This has been broadly known for years, but this past week, the more precise details became public for the first time in a trove of data released after a legal challenge from The Washington Post and the owner of the Charleston Gazette-Mail in West Virginia.
The revelatory data comes from the Drug Enforcement Administration and its Automation of Reports and Consolidated Orders System (ARCOS). It tracks the movement of every prescription pill in the country, from factory to pharmacy.
“This really shows a relationship between the manufacturers and the distributors: They were all in it together,” said Jim Geldhof, a retired DEA employee who spent his 43-year career working on drug diversion cases and is now a consultant for plaintiffs in a massive lawsuit against the drug industry. “We’re seeing a lot of internal stuff that basically confirms what we already knew. It just reinforces the fact that it was all about greed, and all about money.”
The industry has denied that vigorously, blaming criminal doctors who prescribed opioids as if they were candy and individuals who abused the drugs. The industry also contends that the DEA had all the information it needed to stop diversion of pills into the black market.
“The DEA has been the only entity to have all of this data at their fingertips, and it could have used the information to consistently monitor the supply of opioids and when appropriate, proactively identify bad actors,” said John Parker, spokesman for the Arlington, Va.-based Healthcare Distribution Alliance. “Unlike the DEA, distributors have no authority to stop physicians from writing prescriptions, nor can they take unilateral action to halt pharmacies’ ability to dispense medication.”
The DEA declined to comment this past week, citing pending litigation.
It appears that failures mark every point along the supply chain — from manufacturers to distributors to pharmacies to the doctor all too ready to write a script. The epidemic was not something out of sight, behind closed doors, under a bridge. In full view, it intensified and the companies, health care professionals, law enforcement officials and government regulators were unable or unwilling to stop it.
“We have a tradition of trusting companies, and the [government] is kind of weak here,” said Keith Humphreys, a Stanford professor who served as a drug policy adviser to Presidents George W. Bush and Barack Obama. “Here it was misplaced trust.”
The data shows a trend in pill distribution that, according to the lawsuit plaintiffs, can’t be passed off as reasonable therapeutic medical treatment.
The industry shipped 76 billion oxycodone and hydrocodone pills across the country from 2006 through 2012, the period covered by the ARCOS data released this past week. These pills didn’t flow in a steady stream but were more like a flash flood, spiking from 8.4 billion in 2006 to 12.6 billion in 2012. As a point of comparison, doses of morphine, another mainstream treatment for severe pain, averaged slightly more than 500 million a year throughout the seven-year period, according to the data.
The industry was supposed to self-regulate. Companies have an obligation, under the Controlled Substances Act, to report suspicious orders of prescription drugs. The plaintiffs suing the drug companies allege that the incentive structures were tilted in favor of moving more product.
For example, in a filing released Friday, the plaintiffs alleged that Ireland-based drug manufacturer Mallinckrodt gave the sales people in charge of generic opioids “key roles” in investigating suspicious orders of drugs. The compensation scheme “was weighted heavily to favor sales over compliance,” the plaintiffs allege, adding that bonuses for the sale of opioids could exceed six figures.
“In contrast, there is nothing in the record indicating that [national account managers] were evaluated based on their compliance responsibilities” or “ever penalized for failing to stop suspicious orders,” the lawsuit claims.
After the release of the ARCOS data, Mallinckrodt said in a statement that the company produced opioids only within a government-controlled quota and sold only to DEA-approved distributors.
As of September 2012, Teva Pharmaceuticals, an Israeli-based manufacturer of generic drugs, didn’t have a suspicious-order monitoring system in place, according to the court filing. The company apparently decided it needed a system, and hired an AmerisourceBergen employee in 2014 to design it. He created a system called “DefOps,” short for “Defensible Operations,” which he admitted in a deposition was designed “to keep Teva out of trouble with the DEA and because it ‘sounded good,’ ” according to the court papers.
From 2013 to 2016, the papers allege, Teva reported only six suspicious orders out of 600,000.
Teva declined to comment Saturday.
The new details have made more nuanced and complex the familiar narrative of the pharmaceutical industry’s role in the drug epidemic. Many Americans knew about the role of Purdue Pharma, which in 1996 introduced the slow-release opioid painkiller OxyContin. The new formulation of oxycodone was heavily marketed by Purdue as being less likely to become addictive because, the company said, it didn’t give patients such a jolt of a high.
Experts trace the epidemic to the appearance of Oxy, its heavy marketing, and its migration into the illicit drug trade along with other opioid painkillers.
The public’s search for accountability has centered on Purdue and its owners, the Sackler family. Protesters gathered last year at the Smithsonian’s Arthur M. Sackler Gallery, as well as other institutions that received support from Sackler family members. Earlier this year, Harvard President Lawrence Bacow rejected a demand by activists that the university remove Arthur M. Sackler’s name from a museum collection, saying that the Sackler family had made the donation to the school before the introduction of OxyContin and noting that Sackler himself had passed away by that point.
In an earlier statement, Purdue denied the claims brought in the lawsuit and said they are based on mischaracterizations and without merit.
“We live in an age when assigning blame has become a national obsession, especially when it comes to the horrors of the opioid crisis,” Jillian Sackler, president of the Dame Jillian and Dr. Arthur M. Sackler Foundation for the Arts, Sciences and Humanities wrote in an op-ed in The Post in April.
Now Purdue is just one character on a crowded stage. During the height of the crisis, from 2006 to 2012, Purdue’s sales represented only 3 percent of the market. It was not even one of the three biggest companies manufacturing the opioids.
At the top were generic drug companies many Americans have never heard of: Actavis, a product of U.S. mergers, and now owned by Teva; Par Pharmaceutical, since acquired by Endo Pharmaceuticals of Ireland; and a generics subsidiary of Mallinckrodt, now known as SpecGx. They manufactured 88 percent of the opioids in those seven years.
Generic drug companies have been on an endless quest for steady profits because the prices of their drugs are unstable and generally declining, said David Amsellem, a managing director at financial firm Piper Jaffray and an expert on specialty pharmaceuticals. He calls these companies “low-market businesses that are looking for pockets of high margins.”
That situation has contributed to constant churn in the business. Companies are routinely bought and sold, divisions spun off, names changed. That’s part of the reason the firms responsible for the vast bulk of sales from 2006 through 2012 are virtually unknown to most of the nation. The generic companies don’t promote drugs on television, like the big-brand pharma companies.
“They’re order-takers,” Amsellem said.
Less obscure are the big distributors: McKesson Corp., Cardinal Health and AmerisourceBergen. Also mentioned in the ARCOS data are retailers who distributed drugs. They are some of the most familiar names in America, including Walgreens, CVS and Walmart.
In statements to The Post on Tuesday in response to the release of the DEA database, several drug companies issued broad defenses of their actions during the opioid epidemic, saying they were committed to providing a legal product to legitimate pain patients while combating the diversion of drugs.
The drug epidemic is a case of supply and demand, and the newly released data makes clear that supply was never in doubt. The demand side is a more complex public health issue that brings into play the ongoing challenges of communities where the social fabric has been frayed. The new data shows that pills surged most dramatically into central Appalachia, particularly coal country, and bordering areas where the economy has been depressed.
Many people in those areas have endured hardship and job injuries. They need painkillers, including the powerful kind provided by derivatives of the opium poppy. Almost lost in the national controversy over the opioid epidemic is that some people need them badly. In the 1990s, amid extensive drug industry marketing, the medical community seized on a big idea: that freedom from pain was a fundamental human right. As a result, some of the stigma associated with opioid painkillers, which are cousins of street heroin, dissipated.
Within a decade, the pills became their own self-sustaining industry, a black-market and even street-corner product. The painkillers arrived in bulk at small-town pharmacies. That trend is parallel to a rise in the death rates in those communities. Prescription opioid overdoses have claimed the lives of more than 200,000 people in the United States since 1996.
A crackdown on indiscriminate doctors and pharmacists — commonly known as pill mills — as well as tighter prescription guidelines by the medical community have helped drive down the number of overdoses due to prescription drugs. This past week, in a rare drug-statistic bulletin delivering good news, government officials said the overall number of fatal drug overdoses in the country had dropped 5.1 percent from 2017 to 2018, the sharpest decline involving prescription opioids.
But the drug epidemic has hardly abated. Deaths from fentanyl, the powerful synthetic opioid that is being illicitly manufactured abroad and smuggled into the United States, continue to increase. There has also been a rise in deaths from cocaine and methamphetamine.
Just cutting off the supply of one type of drug, or focusing on treating people with addiction and throwing drug dealers in jail, won’t be enough to solve the underlying problem, said Paula Masters, vice president of population health for Ballad Health, which operates hospitals in some of the hardest-hit areas, including Southwest Virginia.
“All you’re doing is squeezing that balloon. If you only squeeze it one way, all you’re going to do is put the air in the other side,” Masters said.
The accountability question is now being played out in courts across the country. The big event is in Cleveland, where a federal judge is overseeing roughly 2,000 separate lawsuits filed against a rash of drug companies by counties, cities and towns across the country. Opening arguments are supposed to begin this fall in two test cases involving counties in Ohio. Thousands of records remain under seal, but may be released in coming weeks and could include depositions, internal company emails and internal company policies.
The outcome in Cleveland could be a massive, industry-wide settlement along the lines of what happened with the tobacco industry many years ago. But the drug companies have denied wrongdoing. Several executives have testified before a congressional subcommittee under oath that they did not believe their companies contributed to the epidemic.
John Hammergren, then chairman, president and chief executive of McKesson, the nation’s largest drug distributor, testified last year that overprescribing by doctors was the “key driver of the crisis.” He added, “At the same time, there clearly were certain pharmacies in West Virginia that were bad actors that McKesson itself terminated. In hindsight, I would have liked to have seen us move much more quickly to identify the issues with these pharmacies.”
George Barrett, then executive chairman of Cardinal Health, testified: “Pharmaceutical wholesale distributors do not and should not have visibility into the medical judgment or the patients for whom prescriptions are written. However, we can play a role by raising awareness of the dangers of overprescribing, which we are doing.”
The companies have said they remained within established guidelines for opioid distribution. They have argued that state regulators or the DEA should have stepped in if there was a problem.
“The ARCOS data show that distributors have consistently reported sales of opioid-based medications, along with the quantity of the order and the identity of the receiving pharmacy to the DEA. Distributors only recently received access to the full set of data with information about the total shipment of opioid medicines a particular pharmacy received from all distributors,” said Parker, of the Healthcare Distribution Alliance.
The DEA, with limited resources, relied largely on corporate self-regulation.
Some DEA agents and investigators tried to hold the industry accountable, and in 2005 and 2006, as the pill flood was building, they sent letters to drug distributors and manufacturers saying that they needed to comply with federal law and work harder to prevent their pills from being diverted to the black market.
Despite these warnings, diversion continued. The DEA began making cases against some of the biggest drug companies. The industry fought back. Some members of Congress pushed a new, more industry-friendly law, making it harder for the DEA to penalize companies for failing to report suspicious shipments of narcotics.
When companies did face penalties after government investigations, the fines were trivial compared with corporate revenue. The fines were essentially just one cost of doing business.
For example McKesson, the drug distributor, was fined a record $150 million in 2017. Its net income reported that year was $5 billion.
Sari Horwitz, Scott Higham, Steven Rich, Aaron C. Davis and Alice Crites contributed to this report.