Chapter 5
Washington, D.C., 2008
With each warrant, each raid, and each fine, executives at the nation’s major drug companies were becoming angrier and angrier. Joe Rannazzisi’s enforcement actions had rankled the drug industry, and now the companies’ practices were attracting attention on Capitol Hill. The days when just about anyone could purchase pain pills over the internet were drawing to a close.
In 2008, Congress shut down the online pharmacies by overwhelmingly passing the Ryan Haight Online Pharmacy Consumer Protection Act, named after an eighteen-year-old La Mesa, California, teenager who had overdosed on Vicodin pills he ordered online without ever seeing a doctor or obtaining a prescription. His death became a clarion call for parents terrified that their children could order deadly narcotics from their computers and have them delivered to the family’s front door. The bad publicity was so intense, longtime supporters of the drug industry in Congress did not have sufficient political cover to oppose the bill.
As one major source for illicit drugs was shut off, Joe had to shift his focus to another: pain management clinics—little more than “pill mills”—that were springing up around the country, particularly in Florida, where state regulations were lax. Palm Beach, along with Broward and Dade counties, home to Fort Lauderdale and Miami, were quickly becoming the epicenter of these storefront operations run by unprincipled doctors and pharmacists who wrote and filled prescriptions with few questions asked. The clinics began to resemble open-air drug markets. Long lines of customers lingered in parking lots filled with cars from multiple states: Tennessee, West Virginia, Alabama, Ohio. Signs in the windows demanded “cash only.” Inside, some owners had installed bulletproof partitions and kept pistols and attack dogs in the back.
As Joe’s teams raided the pill mills in 2008, he again targeted the drug distributors that were supplying them—the same companies that had shipped hundreds of millions of painkillers to the online pharmacies. He once again put the drug manufacturers on notice.
Inside the drug companies, executives were trying to figure out how to fight back. On March 19, 2008, Jack Crowley, the former DEA official and executive director of compliance for Purdue Pharma, sent an email to the head of his company’s supply chain. Crowley said that the time had come to arrange a meeting with the Big Three drug distributors, along with some in-house corporate investigators, “to talk about DEA’s latest plans to squeeze the wholesalers and distributors on ‘pain clinics.’”
Crowley said he had been hearing that the DEA was shifting its enforcement efforts to the pill mills. “They will call distributors into Headquarters and read them the riot act, etc. ‘We don’t need all these pain meds on the street,’” Crowley wrote. “I think we’re going to have some potential problems with patient access and making sure our product is available to our patients.”
Crowley worried that the DEA might shut down another marketplace for opioids if the manufacturers and distributors didn’t come together and push back. “We really do have to partner with our own customers to help them in their business with pharmacies catering to ‘pain clinics.’ Otherwise, they will cut them off based on some kind of threshold. We need to convince them they should talk to us when our product is involved and make it a joint decision,” he said.
Crowley was articulating a growing industry-wide perception: The DEA had to be stopped.
On March 20, a day after Crowley warned colleagues about a growing DEA problem, Kristen Freitas, a lobbyist for The Alliance, sent out an alert to members of her organization. She crafted a “confidential draft political strategy” designed to defang the DEA. It contained nine tactics. In one, Freitas proposed that The Alliance seek out pain patient advocacy groups, many of them funded by the drug industry, and enlist them in a public relations campaign against the DEA. In another, she said The Alliance should contact executives in the pharmacy community, including her former employer, the National Association of Chain Drug Stores, which represented some of the biggest names in the retail pharmacy industry, including CVS and Walgreens. She wanted to warn them about the impact the DEA’s actions could have on their businesses.
Most critically, it was time to get Congress involved. She proposed that The Alliance contact members of the House and Senate appropriations subcommittees, which were responsible for approving the DEA’s budget, and the House and Senate judiciary committees, which oversaw the agency’s operations, to persuade lawmakers to compel the agency to curtail its operations. The purpose of enlisting Congress was clear: If the DEA didn’t back off, its oversight committees could squeeze the agency by threatening its budget or blocking appointees.
Over the years, The Alliance and the pharmaceutical industry had cultivated close ties with sympathetic members of Congress, including U.S. senator Orrin G. Hatch, a powerful Republican from Utah, and contributed generously to their campaigns. As part of her political strategy, Freitas crafted twenty questions those lawmakers could ask DEA officials when they came to Congress to testify.
The practice of lobbyists writing questions for members of Congress and drafts of legislation is an open secret in Washington, but not widely known outside the Beltway. Freitas began her career as an aide to Representative Dick Chrysler, a Republican from Michigan, before moving to the National Association of Chain Drug Stores and later joining The Alliance. She urged her colleagues to keep the practice a “close hold.” The public might not warm to such naked special interests.
Most of the questions Freitas wrote for the lawmakers were designed to shift blame away from the drug companies and place it on disreputable doctors and pharmacies and the DEA itself. One question she suggested: “Can or should a wholesale distributor be asked to determine the appropriateness of a validly-licensed pharmacy’s practice?” Another question: “Isn’t your initiative overly broad and not focused specifically enough on the rogue pharmacies?”
A lawmaker could be particularly helpful if he or she were to read an Alliance talking point during a congressional hearing. Freitas proposed that a senator or representative could say from the dais during a hearing, “It seems to me at the end of the day, this prescription drug abuse is caused by inappropriate prescribing and inappropriate dispensing, neither of which wholesalers are authorized or capable of regulating or enforcing.”
“Tactic 8” was perhaps the most important piece of Freitas’s DEA political strategy: “Identify high-level Congressional ‘champion’ who will request a meeting with DEA to discuss concerns.” Freitas listed the status of that tactic as “In development.”
Two months later, on May 2, 2008, McKesson settled its case with the DEA. The agency had alleged that three of the company’s warehouses were filling extremely large orders from its online pharmacy customers and neglecting to report them to the DEA. McKesson paid a $13.25 million fine, the largest levied against a drug distributor. “By failing to report suspicious orders for controlled substances that it received from rogue Internet pharmacies, the McKesson Corporation fueled the explosive prescription drug abuse problem we have in this country,” DEA administrator Michele Leonhart said in a statement. As part of the settlement, McKesson promised to install a system to flag and report all unusual orders of opioids to the DEA. Joe was not pleased by the settlement, negotiated by agency leaders and the Justice Department. He thought that the fine was pitiful compared to the company’s annual revenues of more than $93 billion. He also questioned whether McKesson would actually stop sending excessively large orders of opioids to its customers, including the emerging pill-mill industry.
John Hammergren, McKesson’s president, signed the settlement on behalf of the company. Nineteen days after the settlement, one of Hammergren’s top corporate officers sent a cautionary note to McKesson employees. “With the recent fines and ongoing attention being paid to this issue, it is quite possible that wholesalers will be under scrutiny for quite some time,” Tracy Jonas, the company’s director of regulatory affairs, wrote in a May 21, 2008, email. “All communications regarding controlled substances will therefore be subject to subpoena and discovery.
“Write information as if it were being viewed by the DEA (it just might be),” Jonas continued. “Refrain from using the word ‘suspicious’ in communications. Once we deem an order and/or customer suspicious, McKesson is required to act. This means all controlled substances sales to that customer must cease and the DEA must be notified.”
Using the word “suspicious” could hurt the bottom line.
Jonas said there were “13.3 million reasons” to follow his advice, referring to the dollar amount of the DEA fine. “We will not get fined again!”