Johnson & Johnson, Teva, others face federal criminal probe into opioid sales: WSJ

Facing thousands of state and local civil lawsuits, opioid makers including Teva and Johnson & Johnson are scrambling to ink a deal to escape the multibillion-dollar legal overhang. But civil charges could be the least of the drugmakers' concerns, with the feds reportedly gearing up for a criminal probe into their opioid businesses.

Federal prosecutors have opened a criminal investigation into claims opioid makers and distributors willfully violated the Controlled Substance Act by allowing those drugs to be used for nonmedical purposes, according to The Wall Street Journal.

The scope of the investigation is not clear, but at least six drugmakers and distributors––J&J, Teva, Mallinckrodt, Amneal, AmerisourceBergen and McKesson––have acknowledged receiving federal subpoenas in Securities and Exchange Commission filings.

A criminal investigation would represent a significant escalation in charges against the opioid industry as thousands of state and local civil lawsuits could be nearing resolutions.

In late October, Teva offered a whopping $23 billion "framework" deal to end the lawsuits it faces, with the vast majority of that settlement tied to donations of buprenorphine naloxone, an opioid addiction treatment, over the next 10 years. The offer also included $250 million in cash.

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J&J, for its part, offered $4 billion to join Teva's agreement with four state attorneys general and a slew of local plaintiffs. AmerisourceBergen, McKesson and a third distributor, Cardinal Health, reportedly offered to join the settlement for around $20 billion in cash.

According to the WSJ, prosecutors from the U.S. Attorney's Office in the Eastern District of New York were expected to issue a new round of subpoenas against additional companies in the coming months.

Those companies would join the short list of opioid makers and distributors targeted by federal prosecutors on criminal charges in the nation's opioid epidemic.

In July, Department of Justice (DOJ) prosecutors charged Miami-Luken’s former president, Anthony Rattini—along with a former compliance officer and two pharmacists—with illegally distributing opioids at the height of the nation’s addiction crisis. The charges come with a maximum penalty of 20 years in prison.

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According to the prosecutors, Rattini and compliance officer James Barclay “sought to enrich themselves by distributing millions of painkillers to doctors and pharmacies in rural Appalachia, where the opioid epidemic was at its peak” between 2008 and 2015.

According to the Dayton Daily News, Miami-Luken shut down in October 2018 amid congressional inquiries, multiple lawsuits and a $2.5 million settlement with the state of West Virginia.

Miami-Luken wasn't the first distributor to be knocked, though: Two former executives from Rochester Drug Co-Operative (RDC) were indicted by the DOJ in April. The two execs––former CEO Laurence Doud III and former Chief Compliance Officer William Pietruszewski––and RDC were charged with illegal distribution, a move Drug Enforcement Administration Special Agent in Charge Ray Donovan said “should send shock waves throughout the pharmaceutical industry.”

RDC agreed to pay a $20 million penalty and admit guilt in exchange for five years of deferred prosecution, and Doud and Pietruszewski both face 15 years in prison.