pharmacies in and around Houston, which the DOJ called a nationally recognized “hot zone” for diversion of pharmaceutical opioids onto the black market.

The distributors sought to thwart the Drug Enforcement Administration Agency’s oversight function in several ways, including by following what one defendant called a “blueprint” for avoiding detection: high prices, low purchasing limits for the controlled drugs and compliance measures that only served appearances.

In addition, the distributors were all located outside Texas, far removed from their Houston-area pill-mill pharmacy customers and the affected communities.

Those charged include Sheldon Dounn, 71, of Plantation, Florida; Richard “Dick” Osbourne, 78, of Memphis, Tennessee; Courtney Rotenberry, 45, of Savannah, Tennessee; Hernan Alvarez, 52, of Phoenix, Arizona; Joshua Weinstein, 50, of Miami, Florida; Derrick “Chad” Atkinson, 40, of Lumberton, North Carolina; Jason Smith, 43, of Plantation, Florida; Joseph Pesserillo, 38, of The Villages, Florida; Cassandra Rivera, 40, of Ft. Lauderdale, Florida; Eric Bailey, 59, of St. Louis; and Velencia Griffin, 42, Kendal Lyons, 29, and Andre Reid, 44, of Houston.

THE LARGER TREND

According to the DOJ, settlements and judgments under the False Claims Act exceeded $2.68 billion in the fiscal year ending Sept. 30, 2023. Of that total, more than $1.8 billion related to matters that involved the healthcare industry – including managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities and physicians.

The government and whistleblowers were party to 543 settlements and judgments, the highest number of settlements and judgments in a single year. Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $75 billion.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.



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