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Pharmaceutical distributor embroiled in criminal charges ceases opioid sales

A New York-based wholesale pharmaceutical distributor has announced it will no longer distribute opioid medications, almost nine months after two of its former executives were charged with illegally distributing opioids and conspiring to defraud the US Drug Enforcement Administration.

“The ever-increasing expenses associated with the legal and regulatory compliance for this segment of drugs are simply not sustainable,” Rochester Drug Co-Operative (RDC) said in a statement released by the company spokesman, Jeff Eller. “While these specific drugs represent a relatively small percent of total sales, they account for significant legal and compliance expenses.”

RDC is a distributor that buys medicines directly from manufacturers and sells them wholesale to pharmacies.

The company’s decision to cease distribution of opioids was “unrelated” to the criminal charges, Eller said. “This was a business based decision, not a litigation based decision,” he told CNN.

Drug trafficking charges against executives were first of their kind

The April 2019 criminal drug trafficking charges brought against the two former executives of RDC were the first time distributors were charged with these crimes.

William Pietruszewski, 53, a former compliance officer for the RDC, was arrested last year and pleaded guilty to one count of conspiracy to distribute controlled substances, one count of conspiracy to defraud the United States and one count of willfully failing to file suspicious order reports with the DEA. His attorney had no comment at the time.

The former CEO, Laurence Doud III, 76, was arrested last year and charged with one count of conspiracy to distribute controlled substances and one count of conspiracy to defraud the United States. He pleaded not guilty to both counts. The former CEO’s legal team filed a motion to dismiss the count of conspiracy to illegally distribute controlled substances on the grounds that “the law was not intended to cover the CEO of a pharmaceutical company,” his attorney, Robert Gottlieb, told CNN. The motion is pending and the case is ongoing, Gottlieb said. Doud faces 10 years to life in prison.

Only four suspicious narcotics orders out of 1.5 million were flagged

Between 2012 and 2017 RDC saw an 800% increase in demand for oxycodone and a 2,000% increase in demand for fentanyl from its customers, federal prosecutors said. Of nearly 1.5 million orders for narcotics placed between 2012 and 2016, the company flagged only four as suspicious, according to court documents. The DEA identified at least 2,000 orders that should have been flagged, some from pharmacies that exhibited red flags for suspicious activity. Companies are required to report suspicious orders for controlled substances, including opioids, to the DEA.

As part of the deferred prosecution agreement in April 2019, RDC waived its right to a criminal indictment and admitted to a pattern of conduct that violated federal narcotics laws and conspiracy to defraud the DEA. Eller said that it would “be premature to discuss” if these changes in distribution would impact their agreement with federal prosecutors.

Eller refused to comment on how much the company’s revenue and distribution has declined since the two former executives faced criminal charges. As of April 2019, it was the nation’s sixth largest distributor of pharmaceuticals with over $1 billion in revenue, distributing to over 1,300 pharmacies, according to the prosecution agreement.

The spokesman told CNN that RDC will cease opioid distribution “when existing inventory runs out,” but it will continue distributing all other healthcare products, according to its statement. “We are grateful for the loyalty and patience our customers have shown as we have worked through this decision,” RDC wrote in its release.