Chapter 3
DEA Headquarters, 2007
When his warnings to executives went unheeded, Joe Rannazzisi went on the offensive, launching a series of strikes against the opioid industry. It was the first time the DEA had gone after Fortune 500 companies. He began with McKesson. He decided to deploy one of the agency’s most potent weapons against the company, an Order to Show Cause, compelling McKesson to explain why some of its operations shouldn’t be shut down for violations of federal drug law. If McKesson couldn’t satisfy the DEA, it would lose its registration to sell narcotics at the offending warehouses, forcing it to forfeit millions in profits.
McKesson’s executives pleaded with Joe, pledging to pay closer attention to the volume of pain pills the company was sending to its customers. But little had changed. The flow from McKesson’s warehouses to the online pharmacies had turned into a torrent.
“The time for talk is over,” Joe told his staff.
The operation was code-named “Lightning Strike.” Joe dispatched DEA raid teams across the country to choke off the supply of pills to the pharmacies. Agents and investigators shut down one of McKesson’s largest drug distribution warehouses, in Lakeland, Florida, between Tampa and Orlando, from where the company had sent the two million pain pills to the six pharmacies.
For many major corporations, Lakeland was a strategic transportation hub, providing easy access to points east and north along Interstate 4 and Interstate 75 to Appalachia, a region that was quickly becoming the epicenter of the pain pill epidemic. There is so much congestion at the Tampa interchange, much of it from the thousands of trucks pulling in and out of the warehouses operated by companies like Best Buy, Advance Auto Parts, Publix, and Pepperidge Farm, it’s derided by locals as the “Malfunction Junction.” The interchange had also become known for something else: a transshipment point for the nation’s opioid distributors. Not only did McKesson maintain one of its largest warehouses in Lakeland, but so did Cardinal, the nineteenth-largest company in America.
Joe’s teams struck five other McKesson warehouses in 2007. One of them, in Maryland, had shipped 3 million pain pills to a single pharmacy in Baltimore. Another, in Texas, had sent 2.6 million pills to a pair of pharmacies in Houston. Inside the enormous warehouses, the DEA agents and investigators sifted through the company’s computers and filing cabinets, seizing tens of thousands of order forms, invoices, memos, emails, and drug distribution records.
On April 24, 2007, Joe’s teams raided the third-largest drug distribution company in the nation—AmerisourceBergen, based in Valley Forge, Pennsylvania, the twenty-ninth-largest corporation in America. As he had done with McKesson, Joe warned the company about its online-pharmacy customers. Joe targeted AmerisourceBergen’s warehouse in Orlando, Florida, with the DEA’s most severe sanction, an Immediate Suspension Order. It was seen by drug industry executives as a death sentence. The DEA deemed the company’s conduct to be so egregious, it posed an “imminent danger” to the public. The order prevented AmerisourceBergen from distributing any more narcotics from the location. AmerisourceBergen capitulated to avoid the wrath of the DEA. Within five months, the company announced that it had designed a monitoring system to detect and halt huge and suspicious orders of pills. The DEA lifted its order.
Joe next trained his sights on Cardinal, a Fortune 500 company based in Dublin, Ohio, with revenues of $87 billion. Joe’s DEA team had warned Cardinal that its drug shipments were a serious concern and pills were being diverted from the supply chain and winding up on the street. The DEA stormed three Cardinal warehouses between November 28 and December 7, 2007—in Auburn, Washington; Swedesboro, New Jersey; and Lakeland. At each warehouse, Joe’s team served the company with Immediate Suspension Orders for shipping massive amounts of opioids to pharmacies that the company “knew or should have known” were diverting them to the black market.
In Florida, pharmacies typically dispensed an average of 8,400 tablets of hydrocodone each month. Cardinal supplied one of its pharmacy customers in Tampa with an average of 242,000 pills in four months and another in the same city with 287,000 pills inside of three months. The DEA ordered Cardinal to cease distribution of all narcotics at each of the warehouses, which served hundreds of Cardinal’s retail pharmacy clients.
Inside of a year, Joe had moved against the largest opioid distribution firms in the country, known in the industry as the “Big Three.”
Maybe they’ll finally get the message, he thought.
In the midst of the raids, in May 2007, Joe received an unexpected late-night call on his private line at DEA headquarters. It was from an old colleague at the Department of Justice, John L. Brownlee, a career federal prosecutor now serving as the U.S. attorney for the Western District of Virginia. Brownlee, normally unflappable, was upset. He told Joe that his superiors at the Justice Department were pushing him to settle the case he had worked so hard to build against Purdue Pharma in exchange for a $634 million fine for misbranding its blockbuster OxyContin pill as safer and less addictive than other painkillers. As part of the deal, three company executives would plead guilty to misdemeanor charges. No one would go to jail. Joe knew that the Justice Department had amassed a mountain of evidence, enough to bring felony counts against Purdue and its top executives for a litany of fraud charges. He also learned that the company had hired several high-powered former Justice officials, now in private practice, to lobby the department on behalf of Purdue. They included former U.S. attorneys Mary Jo White and Rudy Giuliani, who had formed his own consulting and lobbying firm after serving as the mayor of New York City.
Brownlee told Joe he didn’t want to settle, but the pressure from outside and inside the Justice Department had become unbearable.
“John, you know, there’s no shame in taking a settlement,” Joe told him, trying to comfort a friend. “I’m sorry you can’t finish what you started, but you should be proud of what you accomplished.”
Purdue had lit the fuse with the introduction of OxyContin, but by 2007, many more companies were fueling the opioid epidemic, turning it into a conflagration.
Joe knew he might have to eventually target the other opioid manufacturing companies such as Mallinckrodt Pharmaceuticals, a giant in the industry that had so far managed to escape scrutiny. In 2006, Purdue manufactured 130 million pain pills. That same year, Mallinckrodt, headquartered in St. Louis, manufactured 3.6 billion generic pills—twenty-seven times more than Purdue. It costs drug makers pennies to manufacture a 5mg oxycodone pill. At the pharmacy, twenty of those pills sell for $13. On the street they go for $100. But for now, Joe wanted to stay focused on the distributors. One day, he thought, an executive from McKesson or Cardinal or AmerisourceBergen might see the inside of a prison cell. That would chasten the industry.
“Guys in business suits don’t do well in prison,” Joe liked to say.