Former Drug CEO Could Face Life Sentence for Allegedly Defrauding the DEA

Maddie Gilmore, Class of 2023, Belmont Law.

Laurence F. Doud III, former head of Rochester Drug Co-Operative Inc., could very easily face life in prison for his role in conspiring to distribute controlled substances and defrauding the DEA. A Florida jury convicted Doud of one count of conspiracy to distribute controlled substances, carrying a mandatory minimum sentence of ten years, and one count of conspiracy to defraud the United States. Doud is scheduled to be sentenced on June 29, 2022.

Doud allegedly engaged in a variety of misconduct that contributed to the growing opioid epidemic in his role as CEO of Rochester. The U.S. Attorney Damian Williams said: “In a first of its kind prosecution, Laurence Doud was held responsible for conspiring with others in his company to ship massive amounts of dangerous and highly-addictive oxycodone and fentanyl to pharmacies that he knew were illegally dispensing those controlled substances to drug dealers and addicts.”

At the direction of Doud, the company supplied large quantities of oxycodone, fentanyl, and other dangerous opioids to pharmacy customers that its own compliance personnel determined were dispensing those drugs to individuals who had no legitimate medical need for them. Even after “red flags” of the targeted pharmacies were brought to Doud’s attention, the violation of federal narcotics laws continued. The targeted pharmacies, among other things, dispensed quantities of controlled substances in amounts consistently higher than accepted medical standards.

Instead of reporting such findings to the DEA, Doud directed the company’s compliance department not to report them, and instead to continue supplying those customers with dangerous controlled substances that the company knew were being dispensed and used for illicit purposes. This was the basis of the conspiracy charge.

The evidence presented that resulted in Doud’s conviction is an unambiguous example of drug company higher-ups taking advantage and seeking financial gain at the expense of the country and in the midst of an opioid crisis that people like Doud and companies like Rochester contributed to. Yet, defenders of Doud and others in the pharmaceutical industry have found the action against Doud excessive. They claim that by setting this precedent, the action will expose executives to liability and thereby deter companies from pursuing innovative medications. Indeed, some claim there is no basis for enforcing the DEA’s administrative requirements to individuals instead of companies as a whole.

Harry Nelson, founding partner at life sciences firm Nelson Hardiman LLP, said: “Drug distributors, like pharmacies and physicians, have been beaten into submission. I find the effort to paint Doud as a villain is over the top.”

These arguments are unfounded. This lawsuit, although the first of its kind, is not removing the liability shield that would normally fall on the company rather than the individual on mere whim to shift the responsibility. Rather, it is shifting responsibility based on the evidence. The individual, Doud, in this case is the proper target for the noncompliance of administrative regulations, because he in his individual capacity is responsible for much of the harm that occurred here. He directed Rochester to “supply tens of millions of oxycodone, fentanyl, and other dangerous opioids to pharmacy customers that its own compliance personnel determined, and reported to Doud, were dispensing those drugs to individuals who had no legitimate medical need for them,” according to the complaint. Furthermore, the arguments that this will deter ‘necessary opioid innovation research’ is also unsupported, as recognized by legal experts in the field.

The impact on research and development of drugs will not be impacted by Doud’s criminal sentence. Big pharma will not be deterred from continuing the race to discover and develop new marketable drugs. Neither will curing the way we prescribe them. Enforcing correct and medically appropriate prescribing of medications is not going to have any impact on research and development. Furthermore, it is already prescribed by law, so it is in the pharmaceutical industry’s best interest to ensure that patients are given access only to necessary medication and are taking those medications appropriately.

The “intentional malfeasance” committed by Doud is not simply the latest CEO taking the bullet for an industry created practice, but rather the appropriate recognition that, with power, comes responsibility. Doud would not have been able to cause the harm without using the corporate scheme as well as his authority to continue distributing addictive substances in mass amounts and in violation of the law.

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