Douglas S. Boothe was the leader of a little-known generic-drug maker seven years ago when federal agents approached his company with an urgent plea: Slash production of an addictive pain medication that was fueling a national crisis.
Boothe “wasn’t interested” and rejected the Drug Enforcement Administration’s request that Actavis voluntarily cut its supply of oxycodone to U.S. pharmacies, according to exhibits unsealed recently in a landmark lawsuit that accuses drug companies of recklessly distributing billions of addictive pain pills despite glaring signs of abuse.
Now, Boothe is among a crop of figures from the generic-drug industry — from high-ranking executives to salesmen to account managers — whose decisions during the height of the country’s opioid epidemic have been thrust into the national spotlight after the release of the documents.
Drugmaker Purdue Pharma and its owners, the Sackler family, have for years borne the brunt of public criticism for inventing and deceptively marketing one of the most well-known opioid painkillers, OxyContin, in the 1990s. But the records show that by 2006, as the death rate accelerated, a handful of obscure generic-drug manufacturers were selling the bulk of opioid pills flooding the country.
The documents and a DEA database that tracks every opioid pill sold in the United States from 2006 through 2012 are being made public a year after The Washington Post and the owner of the Charleston Gazette-Mail in West Virginia began pushingfor their release. The database provides a road map of accountability for these sales. It attributes the vast majority of the 76 billion opioid pills produced and shipped from 2006 through 2012 to three companies that are now controlled bylarge multinational drugmakers: SpecGx, a subsidiary of Ireland-based Mallinckrodt; Par Pharmaceutical, owned by Endo Pharmaceuticals, also in Ireland; and Actavis, part ofIsrael-based Teva Pharmaceutical Industries.
The records show how these and othergeneric-pain-pill makers rushed to gain market share as the nation’s deadliest drug epidemic spun out of control. The records also reveal that some of the manufacturers were warned by auditors or regulators that they were not meeting federal requirements for detecting suspicious orders.
Boothe, Actavis’s chief executive in those years, denied culpability in a deposition unsealed Tuesday. Although federal law compels companies to monitor the pattern, frequency and amounts of drug orders, Boothe emphasized that Actavis could not control how its drugs were ultimately used.
“Once it goes outside of our chain of custody, we have no capability or responsibility or accountability,” Boothe saidin the November deposition. “Once we ship a valid order to a wholesaler or ship a valid order to a distributor . . . our chain of custody is finished at that point.”
Boothe has not responded to voice mails, text messages or calls in recent days, or to messages left with his assistant at an Illinois drug company, Akorn, where he is now chief executive. Teva, Mallinckrodt and Endo declined to comment for this story.
In statements to The Post for its stories about the newly unsealeddocuments, the drug companies have issued multiple defenses of their actions during the crisis. They contend they were trying to sell legal painkillers to legitimate patients who had prescriptions. They also blamed the crisis on overprescribing by physicians and on corrupt doctors and pharmacists who worked in “pill mills” that handed out drugs with few questions asked.
The companies further asserted that they should not be held responsible for the actions of those who abused the drugs and that the DEA had all the information it needed to block pills from reaching the black market.
On the DEA's radar
By 2004, eight yearsafter it had been introduced, OxyContin had mushroomed into the most frequently prescribed brand-name narcotic for moderate to severe pain in the United States. For Purdue, it had been an era of enormous profitability as the exclusive producer of the drug, which earned the company more than $1 billion a year.
But in several court rulings, federal judges in New York and Washington that year invalidated a Purdue patent on OxyContin for misrepresenting to regulators how effective the drug was at lower doses. The decisions helped clear the way for generics manufacturers to compete for market share years earlier than they might have otherwise. Although Purdue would ultimately prevail on appeal, the dam had broken; generics began pouring into the market.
Typically, generic-drug companiesare able to produce less-expensive versions of a patented drug only long after its introduction, by which time itsrisks and benefits are well known. In the case of OxyContin, however, those risks were very much in dispute. In 2007, Purdue and several people who were then current and former executives pleaded guilty in federal court and agreed to pay a total of $635 million to settle charges they had fraudulently marketed OxyContin as a drug that was less addictive than other narcotics and that had few side effects.
Since the landmark fine for deceptive marketing, opioid manufacturers have faced few penalties. Mallinckrodt became the first in 2017, paying $35 million to settle DEA complaints it did not adequately work to detect suspicious opioid orders.
Three years before Purdue’s settlement, the Food and Drug Administration approved the first generic versions of OxyContin, known as oxycodone hydrochloride. Among the early drugmakers to win approval for a generic was Amide Pharmaceutical, a privately held company in Little Falls, N.J., with 200 employees.
With its approval in hand, and construction of a manufacturing plant underway to make billions of pills a year, Amide became the target of a buyout by what was then Actavis, a company based in Europe. Announcing the purchase in 2005, Actavis boasted that Amide would give the company an “important foothold in the US market . . . to generate significant opportunities to drive revenue growth.”
Months later, Actavis bought a second New Jersey generics company and installed one of its executives, Boothe, as the head of the companies’ combined generics division.
Actavis’s sales ofthe generic version of OxyContin and other drugs containingoxycodone grew from 559 million in 2006 to more than 1.1 billion in 2012, according to the DEA database.Its sales of hydrocodone, another opioid pain reliever, rose from 2.2 billion to nearly 3 billion.
Even as their sales of opioids surged, the generic drugmakers maintained a low profile.
“We weren’t really a household name — none of us,” Nancy Baran, Actavis’s head of customer service in those years, said in a recent interview. “Generics are not advertised on TV. No one ever hears your name. I worked at the company for 10 years, and my friends would still ask, ‘Where?’ ”
Inside the DEA’s headquarters near the Pentagon in Northern Virginia, however, Actavis and Mallinckrodt would eventually bubble up on the radar of agents frustrated with their inability to curb the steep increase in prescribed opioids.
The DEA had tried going after unscrupulous doctors, but each case took months to stop a single bad actor. Agents had met with distributors, pressing them to cut off suspicious pharmacies, but the flow of drugs kept increasing.
“We kept trying to work our way back up the chain, to the source,” Barbara J. Boockholdt, then the chief of the regulatory section for DEA’s Office of Diversion Control, said in an interview.
In 2011, Boockholdt walked across the hallway at DEA headquarters to an office that handles the agency’s drug-ordering database — known as the Automation of Reports and Consolidated Orders System, or ARCOS — and asked for reports on the nation’s largest opioid manufacturers.
“I was shocked; I couldn’t believe it, Mallinckrodt was the biggest, and then there was Actavis,” Boockholdt said. “Everyone had been talking about Purdue, but they weren’t even close.”
Agents in Boockholdt’s office analyzed the supply chains, tracing oxycodone from Actavis’s plants in New Jersey to Walgreens and other pharmacies in Florida, some selling a million doses a year. They put together a presentation that ran more than 100 pages, a document that was made public on Tuesday. They put copies in three-ring binders and called in Actavis.
On Sept. 12, 2012, executives from the company were led into a windowless conference room on the sixth floor of the DEA’s headquarters. There, one of Boockholdt’s deputies began by talking about how Florida was having, on average, 11 fatal overdoses a day.
Then the lights were dimmed, and Boockholdt ticked through 60 charts and graphs showing that Actavis had sent nearly 240 million pills to Florida during the previous 30 months — more oxycodone than the manufacturer had sent to almost all other states combined.
Actavis officials were taken aback, the court records show. Michael R. Clarke, the company’s vice president for ethics and compliance, testified in a deposition that it felt like DEA officials were treating Actavis like “street dealers.”
Clarke had expected a more collegial approach like, “You know, that’s great, that’s fine, maybe you can do this better. We were looking for that sort of interchange, and it wasn’t that,” Clarke testified in December, according to the newly unsealed documents. “It was pretty clear that they believed that we were one of the manufacturers that led to whatever problem they identified related to diversion of opioids.”
Boockholdt told Baran, Actavis’s head of customer service, that she needed to send people to South Florida to get to know the company’s customers — “the long lines at pain clinics, out-of-state license plates, questionable clients, security guard (s) in the parking lots and signs stating cash payments only.”
The exchange is included in a 200-page internal memorandum, made public this past week, in which Boockholdt memorialized that Actavis had been put on notice to monitor its sales more closely.
Baran assured the DEA that “to the best of its ability” Actavis would do so, the memo says.
Baran told The Post this week,after her name surfaced in the documents, that she had not previously encountered the kinds of stories the DEA was describing. More typically, she dealt with “ people upset about labeling or packaging,” she said. “It was that kind of stuff.”
In October, a month after the meeting in Virginia, the DEA came knocking at the company’s headquarters in Morristown, N.J., seeking dramatic action — a 30 to 40 percent voluntary reduction in the company’s production of oxycodone, Clarke testified. “It was us essentially reducing what we were making so that there would be less product out there, as opposed to DEA stepping up its enforcement efforts for, you know, that level of criminal activity,” Clarke said.
He and another executive took the request to Boothe, a Princeton University and Wharton business school graduate who had been a vice president of Xerox before converting to a career in pharmaceuticals. Across the Atlantic, Actavis’s parent organization was in disarray, controlled by Deutsche Bank after its billionaire owner had defaulted on loans. Boothe held firm, Clarke testified.
“You know, he wasn’t interested in voluntarily reducing our quota, particularly by 30 or 40 percent, without understanding that there was something else to be had,” Clarke said.
Clarke declined to comment for this story.
Boockholdt and the DEA had already summoned executives of the largest oxycodone manufacturer — Mallinckrodt — to the agency’s headquarters for a similar warning a year earlier. The Aug. 23, 2011, meeting became known among federal agents as the “earthquake meeting,” occurring the day of a rare magnitude-5.8 temblor in the Washington region.
DEA officials showed the company the hundreds of millions of doses of oxycodone Mallinckrodt was shipping to distributors and the number of arrests being made for oxycodone possession and sale in those areas, Boockholdt said.
It wasn’t the first such indication of concern the company had received from the DEA.
Four months earlier, in April 2011, a top company compliance officer had distributed a training documentsaying that a DEA representative in St. Louis had referred to the company in a conversation as “the kingpin within the drug cartel.”
The document, labeled as a presentation for the “Executive Committee,” was emailed to the pharmaceutical giant’s vice president for global supply chain, according to the unsealed records.
The database lists Mallinckrodt subsidiary SpecGx as the maker of just over 2 billion pills that were shipped to Florida. Nationwide, the company would produce28.9 billion pills during the years covered by the database — more than 80 for each person in the country.
After the meeting with DEA officials, Mallinckrodt briefly reduced shipments, Boockholdt told The Post. The company also notified more than 40 of its distributors that they would no longer receive rebates if they continued to supply specific pharmacies whose orders were deemed suspicious.
But Mallinckrodt’s output of opioid pills soon ramped back up, Boockholdt said.
At the time, Mallinckrodt was also failing to shore up its own system for tracking suspicious orders, according to recently released documents, which the company had fought to keep sealed.
Karen Harper, a senior manager for controlled substance compliance, testified in a deposition that she told her superiors in 2008 that Mallinckrodt was not capable of detecting suspicious orders and that its systems needed to be upgraded. But company executives decided against hiring an outside vendor to help detect such orders, she said.
In 2010, the company changed an algorithm for flagging “peculiar” orders — from those twice as large as the average from the previous year to those three times as large — because there were too many orders to review, Harper said.
By 2016, while the company was in then-confidential negotiations with the Justice Department for failing to report suspicious orders, Mallinckrodt consolidated its specialty generic business in a new subsidiary registered in Delaware, called SpecGx LLC — the entity credited in the DEA database with Mallinckrodt’s opioid sales.
The next year, the company agreed to pay a $35 million penalty, acknowledging “certain aspects of Mallinckrodt’s system to monitor and detect suspicious orders did not meet the standards” set by the DEA.
The company’s identity will soon change again. Mallinckrodt announced in April that it plans to change its name to Sonorant Therapeutics, spinning off ‘Mallinckrodt Inc.’ as a separate company for its generics business.It said in federal filings that liabilities arising from opioid litigation would “remain with Mallinckrodt Inc. or its subsidiaries following the separation.”
The company’s outside spokesman, Daniel Yunger, said Mallinckrodt declined to comment for this story.
Years of auditors' concerns
The other large manufacturer of generic opioids listed in the database, Par Pharmaceutical, did not even have a system to detect sales orders that had the hallmarks the government associated with drug diversion, according to an outside auditing firmwhose reports were made public this past week.
“There is no Suspicious Ordering Monitoring System in place,” the auditors wrote in May 2010, referring to a reporting mechanism required by the DEA.
“A program must be instituted based on customers’ sales volumes, seasonal fluctuations, etc., with a firm statistical analysis as the basis for such a program,” wrote the auditors from the firm BuzzeoPDMA.
Par did not act on that advice for years, records show. Instead, employees inside Par’s sales department were responsible for monitoring orders, according to company documents and an executive at Par’s current parent company, Endo Pharmaceuticals.
Founded in 1978, Par quickly established itself in the generic drug industry. Soon after it went public in 1984, the company ran into legal troubles.
In 1989, the company and two of its executives pleaded guilty to charges of bribing FDA officials in exchange for fast approvals for generic drugs. Two years later, the company pleaded guilty to 10 charges involving falsified applications for drug approvals and other infractions and agreed to pay $2.5 million in fines.
Over the following decades, the New York-based company regained its footing. By 2006, Par had more than 700 employees and was describing itself as “the world’s sixth largest manufacturer and distributor of generic pharmaceuticals,” according to archived versions of its website.
Its annual revenue had grown to more than $1 billion by 2012, documents show.
As late as 2015, though, the outside auditorsstill had concerns about Par’s oversight of opioid sales. The auditor noted that federal regulators might take issue with the company’s method for vetting orders.
“Par’s current SOM [Suspicious Ordering Monitoring] system as it currently operates may be difficult to explain and defend during a DEA review,” the auditor wrote.
A lawyer in the case pressed Stephen C. Macrides, Endo’s senior vice president of global supply chain, on why Par notified the DEA of no suspicious orders between 2010 and 2015.
“If an order was deemed suspicious, it would have been reported to the DEA,” Macrides said.
He did not respond to messages seeking comment.
By September 2015, Par’s market value had multiplied. It was acquired for $8 billion by Endo, an Irish company that also manufactured and distributed opioids.
Steven Rich, Alice Crites and Julie Tate contributed to this report.