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Transcript: “American Cartel” A Conversation with Alex Gibney, Sari Horwitz and Scott Higham

MR. GIBNEY: Hello, everybody, and welcome to Washington Post Live. I’m Alex Gibney. Today it’s my great pleasure to introduce two Pulitzer Prize-winning Washington Post journalists, Sari Horwitz and Scott Higham, who are going to discuss their new book, “American Cartel,” which is just an extraordinary work.

Welcome, Scott and Sari.

MR. HIGHAM: Thank you, Alex. Thanks for having us.

MS. HORWITZ: Hi, Alex.

MR. GIBNEY: Remember, as we proceed through this discussion, we always want to hear from you out there, our audience. So you can share your thoughts and questions for our guests on Washington Post Live by tweeting @PostLive.

All right. So let's get into this. Sari, let me start with you. You know, we're talking about companies that create and fuel the opioid crisis, and to some extent some people may feel, well, haven't we heard that story? We've heard this story about the Sacklers and indeed the Sacklers have been identified, and if criminal charges haven't been brought at least they've been vilified in the press.

But correct me if I'm wrong. This goes way beyond the Sacklers, does it not? This is not just the story of one bad apple.

MS. HORWITZ: You are exactly right, Alex. Most people, when they hear about the opioid epidemic, they think the Sacklers. They think Purdue Pharma, Oxycontin. But it's so much bigger than that. We found, in our two-year investigation and the writing of this book, a constellation of companies that fuel the deadliest epidemic, drug epidemic, in American history. Some of these companies are some of the largest in this country. Some we've heard of. They are household names--Walgreens, Walmart, Johnson & Johnson--some we've never heard of, and Scott is going to tell you a little bit more about one of those.

But these companies, over 20 years, distributed millions of opioids across the country. Actually, we found 100 billion pills that they distributed throughout the country. And you know, what was really shocking, Alex, is Scott and I traveled to many of the hardest-hit areas--Ohio, West Virginia, New England--and we talked to people in recovery, we talked to people struggling with rehab, in so much pain. And we met people and communicated with people like Ed Bisch and Cheryl Juaire whose sons were killed in this epidemic.

And you contrast, you juxtapose that pain, that grief of those families, and so many others who were touched by this epidemic, with what we found, internal emails from these companies where the people in the companies were laughing at the addicts. They were making fun of them. They were mocking them.

We found, by looking through thousands of documents, internal emails, for example, one company, AmerisourceBergen, passed around an email that was a parody of the Beverly Hillbillies theme song from that sitcom, and they were making fun of the "Pillbillies" from Appalachia. It's really shocking stuff.

And one of the companies we had never heard of, and you probably have never heard of out there--I know Alex has--was Mallinckrodt, and Scott can tell you a little bit about Mallinckrodt.

MR. HIGHAM: Yeah, we have been investigating this for quite some time, and when we first started investigating the opioid industry we had never heard of this company, Mallinckrodt. They are a very old-line pharmaceutical company founded around the turn of the last century out of St. Louis. And they jumped into this market that Purdue Pharma created and they started manufacturing 30-milligram oxycodone pills. They were blue in color. They had a "30" stamped on one side and an "M" stamped on the other. And these pills became so popular in the United States that users and dealers were referring to them as "blues" or "30s" or "M's." And Mallinckrodt produced 30 times the number of pills that Purdue Pharma produced, that we saw in the data that we obtained by going to court and intervening in a huge court case and trying to get access to DEA data that tracks all this information.

The company's conduct was so egregious, Alex, that at one point DEA called them, literally, a "kingpin." And this company also is responsible for some of the emails that were really kind of dehumanizing the victims of this epidemic. There was one guy who was a national sales manager for Mallinckrodt, and one of his customers was saying, you know, "We need more of these oxy 30s. I can't get enough of them. It looks like people are addicted to these things. Oh wait, they are." And this national sales manager, Victor Borelli, wrote back and said, "Just like Doritos. Keep eating. We'll make more."

MR. GIBNEY: Wow. So listen, Scott. I want to stay with you for a second, and then, Sara, I want to get back to you. You know, you identify a lot of the malefactors in this book, but I think one of the really important contributions of this book is that there is an Empire Strikes Back element to it. You also identify a couple of heroes, people who are--well, more than a couple but a number of heroes, people who are really trying to fight back and do the right thing and hold some people to account.

Talk about two of them, Joe Rannazzisi and Paul Farrell.

MS. HORWITZ: Yeah, this is a David-and-Goliath story, and it's told in two parts. It's told through characters, and two of our main characters, one appears mostly in the first part of our book and the second in the second half of the book. And the first half of the book is kind of like a police procedural. It's a detective story. And there's a guy named Joe Rannazzisi who is vaunted DEA agent who is in charge of the division that oversees the pharmaceutical industry for the DEA. And he and his team start to try to figure out, where are all these pills coming from? Which companies are responsible? What is happening here?

And he starts going after these companies, and they start fining them, they start shutting down their warehouses. And some of these companies are Fortune 500 companies with huge amounts of influence and power in Washington. They have big law firms that they rely upon in D.C. They have members of Congress who are on their side. And these companies began to push back, and they literally got Joe Rannazzisi removed from his position, and the members of his team were also removed from their position, and the whole operation was shut down.

And so in the second half of the book picks up with another hero, a guy named Paul Farrell, who is a small-town lawyer from Huntington, West Virginia, and he sees his town being ravaged by opioids. And he's having breakfast one morning with his family and, you know, he's been doing some medical malpractice cases and some other things along that line, and they start talking about this explosive story that's in the Charleston Gazette that morning, about how many pills were being distributed in West Virginia. And Paul's brother, who was a fighter pilot in the Iraq war, turns to his brother and says, "Paul, isn't this what you do for a living?"

And so that launches Paul on this journey to figure out how to hold these companies accountable, and he starts filing lawsuits, and pretty soon there's an entire collection of some of the biggest and brightest and smartest attorneys on the plaintiff's side going after these companies in this David-and-Goliath battle.

MR. GIBNEY: So we've got the civil actions and we have, to some extent, the actions of regulators like Joe Rannazzisi. But then, of course, Joe Rannazzisi gets sidelined. Sari, talk to me a little bit about the larger context of how business works in Washington, in terms of the revolving door, and explain a little bit about what the revolving door is and how it really helps to explain how this crisis became more and more problematic.

MS. HORWITZ: Such a great question, and we really deal with this a lot in our book. This story is a revolving door in Washington at its worst. So you have regulators like Joe Rannazzisi who are going after these companies, shutting down the warehouse, extracting millions of dollars in fines, going after what he calls "drug dealers in suits," basically. And they're trying to protect us. They're trying to protect the American people from dangerous narcotics.

Meanwhile, the drug companies, they are smart. They decide to lure away the best and the brightest if they can from the DEA and the Justice Department to help them as they are selling opioids, and they are very successful. They hired dozens of people from DEA and the Justice Department to work for these companies. So again, these are the people who are trying to protect us, working for the DEA and the Justice Department. They are lured away to the companies who are selling addictive painkillers that are killing people.

And one of the examples that I like in our book is a man named Linden Barber. He was a lawyer who worked at the DEA, and he worked with Joe Rannazzisi, closely with Joe Rannazzisi, while Joe was going after the companies, especially the distributors who were breaking the law. And Linden Barber leaves and goes and works to represent the drug industry. But he takes a step further. The drug industry started suing in court, and they were losing, and so they realized, okay, we're losing. We've got to change the law.

So they use Linden Barber. He helps them rewrite a law that can undercut the DEA's law enforcement tools, really, and of course, Linden Barber knows how to do that because he's been at the DEA.

So at the height of the opioid epidemic, we have people from the DEA who have left for bigger salaries, working with the drug industry, helping to pass legislation that stops the DEA from protecting Americans. It was really shocking.

MR. GIBNEY: It's really shocking, and even more cynical than that, when he testifies before Congress, as I understand it, he used his authority as a former DEA lawyer to convince or to give cover to Congresspeople that actually, as a law enforcement official, as somebody who cared deeply about it, this is actually going to be better, when in fact it's just the opposite. Is that right?

MS. HORWITZ: Yes. There was, in fact, a very explosive, dramatic hearing where Joe is there to testify and Lyndon Barber is there to testify. And, you know, the members of Congress really didn't seem that interested in hearing from Joe. They wanted to get past him, especially Marsha Blackburn, who was a co-sponsor of the bill that undercut the DEA. She asked Joe questions--this is in one of our chapters in our book--she asked him questions that were written by the industry. She doesn't really want to listen to his answers. She keeps interrupting him. And she actually says, "We want to get to the next panel," and the next panel had Linden Barber on it.

MR. HIGHAM: And what's kind of shocking is these members of Congress, after this hearing I talked to one of the key staff members about this piece of legislation, which basically made it almost impossible for the DEA to go after some of these big companies. It raised the standard of proof for them to a point that it was almost impossible for them to reach.

And so I asked the staffer, I said, "Why are you guys all supporting this legislation?" and he said, "Well, we just had a DEA agent testify up here, he's a lawyer for the DEA, about, you know, how important this was for the industry and for the DEA." And I said, "Who was that?" and he said, "Oh, Linden Barber." And I said, "Do you know who Linden Barber works for?" and he said, "No." I said, "He's an attorney for the drug industry."

So they had no idea the stealth campaign that was being launched by the industry, by these lobbyists, with a ton of money and a lot of influence, and people on their side who used to work at the DEA and the Department of Justice now on their very good payrolls.

MR. GIBNEY: Yeah. We should spend a little bit more time on this because it kind of testifies to a number of things. Obviously, these Congresspeople are enormously busy. A lot of times they're busy raising money, which they have to do almost 24/7, and they don't have a lot of time to focus on the details. My understanding is that this change in the law was actually passed by unanimous consent.

But it's like the ability--Sari, expand on that a little bit further, because as I understand it Linden Barber was actually materially involved in helping to write the law. So a lot of the people don't really understand that the laws aren't being written by the lawmakers. They're actually being written by the lobbyists.

MS. HORWITZ: Exactly. Linden Barber helped write this law.

You know, it's so interesting, Alex, because the attorney general, when the law was first introduced, was Eric Holder, and he and Joe talked about this, and Joe explained to him how much this would hurt the DEA in trying to protect Americans. And so Eric Holder came out and spoke out against the law. He said, "We can't pass this. It will take away the tools of the Drug Enforcement Administration to take on these companies and stop them from distributing massive amounts of opioids into communities across the country."

But Eric Holder left office, and another version of this bill was introduced. So we're getting into the weeds here, but another version was introduced. And Joe, as Scott explained, was basically forced out of government, so there was no one to speak out. And the members of Congress passed this bill. It sailed through. President Obama signed it. And it was only after The Washington Post wrote about it and said, "Whoa, does everyone know what this bill does?" that people like Joe Manchin, of West Virginia, one of the hardest-hit areas in the country, came out and said, "Whoa, we didn't know what this said. They pulled the wool over our eyes. We didn't understand what was in this bill."

MR. HIGHAM: Well, and it was only about four paragraphs long, Alex, as you recall. We worked together on a documentary that Alex did called, "Crime of the Century," which if you haven't watched it, it's a remarkable documentary. And there was really only two sentences in this bill that changed almost 40 years of settled law, and nobody read it. It just sailed through Congress, became law, and to this day the DEA no longer really has the power to immediately shut down a drug company's operation if it's a danger to the public, because the standard has been changed and it's so much higher. The burden of proof is so much higher.

So as Joe Rannazzisi would say, they didn't want to obey the law so they just went ahead and changed the law. And in our book, we follow Joe, you know, his demise at the hands of the drug industry and of his own people, but then Joe comes back and he gets his payback. He becomes an expert witness for the plaintiffs who are now suing--there's roughly 4,000 towns and cities and municipalities, Indian nations, that are suing two dozen companies in the largest civil action in American history. And Joe is now one of the star witnesses in that case. So there is a story of redemption there where Joe now gets to come back and say, "You know, look, this is what you guys were doing all along. This is what you knew. This is when you knew it, and you didn't do anything about it." And his testimony has been very, very powerful. In fact, he was the lead witness in a case that concluded recently in Cleveland against Walmart, CVS, and Walgreens. And a jury came back and found them guilty of violating federal drug laws, and those companies are now facing serious, serious fines.

MS. HORWITZ: One thing--

MR. GIBNEY: So we have a Twitter question. Oh, sorry. Go ahead, Sari, and then I'll pop in with a Twitter question.

MS. HORWITZ: Okay. I'll just say this pretty quick. I just want to say that we're talking a little bit about some history here, but what's important for people to realize is that right now we are in the midst of the deadliest drug epidemic in American history, and it's all fentanyl now. But the stories that we tell in our book about the prescription pill epidemic led to where we are today. And to give you just a little context of it, it's like the equivalent of a Boeing 727 jet, completely filled with people, going down every single day and killing everybody on board. That's how many people today, still, are dying in the opioid epidemic.

MR. GIBNEY: Okay. I'm glad you raised that. I'm going to wait for just a second and then I'll get to the Twitter question in a moment. But as long as we're on that let's stay with fentanyl for a second because I think a lot of people are aware of the scourge of fentanyl, and we see stories, particularly on the border, our southern border in California. And prior to that we knew about fentanyl coming in from China. And it seems like this is just standard--not standard; I don't want to minimize the problem, but it seems like this is old-school criminal cartels.

What does this criminal cartel business of fentanyl have to do with these respectable corporations that you profile in your book? What's the connection between the two of them?

MR. HIGHAM: Sari and I have been talking to a lot of federal agents, and what they'll tell you is that the U.S. pharmaceutical industry basically set the table for the Mexican drug cartels. The pharmaceutical industry's conduct resulted in the addiction of millions and millions of Americans to opioids, and fentanyl is an opioid. Fentanyl, oxycodone, hydrocodone is the same molecular structure.

And so the conditions were set. There was a ready market in the United States. When these companies started getting shut down, when they started getting fined, when they started getting sued, the pills dried up. It was almost impossible for people on the street to get these pills any longer. And the Mexican drug cartels saw a market, and they began to stamp out fake oxycodone pills that are blue in color, with an "M" on one side and a "30" on the other, just like the Mallinckrodt blues that were so popular on the street, except these pills are fentanyl.

I was just down on the border twice in the last six weeks, and there are garbage bags full, truckloads full of these pills coming through the ports of entry. Fentanyl is so hard to detect, it's so cheap to make that the cartels are seeing a huge opportunity here. So if one shipment gets snagged at the border they know that 10 more are going to get through these ports of entry like Nogales or San Ysidro in San Diego or Otay Mesa. And these pills are now washing across the United States.

It's terrifying because some people, they know that these are counterfeit. Hardcore users know they're counterfeit because they know they can't buy these pills on the street anymore. But there's a lot of unsuspecting people who think that these are oxycodone. They have no idea that they're fentanyl. They're so well made. And you take one of these pills and that's it. Lights out. Your respiratory system fails and you die.

We lost 100,000 people last year to overdoses, and most of them are due to fentanyl. And epidemiologists and others who have studied this believe that we are on pace to losing hundreds of thousands of people to the fentanyl epidemic.

MR. GIBNEY: So let's go to our Twitter question now, and the Twitter question, Sari, I'll give this one to you. "Where does San Francisco-based McKesson Corp fit into this and how have they managed to fly under the radar for so long?"

MS. HORWITZ: McKesson, we write a lot about in our book, because they are a drug distributor. A lot of people don't realize the supply chain. There are companies who manufacture opioids--that's Purdue, that's Mallinckrodt, that's Johnson & Johnson--and then there are these distributors who distribute them to the pharmacies. That's the supply chain. And McKesson was one of the companies that Joe Rannazzisi and his team really went after and actually fined them, I believe, twice. Is that twice? Twice.

MR. HIGHAM: Yes.

MS. HORWITZ: And the problem with McKesson is while the manufacturers, the issue with the manufacturers is misleading advertising, telling doctors and telling people that you can't get addicted. It's less than 1 percent of people get addicted to opioids. With the distributors there is a law, and this is the law that McKesson was supposed to abide by, which said that when you see a suspicious order from a pharmacy, when you see a suspiciously large order, change in the habits, maybe they order more often, you're supposed to, as a distributor, stop, check with the pharmacy and see what's going on, why are you ordering so many more, thousands of more pills, and notify the Drug Enforcement Administration.

Well, distributors like McKesson, and they're one of the big three, didn't do this, and that's one of the companies that's now being sued and is part of a historic, landmark settlement between the, as Scott talked about, the 4,000 towns, cities, counties, Indian reservations. They settled with the big three distributors, McKesson being one of them, and Johnson & Johnson, for $26 billion that is supposed to be paid over 18 years to these localities. And, you know, there are a lot of questions. Will the money get on the ground, and that remains to be seen. But there's been a clearinghouse set up to monitor this $26 billion and make sure that it gets to the communities that so desperately need it for addiction treatment, prevention, and education.

MR. HIGHAM: Alex, in "American Cartel," like Sari said, we have a lot of information about McKesson, but we have another character who we follow. His name is David Schiller. And he was like a cowboy DEA agent. He was one of the best DEA agents in the agency. And he started developing a national case against McKesson, and he believed that they were the El Chapo of America. He put together I think like 10 or 12 different U.S. attorneys' offices around the country that were seeing the same pattern of conduct, and he wanted to charge them criminally. He was basically overturned by his supervisors at the Department of Justice, and he left the agency after a long and storied career, deeply upset about what took place in this case.

You know, if you talk to families, and Sari and I have talked to a lot of families who have lost people, they'll say that while these big settlements are important because that money is going to go back to communities and it's going to help fund drug rehab programs, et cetera, but what these families really wonder is why have none of these companies been held criminally responsible.

You know, there are 40,000 Americans who are in jail right now on marijuana charges, believe it or not, and there are zero executives of Fortune 500 companies who were involved in the opioid trade who haven't even been charged. There's not been a single charge brought against them. There have been a couple of other charges that have been brought against, you know, Purdue Pharma, which is a very small company, another company called Insys, but the really big corporations, the ones that have massive amounts of money, influence, and power, are able to wield that in Washington, and in "American Cartel" we deal, in detail, how much influence and how much power they have, and how they have been able to avoid criminal charges and pay basically civil fines and settlements to avoid accountability.

In fact, the day that Johnson & Johnson and McKesson, AmerisourceBergen signed this settlement agreement, along with Cardinal Health, all of their share prices went up. So what does that tell you?

MR. GIBNEY: I want to stay on this point. Sari, I'll throw to you and you can continue on to what you wanted to say. But one of the other issues, and I've talked to some of the victims also, in addition to wanting to know why people aren't being held to account, one of the things that's often missing in these settlements is either (a) an admission of guilt or (b) very often an evidentiary record of exactly what happened. In other words, so often in settlements it's like, well, no fault and the evidence is buried. That's one thing that comes out in the trial is the truth. So talk a little bit about that if you would.

MS. HORWITZ: You're exactly right, Alex. The frustration for these families, and there are so many of them across the country who have been touched by this epidemic, is that, yes, there have been big settlements, and that money will be going forward to help communities. But there's been no apology, no accepting of responsibility by any of these company executives. In fact, the companies deny responsibility. They have agreed to pay the money but they deny responsibility, and that is really difficult for the families.

And I would just add that there was just recently a trial in West Virginia about a week ago where the judge ruled for the distributors and against West Virginia, and the parents feel, in that case, that there was a such a miscarriage of justice for this to happen in the epicenter of the opioid epidemic.

MR. GIBNEY: This is a tough question to ask but I'll ask it anyway, which is, okay, where does that leave us? In other words, how do we reckon with this idea that there has been this big crime committed, some fines have been paid, some traffic tickets have been paid. But how do we go forward? How do we prevent this from happening again? How do we hold these companies to account? What's the solution?

MR. HIGHAM: Well, if you talk to the families, they say that they believe that if the Justice Department were to file criminal charges, or if state attorneys general were to file criminal charges, and actually go through with them and bring these cases to trial you would have accountability, you would have a deterrent. It would be sent to the corporate community that this behavior is unacceptable. You would also have what you were talking about before, Alex, is an evidentiary record, because all of this material would then come out in court. You would have depositions. You would have testimony. You would have documents. Everything would be on the public record. And so going forward you would have a deterrent to the corporate community.

And this is something that didn't take place during the meltdown in 2008 in the housing crisis or in all the Wall Street scandals. One person went to jail in the Wall Street scandals and not one major executive of any of the Wall Street firms went. So what kind of signal does that send to the rest of the corporate community, regardless of what industry you're in, that bad behavior, the only consequence is paying fines. And if you listen to people like Joe Rannazzisi and David Schiller, they'll tell you that those fines just basically amount to traffic tickets to these companies. They pay them. It has no impact whatsoever on their bottom line, on their bonuses, nothing.

So the families, I think, if you talk to them, would like to see some kind of action on that front.

MR. GIBNEY: Okay. I think we're just about out of time, but Sari, do you have a final thought?

MS. HORWITZ: Well, I think it's sort of discouraging because fentanyl is just pouring over the border and it's very hard to stop that, and that's where we are right now. I'm sorry but I've got to do a little plug for our book here, but I think that it's important for people to read what we found in our two-year investigation and be informed of what happened, sort of the horror show of what happened, the shocking things we found out, so it won't be repeated again. Because what these companies did was just a horrific chapter in American history.

MR. GIBNEY: Terrific. Thank you so much, Sari, and thank you so much, Scott, for a terrific conversation, and a magnificent book. I hope everyone reads it.

Look, thank you all out there for joining us today. I’m Alex Gibney. To check out what interviews are coming up please head to WashingtonPostLive.com to register and find out more information about all of their upcoming programs. Thanks again for joining us.

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