Investigative Group

Lawmakers, Drug Distributors Clash Over Who’s Responsible For Flooding West Virginia With Opioids

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Lawmakers and pharmaceutical executives battled Tuesday during a congressional hearing over whether drug distributors or the Drug Enforcement Administration (DEA) was responsible for flooding small West Virginia communities with opioids.

Republicans and Democrats alike blasted pharmaceutical distributors for failing to report large opioid shipments to the DEA, but the companies’ executives said they reported such orders to the agency — sometimes on more than one million occasions. One former executive said the DEA told his company it was reporting suspicious orders too broadly.

In 2009, “H.D. Smith changed our reporting practices upon learning from the DEA that we were over-reporting and that orders were not ‘suspicious’ simply because they were flagged for initial review by the company’s electronic anti-diversion” system, former H.D. Smith President and CEO James Christopher Smith told a House Committee on Energy and Commerce subcommittee.

Drug distributors reported suspicious orders to the DEA and repeatedly blocked large shipments, Smith and four other executives of such pharmaceutical companies told the Subcommittee on Oversight and Investigations.

“From 2008 through 2017, we blocked and reported to DEA over one million suspicious orders nationwide,” McKesson Chairman, President and CEO John Hammergren told the subcommittee. “McKesson for years has reported every controlled substance transaction in West Virginia and across the country to DEA, and DEA gathers similar information from other distributors.”

The DEA is the only organization that knows the total volume of any drug distributed in any given state or pharmacy, the executives noted.

“No single distributor knows the total volume of any drug distributed in a particular state or region, let alone to a particular pharmacy,” Hammergren said. “That information is known to DEA, however.”

The number of individuals and businesses the DEA licensed to prescribe, distribute or manufacture prescription drugs increased by 510,000 between August 2006 and March 2018 but only stripped 240 licenses, a recent Daily Caller News Foundation investigation found. The agency also knowingly licensed drug dealers and addicts.

But lawmakers rejected the executives’ claims. Drug distributors sent more than 780 million opioid pills to West Virginia between 2007 and 2012, and especially small communities received disproportionately large shipments over a longer period of time, a committee investigation found.

“While concerns rose over the opioid epidemic, some distributors were still failing to exercise effective controls against diversion,” even after settlements in 2008 with the Department of Justice regarding distributors’ failure to report suspiciously large drug orders, full committee Chairman Greg Walden said.

“This led to more enforcement actions and more settlements, including a record-setting $150 million civil penalty by McKesson in January 2017,” the Oregon Republican continued. “It is not sufficient to simply blame the DEA. You have a unique set of resources and tools at your disposal and a shared responsibility in flagging suspicious activity and diversion. You are supposed to be one of the first lines of defense in this crisis.”

Three companies represented at the hearing — McKesson, Cardinal Health and AmerisourceBergen — account for roughly 85 percent of the drug supply, according to Walden.

Walden’s Democratic counterpart made similar remarks.

“Some of these distributors have paid large fines to [the Justice Department] because their systems failed and because they did not report suspicious orders to DEA as required,” Frank Pallone of New Jersey said. “But just a few years later, they were hit with multi-million dollar fines for the very same short comings.”

Subcommittee Chairman Gregg Harper challenged the distributors’ claim that their lack of full data prevented them realizing pharmacies were receiving suspiciously large opioid orders.

“In some cases, such as what we’ve seen in West Virginia, the volume of controlled substances the distributor sends on its own should be cause for concern,” the Mississippi Republican said. “How many other times did a distributor miss the red flags of their own distribution, let alone what could be found with due diligence?”

McKesson, for example, sent nearly 300,000 opioid pills — more than 36 times the limit it set for itself — to one pharmacy in a small town between 2006 and 2007, according to Walden.

Subcommittee Ranking Member Diana DeGette of Colorado added: “At the end of the day … whatever systems were in place did not prevent damage to these communities, caused by what appears to be excessive supply of opioid pills.”

Subcommittee Vice Chairman Morgan Griffith grilled Hammergren on the topic. The Virginia Republican recounted McKesson’s $13.25 million settlement with the government, which included a company promise to improve how it reported suspicious shipments to the DEA, and the subsequent January 2017 $150 million settlement over the same concerns.

The second settlement pointed out how 12 of 30 McKesson distribution centers failed to report suspicious orders, according to Griffith.

“That is a wide systemic failure; wouldn’t you agree?” He asked Hammergren.

McKesson’s Landover, Md., distribution center, which provided shipments to West Virginia and closed in 2012, “routinely failed to report suspicious orders placed by pharmacies in West Virginia,” Griffith also noted.

“The serious lack of suspicious order reporting does not show a high level of engagement.”

Hammergren replied: “That’s not true; we had a high level of commitment, Congressman.”

“And you failed,” Griffith said.

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