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AFloodof1.6BillionDosesofOpioids

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StrongerDEAEnforcement
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Fueling an Epidemic

A Flood of 1.6 Billion Doses of Opioids into Missouri and the

Need for Stronger DEA Enforcement

EXECUTIVE SUMMARY 

The three major pharmaceutical distributors in the United States—McKesson Corporation, 

AmerisourceBergen Corporation, and Cardinal Health, Inc.—each recorded 2017 revenue in excess of 

$125 billion and ranked within the top 15 companies on the 2017 Fortune 500 list. Although unknown to 

many Americans, these companies play a critical role in preventing the diversion of opioid products 

from pharmacies and other customers to the black market.

Under the Controlled Substances Act (CSA), distributors carry a legal obligation to monitor and report 

suspicious orders of controlled substances to the Drug Enforcement Administration (DEA). The sheer 

volume of opioid products distributed in the United States makes compliance with CSA obligations a key 

component of the fight against the opioid epidemic. According to information McKesson, 

AmerisourceBergen, and Cardinal Health provided to the Committee, for example, these companies 

shipped around 1.6 billion dosage units of opioid products to Missouri alone between 2012 and 2017. 

This volume of opioids equated to more than 260 dosage units for every Missourian during the five-year 

period. During 2015—the peak year for opioid shipments to Missouri during 2012-2017—the three major 

distributors shipped approximately 52 opioid dosage units per person in the state.

These “big three” distributors have also consistently failed to meet their reporting obligations over the 

past ten years—in some cases surrendering licenses for distribution facilities and paying escalating fines 

after DEA and Department of Justice investigations.

Pharmaceutical manufacturers also carry the same reporting responsibilities under the law. DEA has 

accused at least one high-volume generic manufacturer of opioids—Mallinckrodt Pharmaceuticals—of 

failing to design an effective system to detect and report suspicious orders and concluded a $35 million 

settlement with the company in January 2017.1 Another manufacturer, Endo Pharmaceuticals Inc., 

reached a settlement with the Attorney General of New York in March 2016 based, in part, on a finding 

that certain sales representatives should have recognized and reported potential signs of opioid 

diversion.2 In addition, Teva Pharmaceuticals USA, Inc., and Allergan plc both appear as defendants in 

many of the complaints counties and other governmental entities have brought against distributors and 

manufacturers in response to the opioid epidemic.

This report examines the efforts McKesson, AmerisourceBergen, Cardinal Health, Mallinckrodt, and Endo 

have undertaken to meet their obligations under the CSA, as well as the suspicious order reports these 

companies have provided to DEA for Missouri orders between 2012 and 2017. The report does not, 

however, address efforts by Teva, which failed to provide information in response to Ranking Member 

McCaskill’s specific requests.

By mapping county-level suspicious order reporting data from these companies and comparing the 

information to other county-level data from the Centers for Medicare and Medicaid Services (CMS), the 

Centers for Disease Control and Prevention (CDC), and other sources, this report also identifies several 

potential hotspots for opioid diversion and prescribing in Missouri. In general, data suggests significant 

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opioid prescribing and diversion activity occurs in the Missouri counties to the south and southwest of St. 

Louis and in counties along the Missouri-Arkansas border—particularly Barry, Howell, and St. Francois 

counties.

Despite the highly sophisticated methods and significant resources the three major distributors have 

deployed, their suspicious order reporting between 2012 and 2017 varied widely. McKesson and 

AmerisourceBergen, for example, both shipped around 650,000,000 dosage units to Missouri in this fiveyear period, but McKesson reported 16,714 suspicious orders to DEA while AmerisourceBergen reported 

only 224—around 75 times fewer reports than McKesson. Although Cardinal Health shipped fewer than 

half of the total opioid dosage units AmerisourceBergen distributed to Missouri between 2012 and 2017, 

it reported 5,125 suspicious orders to DEA—or almost 23 times more reports than AmerisourceBergen. The 

total suspicious orders McKesson reported also far exceed both the AmerisourceBergen and Cardinal 

Health totals, despite the fact that the McKesson total only reflects company reporting to DEA between 

August 2013 and December 2017. Among pharmaceutical manufacturers, Mallinckrodt reported 905 

Missouri orders to DEA compared to no orders reported from Endo between 2012 and 2017.

These divergent reporting results alone do not in any way indicate violations of the CSA by the 

companies involved. But they do highlight the importance of ongoing outreach from DEA to industry 

regarding legal obligations for distributor and manufacturer registrants. More importantly, the findings 

discussed below underscore the need to return DEA administrative enforcement activity to pre-2011 

levels and restore earlier standards for the use of immediate suspension orders (ISOs)—the most critical 

tool in the DEA arsenal for deterring and punishing lax compliance. In fact, according to information 

the minority staff has reviewed, DEA did not issue an ISO against a distributor or a manufacturer 

between 2012 and 2017, and ISOs against all DEA registrants fell from 58 in 2011 to eight in 2014, with five 

orders in 2015, nine in 2016, and six in 2017. Moreover, although DEA has touted voluntary surrenders of 

registrations as a measure of enforcement activity, only 22 distributors have voluntarily surrendered 

registrations between 2011 and 2017, and this list does not include McKesson, AmerisourceBergen, or 

Cardinal Health.
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METHODOLOGY

On July 26, 2017, Ranking Member McCaskill issued requests for documents and information to the three 

major drug distribution companies operating in the United States—McKesson Corporation, 

AmerisourceBergen Corporation, and Cardinal Health, Inc.—related to their efforts to prevent opioid 

diversion.3 The requests sought materials and data concerning internal estimates of diversion risk, 

company compensation policies, suspicious order reporting, on-site investigations of pharmacies and 

other customers, and total opioid shipments to Missouri between 2012 and 2017.4 The same day, 

Ranking Member McCaskill also issued requests to Allergan, Endo, Mallinckrodt, and Teva—four of the 

largest generic pharmaceutical manufacturers—covering many of these same issues and focusing 

specifically on company efforts to monitor transactions between distributor partners and pharmacies.5 

These requests followed extensive briefings regarding anti-diversion efforts from each of the recipient 

companies.

Over the course of several months, each of the distributors provided documents and information in 

response to the majority of the requests Ranking Member McCaskill issued. In some cases, distributors 

declined to provide information to preserve confidentiality or to protect business sensitive information.6 

The July 2017 requests, for example, sought information on opioid shipments and suspicious order reports 

at the level of individual pharmacies or other customers; this data might have enabled the minority staff 

to gauge whether shipments were appropriate given local demand and whether suspicious order 

reports were warranted. Because distributors provided aggregated shipment and reporting data for 

Missouri, however, the minority staff lacked the data necessary to determine whether these companies 

complied—or not—with their obligations under the CSA. Distributors also declined to provide written 

performance reviews for their chief compliance officers since January 2012, as well as certain other 

information on compliance metrics and compensation adjustments. As a result, the minority staff 

cannot determine the degree to which historic compliance failures directly affected senior 

management at the three major distributors.

Mallinckrodt and Endo also provided extensive information regarding their anti-diversion efforts.7 Teva, 

however, refused to provide information in response to the specific July 2017 requests, and Allergan 

delayed a written response for months. In correspondence with the Committee on August 30, 2017, for 

example, Teva provided general information on its anti-diversion efforts but failed to answer specific 

requests or provide information responsive to several questions minority staff had raised after an earlier 

briefing.8 The company emphasized that it considered its August 30 letter “to be a full response to your 

inquiry.”9 In response, on September 28, 2017, Ranking Member McCaskill sent a non-public letter to 

incoming Teva CEO Kåre Schultz urging him to cooperate fully with the investigation.10 The letter noted 

recent significant legal and management issues at Teva and stated that “the company’s decision to 

obstruct basic oversight on the opioid epidemic should deeply concern shareholders.”11 The letter also 

provided Teva with one week to respond and arrange for document production.12

Teva responded in a letter on October 5, 2017, stating that it had already provided information relevant 

to the July 2017 requests and that disclosing the identity of customers submitting suspicious orders would 

“chill the willingness of such customers to share information with your Committee and participate in our 

collective efforts to address opioid abuse.”13 The company also asserted that DEA was better suited to 

provide certain information Ranking Member McCaskill had requested and that releasing information 

could impact ongoing litigation against the company.14 On December 21, 2017, Ranking Member 

McCaskill requested that Chairman Ron Johnson approved the issuance of a subpoena to Mr. Schultz 

to compel the production of responsive documents and information.15 On January 12, 2018, Chairman 

Johnson declined to approve a subpoena.16 Without additional documents and data from Teva, the 

minority staff lacks sufficient information to understand fully the efforts the company has undertaken to 
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meet its CSA obligations. As Ranking Member McCaskill stated on March 6, 2018, however, “Teva’s 

refusal to cooperate with Congressional requests strongly suggests they have something to hide. I’d 

hope that everyone involved or associated with the company takes note that they’re dealing with an 

entity that’s stonewalling a Senate investigation examining a national public health crisis.”17

Despite initial assurances of compliance,18 Allergan failed for months to provide any written response to 

the July 2017 requests. On May 21, 2018, Ranking Member McCaskill wrote to Brenton L. Saunders, 

Chairman, President, and CEO of Allergan, and urged him to comply with the requests.19 Counsel for 

Allergan responded on May 29, 2018, explaining that the company currently markets only three 

branded opioid products in the United States and was not a DEA registrant for Schedule II or Schedule III 

drugs.20 Instead, since November 2015 Allergan has contracted with UPS Supply Chain Solutions, a thirdparty logistics provider that “evaluates all orders for controlled substances it receives from Allergan’s 

customers.”21 According to Allergan, UPS Supply Chain Solutions has reported no orders for the three 

branded Allergan opioid products currently on the market.22 The company further explained that prior 

to November 2015, entities sold to Teva in August 2016 performed all suspicious order monitoring 

functions for the company; Allergan therefore no longer possesses information relating to these 

functions.23 Based on an investigation, however, the company reported that it was not aware of any 

suspicious order notifications it or its distributor partners had provided to the DEA regarding orders of 

branded opioid products originating from Missouri.24

OPIOID DIVERSION HAS SIGNIFICANTLY CONTRIBUTED TO THE OPIOID 

EPIDEMIC IN MISSOURI

Over 3,400 Missouri residents died between 2012 and 2016 due to opioid-involved overdoses,25 and 664 

Missourians died from prescription opioid overdoses in 2016 alone.26 From July 2016 through September 

2017, Missouri also experienced a 21% increase in the rate of individuals visiting emergency departments 

as a result of opioid overdoses,27 and the number of quarterly Missouri resident non-heroin opioid deaths 

almost doubled from the first quarter of 2013 to the first quarter of 2017.28 Based on data from the DEA 

Automation of Reports and Consolidated Orders System (ARCOS), Missouri ranks 14th among the 50 

states in terms of grams of hydrocodone and oxycodone distributed per 100,000 state residents in 

2016.29 And according to the St. Louis County drug monitoring program, county physicians prescribe 

enough painkillers per month to provide every resident with three pills.30

The opioid epidemic—in Missouri and elsewhere—has arisen, in part, from the diversion of prescription 

opioids through illegal dispensing practices at pharmacies. In Missouri, the Board of Pharmacy initiated 

at least 20 disciplinary actions against pharmacies or pharmacy employees for opioid diversion 

between 2012 and 2016.31 One pharmacy in Webb City, for example, could not account for more than 

35,000 hydrocodone dosage units and almost 20,000 oxycodone dosage units between May 2014 and 

March 2015.32 A pharmacy in Buffalo, Missouri, was disciplined in 2015 for diverting 21,978 hydrocodone 

and hydrocodone/APAP dosage units for the personal use of a pharmacist-in-charge.33 And another 

pharmacy in St. Louis was cited for the diversion of 3,054 hydrocodone/APAP dosage units in 2014;34

investigators discovered “that quantities of controlled substances had been increased when the orders 

were placed on the wholesaler website the Pharmacy used to order its drugs.”35 After placing an order, 

any pharmacy employee could “add a medication to the order or change the quantity of drugs on the 

order because all Pharmacy staff had access to and shared the password to the [distributor] website.”36

A number of Missouri disciplinary actions have also involved national chain-affiliated pharmacies in 

Joplin, Independence, Chesterfield, and Kansas City.37 At these pharmacies between 2012 and 2016, 

illicit activity allegedly resulted in more than 54,000 unaccounted or diverted dosage units of various 

opioid medications.38
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Illicit prescribing practices have also contributed to opioid diversion in Missouri. In 2013, for example, a 

federal grand jury indicted a St. Louis doctor for dispensing large quantities of opioid products “with little 

or no medical examination and for no legitimate medical purpose.”39 This physician allegedly wrote 

“approximately 1300 controlled substance prescriptions generating approximately $195,481 cash 

revenue.”40 Similarly, a Bolivar physician pleaded guilty in 2013 to writing multiple “prescriptions for 

OxyContin, Oxycodone Hydrochloride, and Oxycodone-Aspirin ... [outside] the usual course of 

professional practices and for a person who had no legitimate medical need for the prescriptions” 

between 2009 and 2010.41 The physician also met patients in a parking lot near his clinic to provide 

prescriptions.42 During this time period, a local hospital reported “96 overdose incidents at the hospital, 

29 of whom were connected to [the Bolivar physician],” including six patients who fatally overdosed.43

CERTAIN MAJOR DISTRIBUTIONS AND MANUFACTURERS HAVE CONSISTENTLY 

FAILED TO MEET THEIR ANTI-DIVERSION OBLIGATIONS

Three companies—McKesson, AmerisourceBergen, and Cardinal Health—account for approximately 

90% of drug distribution revenue in the United States.44 Each of the “big three” distributors appears in 

the top 15 companies ranked in the 2017 Fortune 500 list,45 and each recorded revenues of over $125 

billion for fiscal year 2017—following years of steady growth.46

FIGURE 1: Revenue for Major Distributors, FY 2010-2017 (In Billions)

These companies—and other drug distributors—each carry an obligation under the CSA to report to 

DEA any suspicious orders of controlled substances, which include “orders of unusual size, orders 

deviating from a normal pattern, and orders of unusual frequency.”47 According to the Washington 

Post, however, at least 13 distributors, including McKesson, AmerisourceBergen, and Cardinal Health, 

“knew or should have known that hundreds of millions of pills were ending up on the black market.”48 In 

some cases, distributors continued to send pills “[e]ven when they were alerted to suspicious pain clinics 

or pharmacies by the DEA and their own employees.”49
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In response to these failures, DEA has concluded several settlements with major opioid distributors. In 

January 2017, for example, McKesson agreed to pay a $150 million penalty to resolve allegations that it 

“failed to design and implement an effective system to detect and report ‘suspicious orders’ for 

controlled substances distributed to its independent and small chain pharmacy customers.”50 In 

December 2016, Cardinal Health resolved similar allegations, paying $44 million after allegedly violating 

the CSA in Maryland, Florida, and New York.51

Recent DEA actions against distributors have also paralleled a federal effort to hold opioid 

manufacturers accountable for failing to monitor and report suspicious orders of their products. In April 

2017, the generic manufacturer Mallinckrodt agreed to pay a $35 million fine following DEA allegations 

that the company “ignored its responsibility to report suspicious orders as 500 million of its pills ended up 

in Florida between 2008 and 2012—66 percent of all oxycodone sold in the state.”52 (DOJ confirmed 

the settlement on July 11, 2017.53) DEA alleged, for example, that Mallinckrodt continued to supply 

opioids—as many as 2.1 million tablets of oxycodone—to a Florida distributor despite knowing the 

company delivered oxycodone to the operator of a notorious Florida clinic.54 Mallinckrodt had also 

allegedly continued to pay “chargebacks,” in which manufacturers provide distributors certain 

reimbursements following sales to pharmacies, in connection with this clinic.55 In total, DEA estimated 

that Mallinckrodt failed to report at least 43,991 opioid orders.56

More recently, Mallinckrodt received a grand jury subpoena in January 2018 from the U.S. Attorney for 

the Southern District of Florida “for documents related to the Company’s distribution, marketing and 

sale of its oxymorphone generic products.”57 The company also received a subpoena seeking similar 

information from the Department of Justice for “documents related to the marketing and sale of the 

Company’s opioid products.”58 Similarly, Endo received a subpoena from the U.S. Attorney for the 

Southern District of Florida “seeking documents and information relating to products containing 

oxymorphone.”59 In addition, a 2016 settlement between the Attorney General of New York and Endo 

included a finding that, “[a]lthough Endo had issued a written policy requiring [sales representatives] to 

report signs of abuse, diversion and inappropriate prescribing, certain Endo sales representatives who 

detailed New York [healthcare providers] testified that they did not know about any policy or duty to 

report problematic conduct observed in [providers’] offices, and did not report anyone, even when 

they saw suspicious behavior.”60 As part of the 2016 settlement, Endo agreed to “maintain and 

enhance its program consisting of internal procedures designed to identify potential abuse, diversion, or 

inappropriate prescribing of opioids.”61 Plaintiffs in federal litigation have also accused both Endo and 

Mallinckrodt of failing to meet their legal obligations to report suspicious orders of controlled 

substances.62

Teva and Allergan both appear as defendants in many of the complaints counties and other 

governmental entities have brought against distributors and manufacturers in response to the opioid 

epidemic. According to a complaint from Wayne County and Oakland County, Michigan, in federal 

court, for example, the Cephalon unit of Teva engaged in false and off-label marketing of the fentanyl 

product Fentora and promoted materials minimizing the risk of opioid addiction.63 A similar complaint 

from the City of Chicago alleges that Cephalon sought to “expand the market for its branded 

opioids...far beyond their FDA-approved use in opioid-tolerant cancer patients,” in part through 

“misleading claims about functional improvement, addiction risk, pseudoaddiction, and the safety of 

alternatives to opioids.”64 According to a complaint from the State of Ohio, Actavis—which acquired 

and retained the name of Allergan in 2015—created and disseminated “advertisements that contained 

deceptive statements that opioids are safe and effective for the long-term treatment of chronic noncancer pain,” as well as materials “that concealed the risk of addiction in the long-term treatment of 

chronic, non-cancer pain.”65
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DISTRIBUTOR AND MANUFACTURER SUSPICIOUS ORDER REPORTING FOR 

MISSOURI VARIED WIDELY BETWEEN 2012 AND 2017

Between 2012 and 2017, according to information provided to the Committee, the three major drug 

distributors shipped approximately 1.6 billion opioid dosage units to Missouri—or around 260 doses per 

resident. At the same time, the number of suspicious order reports these companies reported to DEA in 

2012-2017 varied significantly—from a high of 16,714 reports from McKesson to a low of only 224 reports 

from AmerisourceBergen. Suspicious order reporting from the generic manufacturers Endo and 

Mallinckrodt also varied between 2012 and 2017, with Mallinckrodt reporting 905 orders to DEA and 

Endo reporting no orders during the same five-year period.

By mapping county-level suspicious order reporting data and comparing the information to other 

county-level data from CMS, the CDC, and other sources, the minority staff identified several potential 

hotspots for opioid diversion and prescribing in Missouri. In general, data suggests significant opioid 

prescribing and diversion activity occurs in the Missouri counties to the south and southwest of St. Louis 

and in counties along the Missouri-Arkansas border—particularly Barry, Howell, and St. Francois counties.

A. Distributor Opioid Shipments and Suspicious Order Reporting

According to data provided to the Committee, McKesson, Cardinal Health, and AmerisourceBergen 

shipped roughly 1.6 billion opioid dosage units to Missouri between 2012 and 2017.66 Shipments during 

this period peaked in 2015 before falling in 2016 and 2017. See Figure 2.

FIGURE 2: Opioid Dosage Units Distributed to Missouri per Year, 2012-201767

The volume of opioids shipped into Missouri between 2012 and 2017 from the big three distributors alone 

equated to more than 260 dosage units for every Missourian during the five-year period.68 During the 

peak year of 2015, the three major distributors shipped approximately 52 opioid dosage units per person 

in the state.69 McKesson and AmerisourceBergen distributed roughly equivalent total dosage units—
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around 622,600,000 and 667,900,000, respectively—to Missouri between 2012 and 2017, and Cardinal 

Health shipped around 301,400,000 dosage units, or roughly half of these totals. See Figure 3.

FIGURE 3: Total Opioid Dosage Units Distributed to Missouri, 2012-201770

Suspicious order reporting from the three major distributors for orders originating from Missouri varied 

widely during this period, even in cases in which distributors shipped roughly equivalent opioid dosage 

unit amounts. McKesson and AmerisourceBergen, for example, both shipped around 650,000,000 

dosage units between 2012 and 2017, but McKesson reported 16,714 suspicious orders to DEA while 

AmerisourceBergen reported only 224—around 75 times fewer reports than McKesson.71 Although 

Cardinal Health shipped fewer than half of the total opioid dosage units AmerisourceBergen distributed 

to Missouri between 2012 and 2017, it reported 5,125 suspicious orders to DEA—or almost 23 times more 

reports than AmerisourceBergen.72 The total suspicious orders McKesson reported also far exceed both 

the AmerisourceBergen and Cardinal Health totals, despite the fact that the McKesson total only 

reflects company reporting to DEA between August 2013 and December 2017.73 See Figure 4.
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FIGURE 4: Total Suspicious Orders Reported by Major Distributors for Orders Originating From Missouri, 

2012-201774

On April 2, 2018, DEA produced to the Committee records of suspicious order reports McKesson, 

Cardinal Health, and AmerisourceBergen filed with DEA headquarters for orders originating from Missouri 

between 2012 and 2017.75 (According to DEA, it appears these distributors have not filed any suspicious 

order reports locally with the DEA St. Louis Field Division since January 2012.76 This lack of reporting may 

be due to the fact that distributors subject to memoranda of understanding with DEA file directly with 

headquarters.77) According to information DEA provided, AmerisourceBergen electronically filed 245 

suspicious order reports for orders originating from Missouri between 2012 and 2017, Cardinal Health filed 

1,266 reports, and McKesson filed 7,025 reports.78 Although the AmerisourceBergen total closely 

matches the data the company provided to the Committee, the Cardinal Health and McKesson totals 

fall significantly below the levels in the data these companies provided in response to the July 2017 

requests. 

B. Suspicious Order Reporting and County-Level Information

By tallying suspicious order reports per county and comparing these totals to 2017 population statistics,79

the minority staff identified several hotspots for suspicious order reporting in Missouri between 2012 and 

2017. See Figure 5. For example, Buchanan, Barry, and Howell counties all appear in the highest 

category of counties by suspicious order reports per 1,000 residents, alongside counties south and 

southwest of St. Louis—Washington, St. Francois, Madison, Iron, Dent, and Phelps. Sullivan County near 

the Iowa border and Scott County along the Illinois border have similarly high rates. Cedar County in 

western Missouri falls in the same high category.
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FIGURE 5: Suspicious Orders Per Capita by Missouri County, 2012-2017

Through examinations of county-level information from CMS, CDC, and the Missouri Department of 

Health and Senior Services, the minority staff identified other potential trends in Missouri county-level 

data. For example, St. Francois, Barry, Howell, and Lewis counties all fall in the highest category of 

Missouri counties based on 2015 Medicare Part D opioid prescribing rates, as well as the highest 

category of counties by suspicious order reports per capita. See Figure 6.

FIGURE 6: 2015 Medicare Part D Opioid Prescribing Rates by County80

Barry and Howell counties place in the highest category of Missouri counties based on emergency room 

visits per 1,000 residents as a result of non-heroin opioids, as well as the highest category of counties by 

suspicious order reports per capita. The same applies to the cluster of counties to the south and 

southwest of St. Louis—Washington, St. Francois, Madison, Iron, Dent, and Phelps—and Cedar County in 

the west. Greene County also falls in the highest category of counties based on emergency room visits

and the second-highest category based on suspicious order reports per capita. See Figure 7.
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FIGURE 7: Per 1,000 Capita Emergency Room Visits Due to Non-Heroin Opioid Use by County, 2011-201581

Although the Missouri Department of Health and Senior Services has designated certain death rates 

from non-heroin opioids by county as unreliable due to the total number of incidents,82 reliable data 

shows that both Greene and St. Francois counties fall within the highest category of counties based on 

death rates per capita between 2012 and 2016. These two counties also fall within the two highest 

categories of counties based on suspicious order reporting. See Figure 8.

FIGURE 8: Per 1,000,000 Capita Non-Heroin Opioid Death Rates by County, 2012-201683
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FIGURE 9: 2015 Morphine Milligram Equivalent Opioid Dispensing Per Capita by County84

CDC prescribing data also show that Buchanan, Barry, Howell, Scott, St. Francois, Wright, Madison, and 

Phelps counties fall within the top category of Missouri counties based on morphine milligram equivalent 

(MME) opioid dispensing per capita in 2015, as well as the highest category of Missouri counties based 

on suspicious order reports per capita. See Figure 9. St. Francois and Howell counties also fall in the 

highest category of Missouri counties based on MME dispensing per capita over the national average, 

based on CDC data. See Figure 10.

FIGURE 10: 2015 Morphine Milligram Equivalent Opioid Dispensing Per Capita over National Average by 

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C. Manufacturer Suspicious Order Reporting

Endo and Mallinckrodt have pursued contrasting approaches to reporting suspicious opioids orders 

originating from Missouri to DEA. While Endo flagged hundreds of orders as orders of interest and 

conducted further review, it did not identify any order as suspicious following its review and thus did not 

report any order to DEA. Mallinckrodt reported every flagged order to DEA, regardless of the outcome 

of the company’s internal review.

Endo provided a list to the Committee of 516 Missouri-based opioid products orders the company held 

pending internal review.86 Of these orders, 238 were listed as “[p]ended [d]ue to [o]rder [h]istory”—

meaning that “the requisite amount of historical order data was not available to calculate an algorithm 

score”; Endo then conducted a manual evaluation of the order “for any unusual activity and against 

the customer-specific boundaries established for that particular drug family.”87 Endo also held 23 orders 

for further review because the orders originated from a distribution facility other than the two McKesson 

and Cardinal facilities to which the company ships the vast majority of its products.88 Endo also held 30 

orders because the amount of controlled substance at issue exceeded the rolling 30-day threshold 

Endo had calculated for the specific customer.89 Many of the remaining orders Endo held involved 

large spikes in the quantity each customer ordered.90

In each of the cases described above, however, Endo cleared the order after finding it fell within 

established boundaries for the customer at issue. As the company noted in correspondence with the 

Committee, Endo “did not identify any schedule CII or CIII opioid product orders, originating in Missouri, 

that required DEA suspicious order notification” between 2012 and 2017.91

In contrast to the approach Endo adopted with regard to suspicious orders, Mallinckrodt has stated in 

correspondence with the Committee that it has reported to DEA every instance in which the company 

has flagged an order—regardless of whether the company released the order following investigation.92 

Between January 2012 and July 2017, Mallinckrodt reported 905 suspicious orders originating from 

Missouri to DEA.93 See Figure 11.

FIGURE 11: Mallinckrodt Suspicious Order Reports for Missouri Orders, January 2012-July 2017
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DISTRIBUTOR AND MANUFACTURERS EMPLOY SIMILAR ANTI-DIVERSION 

STRATEGIES

Despite the divergent results in suspicious order reporting described above, McKesson, 

AmerisourceBergen, and Cardinal Health have all used similar anti-diversion strategies to comply with 

their reporting and investigative obligations under the CSA. With a few important exceptions, 

Mallinckrodt and Endo likewise undertake similar anti-diversion efforts.

These commonalities should—theoretically—allow major distributors and manufacturers to arrive at 

similar compliance outcomes. The fact that these companies reported widely divergent totals for 

reports of suspicious orders originating from Missouri between 2012 and 2017 suggests, at the very least, 

that other factors played a role in preventing more uniform outcomes.

A. Distributor Efforts to Monitor and Report Suspicious Orders

McKesson, AmerisourceBergen, and Cardinal Health all employ similar techniques to monitor and report 

opioid diversion. Each of these distributors, for example, uses data analytics to compare customer 

orders against objective metrics, including “established monthly thresholds,”94 “high percentage of 

controlled versus noncontrolled substances purchases,” and “increased volume of high risk controlled 

substances ordered.”95 After detecting indictors of diversion, distributors also pursue similar actions 

within a range of responses. Cardinal Health, for example, has noted in correspondence with the 

Committee that these actions include “blocking and reporting individual orders, raising or lowering 

controlled substance distribution thresholds on a pharmacy-by-pharmacy basis, and cutting off 

pharmacies from our business when the data from our models and from our direct observations tells 

[Cardinal Health] those steps are warranted.”96

B. Distributor Investigations of Pharmacy Customers

McKesson and AmerisourceBergen also provided information to the Committee on the vetting they 

perform for potential pharmacy customers before supplying them with controlled substances. 

McKesson, for example, “requires all prospective customers to complete a detailed questionnaire, 

provide three months of dispensing data for analysis, undergo a site visit, and provide copies of all 

licenses.”97 AmerisourceBergen also requires potential customers to complete a questionnaire 

concerning “anticipated ordering practices, including, among other things, the amount of controlled 

substances ordered, the anticipated ratio of controlled vs. non-controlled substances purchased, key 

prescribing doctors in the area utilizing the pharmacy, the purchasing practices of the pharmacy's 

customers...and whether another supplier is known to have suspended or ceased controlled substance 

sales to the customer.”98

Each of the three major distributors also engages in ongoing investigation of pharmacies and other 

customers, including on-site audits and other reviews. According to McKesson, “pharmacies can be 

subjected to a complete due diligence examination that may include an analysis of its purchase data 

for red flags, licensing verification, and open-source searches for adverse information about a 

pharmacy.”99 These reviews can occur when a customer requests an increase in monthly controlled 

substances ordering thresholds or when the company receives a subpoena or other relevant 

information concerning the customer.100 AmerisourceBergen also described to the Committee its efforts 

to conduct on-site customer investigations upon notice of concerning behavior through ongoing 

monitoring activities and communications with law enforcement, among other sources.101 Similarly, 

Cardinal Health investigates signs of diversion through physical checks of pharmacy customers; 

according to the company, it performs around 20,000 unannounced “surveillance” visits and 1,000 

announced site visits per year.102
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According to McKesson, the company has “either denied onboarding as a customer or ‘cut-off’ the 

ability to order controlled substances” for only 11 DEA registrants in Missouri between 2012 and 2017.103 

Three of these registrants were located in Berry County, two were located in St. Louis City, two were 

located in Butler County, and the remaining four registrants were located in Washington, Phelps, 

Dunklin, and Jackson counties.104 AmerisourceBergen declined to provide requested details regarding 

its investigative efforts for customers in Missouri—citing confidentiality and privilege concerns105—but 

Cardinal Health noted in a briefing to minority staff that it had blocked approximately 1,000 customers 

nationwide from receiving drug shipments during the past five years.106

C. Distributor Hiring of Former DEA Officials

In correspondence with the Committee, distributors have also highlighted their hiring of former DEA 

officials to direct anti-diversion efforts and other compliance activities. AmerisourceBergen, for 

example, stated that its “Diversion Control Team...is led by...a retired career DEA agent who was the 

Assistant Special Agent in Charge of the Atlanta Field Office at the time of his retirement.”107 The 

company has also partnered with “a consulting group comprised of former DEA employees” to 

conduct on-site visits to certain customers; “investigators prepare comprehensive reports for use by 

[Corporate Security and Regulatory Affairs] in determining what, if any, action to take as a result of the 

visit.”108 Similarly, the Controlled Substances Monitoring Program at McKesson “now includes individuals 

with more than 240 years of cumulative DEA enforcement experience.”109 At Cardinal Health, D. Linden 

Barber—who previously served as associate chief counsel at DEA—now serves as Chief Regulatory 

Counsel and Senior Vice President.110

D. Distributor Compensation Policies

Each of the three major distributors has denied in correspondence with the Committee that 

compensation policies have impacted the volume of opioids they have distributed or the efficacy of 

their compliance efforts. According to McKesson, for example, “[t]here has never been a direct 

correlation between the sale of controlled substances and incentive compensation for McKesson sales 

personnel.”111 In 2012, moreover, “McKesson began purposely excluding sales of certain medications 

that are commonly diverted and abused from compensation metrics involving total sales results to 

eliminate any incentive for sales professionals to increase sales of those products.”112 Similarly, Cardinal 

Health has stated that “[t]he performance-based component of executive pay includes consideration 

of the overall performance of the entire company,” and the company does “not measure or 

compensate employee performance by any particular product, including opioids.”113 (At the same 

time, however, “Cardinal Health has not made any specific downward adjustments in executive 

compensation related to the opioid epidemic.”114) According to AmerisourceBergen, company 

“employees do not receive incentive compensation directly tied to sales of controlled substances.”115 

The company has also stated that it conducted an internal risk assessment “to identify any 

compensation plans and practices that may encourage employees to take unnecessary risks that 

could threaten the Company. No such plans or practices were identified.”116

Between 2012 and 2016, the CEOs of McKesson, AmerisourceBergen, and Cardinal Health received 

compensation packages worth more than $450 million,117 and according to recent litigation, McKesson 

CEO John Hammergren received $692 million in realized compensation between fiscal year 2008 and 

October 2017.118 Total 2017 compensation—including salary, cash awards, exercised options, vested 

stock, and the cash value of other perks—for the CEOs of McKesson, AmerisourceBergen, and Cardinal 

Health appears in Figure 12 below.
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FIGURE 12: FY 2017 Compensation for Major Distributor CEOs119

Name Company Compensation

John H. Hammergren McKesson $97,624,527

George S. Barrett Cardinal Health $44,852,053

Steven H. Collis AmerisourceBergen $16,172,171

E. Manufacturer Efforts to Monitor and Report Suspicious Orders

Like major distributors, high-volume generic manufacturers also employ certain sophisticated screening 

techniques before shipping opioid products to customers. According to Mallinckrodt, for example, the 

company begins by confirming the validity of DEA registrations for customers and conducting 

background checks and analyses of public information.120 Similarly, Par Pharmaceutical, an Endo 

subsidiary that manufactures generic opioid products, requires “customers to complete initial and 

annual questionnaires regarding their [suspicious order monitoring] programs, and provide certain 

accompanying documentation.”121

Mallinckrodt also screens each incoming order for controlled substances through a “proprietary 

algorithm that evaluates the order in light of the customer’s order history” and “orders being placed by 

similar customers. Any order flagged under the algorithm is held back from shipment, reported to DEA, 

and investigated.” 122 Likewise, both Par Pharmaceutical and Endo Pharmaceuticals, which 

manufactures branded opioid products for Endo, employ algorithms to identify orders of interest and will 

halt flagged shipments.123 Endo Pharmaceuticals also communicates cleared orders to a third-party 

logistics provider, which uses a separate algorithm to identify “orders of interest” for further review; the 

provider halts any order identified as “suspicious” after this additional scrutiny, and both DEA and Endo 

receive notifications.124

Endo also produced to the Committee emails and correspondence between the company and its 

distributor customers concerning their obligations to monitor and report suspicious orders.125 In this 

correspondence, employees of the Endo subsidiary Qualitest contacted distributor customers regarding 

orders of controlled substances that exceeded established parameters. In some cases, 

correspondence from Qualitest alerted distributors to secondary customers the company had identified 

as suspicious as a result of a review of chargeback data and due diligence information. A December 

2014 letter to Morris & Dickson, for example, stated that “[a]fter reviewing the due diligence information 

provided, we are unable to justify the quantities of Hydrocodone sold” to “a list of customers identified 

while reviewing chargeback data.”126 As a result, Qualitest requested that Morris & Dickson 

“immediately cease distribution and selling of Qualitest Hydrocodone to the customers listed because 

sales represent an undue risk as defined by the [Code of Federal Regulations].”127 In the bulk of the 

exchanges detailed in the correspondence Endo produced to the Committee, however, a Qualitest 

representative attempted to determine the reason for an unusual order—and if the distributor customer 

provided a legitimate explanation, the representative released the shipment.128

F. Manufacturer Monitoring of Chargeback Data

Both Mallinckrodt and Endo also undertake efforts to use data on “chargebacks”—an industry practice 

in which manufacturers reimburse distributors after their sales to pharmacies and other customers—to 

identify potentially suspicious opioid orders. As Mallinckrodt has explained in correspondence with the 

Committee, a “chargeback is a contractual payment from a manufacturer to a distributor made after 

a distributor sells a...product to the distributor’s customer for less than the price the distributor paid...for 

the product.”129 When requesting payments from manufacturers to cover this difference, distributors 
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provide sales information that, according to Mallinckrodt, “may provide...limited insight into the 

pharmacies that ultimately purchase...products from distributors.”130

Although Mallinckrodt has asserted that certain limitations exist regarding the usefulness of chargeback 

information,131 the company “regularly evaluates the overall purchasing patterns of downstream 

pharmacies and identifies any pharmacies that appear to be purchasing a potentially concerning 

quantity of opioid products.”132 Mallinckrodt employees will then contact distributor customers selling to 

these pharmacies to determine “whether the pharmacies’ purchasing volumes or patterns are readily 

explainable by legitimate factors.”133 If not, Mallinckrodt “can restrict chargebacks to distributors in 

connection with any Mallinckrodt product sold by the distributors to the downstream pharmacies in 

question.”134 The company also reports any decision to restrict chargebacks in connection with a 

particular pharmacy to DEA and other distributor customers.135 According to Mallinckrodt, since 2012 

the company has restricted chargebacks on distributor sales to approximately 175 pharmacies 

nationwide and reinstated approximately 59 pharmacies.136

Through an operating company, Endo also reviews available chargeback data twice per year to 

identify “a customer facility of interest.”137 Following this identification, Endo may ask its distributor 

partner for due diligence information regarding the customer, may deny chargebacks, or may request 

that the distributor cease distributing Endo products to the customer and report the customer to DEA.138

Relatedly, Mallinckrodt provided the Committee with hundreds of pages of correspondence between 

the company and its distributor partners regarding reviews of suspicious order information from certain 

pharmacies.139 These letters include attachments listing pharmacies for which Mallinckrodt will no 

longer process chargeback requests from distributors. In a letter dated October 23, 2012, for example, 

Mallinckrodt explained to distributors that as a result of its suspicious order review process, the company 

would “no longer process chargebacks from distributor sales of Mallinckrodt’s dosage pharmaceuticals 

products to the pharmacies identified on Attachment 1 hereto.”140 Attachment 1 for this letter listed 

two pharmacies in Poplar Bluff, Butler County, Missouri.141

As mentioned above, the Department of Justice alleged in 2017 that Mallinckrodt had “failed to design 

and implement an effective system to detect and report ‘suspicious orders’ for controlled 

substances.”142 In announcing a $35 million settlement agreement with Mallinckrodt, the Department 

reiterated its “position that controlled substance manufacturers need to go beyond ‘know your 

customer’ to use otherwise available company data to ‘know your customer’s customer’ to protect 

these potentially dangerous pharmaceuticals from getting into the wrong hands.”143 In providing 

information on its chargeback program to the Committee, however, Mallinckrodt expressly noted that 

“there is no regulatory or legal requirement that Mallinckrodt undertake chargeback analysis.”144

G. Manufacturer On-Site Investigation of Distributor and Pharmacy Partners

Both Mallinckrodt and Endo conduct on-site investigations of their distributor partners. Mallinckrodt, for 

example, “conducts audits of its distributor customers to confirm that they maintain robust suspicious 

order monitoring programs of their own.”145 Similarly, Par Pharmaceutical, an Endo subsidiary, has 

“conducted site visit audits at customers’ DEA-registered facilities.”146

Mallinckrodt also described to the Committee its limited on-site investigative efforts into diversion at the 

pharmacy level.147 Information Mallinckrodt produced to the Committee indicates the company did 

not identify any substantiated examples of diversion at the pharmacy level in Missouri from 2012 to 2017 

after investigation. According to Mallinckrodt, for example, company representatives performed only 

seven on-site visits for Missouri pharmacies during this period—with five of these visits occurring in 

September 2012—and in no case identified “issues warranting Mallinckrodt’s restriction of chargeback 

payments to distributors that sold product to the audited pharmacy.”148 Instead, the company 
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“[a]dvised and reminded [the] pharmacy of common anti-diversion practices and referred [the] 

pharmacy to [the] DEA website for more information.”149 (In a briefing with Committee staff, Endo 

noted that the branded manufacturing arm of the company does not ship to or see ordering patterns 

from pharmacies; Par Pharmaceutical, which manufactures generic Endo products, also does not 

distribute to pharmacies and lacks the ability to investigate or audit these entities.150)

Mallinckrodt did, however, note in correspondence with the Committee that “[a]udits identified a pain 

clinic (Advanced Pain Center) that was a significant prescriber at certain of these pharmacies and 

notified DEA accordingly.”151 In 2010, according to the St. Louis Business Journal, the owners of six pain 

management clinics operating in Missouri under the Advanced Pain Center name paid an $820,000 

settlement to resolve “allegations of submitting false claims to Medicare, Medicaid and Tricare.”152 In 

2013, DEA agents raided several Advanced Pain Center locations in Missouri,153 and in 2015, the owner 

of the company entered a settlement agreement with the Missouri Board of Registration for the Healing 

Arts in which he agreed to place his license on probation until August 2019.154 (The owner had 

previously entered a similar probation term with the Missouri Department of Health and Senior Services, 

Bureau of Narcotics and Dangerous Drugs, in 2014.155)

H. Manufacturer Questionnaires to Distributor Partners

Both Mallinckrodt and Endo also distribute questionnaires to their distributor partners seeking information 

on suspicious order monitoring activities, although the depth of the information requested varies by 

manufacturer. Mallinckrodt, for example, issues relatively straightforward surveys requesting yes/no 

answers to questions concerning whether a distributor maintains a suspicious order monitoring program 

in compliance with federal requirements at 21 C.F.R. 1301.47(b); whether the distributor complies with 

state laws; and whether the distributor monitors pharmacy customers for suspicious activities associated 

with the diversion of controlled substances.156 Mallinckrodt questionnaires also include a prompt for 

more detailed explanation in the event a distributor answers “no” to any question.157

In contrast, the questionnaires Endo submits to its distributor partners consist of five sections with over 30 

questions, including prompts for written answers and instructions to provide summaries describing 

suspicious order monitoring procedures.158 Endo questionnaires also request that distributor respondents 

attach documentation regarding any suspension or revocation of their DEA registration, any crimes 

certain employees have committed relating to the distribution of controlled substances, or any 

disciplinary action against the distributor at the state level.159

CERTAIN DISTRIBUTORS AND MANUFACTURERS HAVE CRITICIZED DEA 

APPROACHES TO ENFORCEMENT

While undertaking comparable efforts to prevent opioid diversion, major distributors and manufacturers 

have also expressed similar criticisms regarding DEA enforcement activities and a lack of information 

sharing that could potentially aid CSA compliance. Most prominently, these companies have claimed 

DEA has provided unclear or inconsistent explanations regarding the definition of “suspicious” orders 

and the extent of registrant obligations to investigate potential opioid diversion.

Although DEA outreach and administrative decisions appear to have provided extensive direction to 

distributors, the recent investigation of Mallinckrodt suggests DEA may have provided conflicting 

guidance to manufacturers. At a minimum, confusion among distributors and manufacturers—and the 

divergent compliance results shown above—highlights the importance of continued DEA outreach

efforts to industry.
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A. Distributor Concerns

In a letter to Ranking Member McCaskill in November 2017, distributors argued that “[f]or many years... 

a lack of communication and information sharing from DEA to its registrants—pharmacies, healthcare 

providers, manufacturers and distributors—exacerbated the challenges and weakened any systemwide efforts to counter the opioid crisis.”160 According to the Healthcare Distribution Alliance (HDA)—

the major trade association for drug distributors—”communication between the DEA, which serves as 

the primary regulator for controlled substances, and DEA registrants certified to handle controlled 

substances...was virtually non-existent [prior to 2016]. Despite many requests for clarity, the DEA too 

often did not help pharmacies, doctors and distributors understand exactly how the DEA wanted them 

to operate and what information the DEA wanted them to report.”161

Current and former DEA officials have disagreed with these criticisms from distributors. Acting DEA 

Administrator Robert W. Patterson explained in March 2018 testimony that the “Diversion Control Division 

has...worked to improve communication and cooperation with the registrant community. As an 

example of this outreach, DEA offers year-round training free of charge to pharmacists, distributors, 

importers, and manufacturers.”162 In remarks during a HSGAC minority roundtable in November 2017, 

Joseph Rannazzisi, former head of the DEA Office of Diversion Control, also described face-to-face 

efforts by DEA to educate distributors on their obligations.163 These efforts included meetings in 2006 

“where [DEA] explained what their obligations were under the law”:

We showed them what a suspicious order is. We showed them why it was suspicious. We 

showed ordering patterns that showed that they were doing something that they 

probably should not be doing. And then with that information—we gave them binders 

of information, we gave them their own ARCOS reports—and with that information we 

sent them back out and said “now you should have the tools.” Then we also went to 

distributor conferences. We had our own distributor conferences. And every time we 

met we told them what their obligations were under the law.164

Mr. Rannazzisi also described two prominent administrative decisions that supplemented the letters DEA 

sent to distributors and the briefings it held with company representatives.165 According to Mr. 

Rannazzisi and other former DEA officials, these decisions regarding Southwood Pharmaceuticals, Inc., 

and Masters Pharmaceuticals, Inc., represented important milestones in the effort to establish 

parameters for distributor behavior.166 In particular, the Masters decision and order from Acting DEA 

Administrator Chuck Rosenberg—later upheld by the U.S. Court of Appeals for the D.C. Circuit167—

provided detailed information on the definition of “suspicious” orders and the investigative 

responsibilities of distributors.168

Finally, distributors have also “repeatedly asked DEA to share data showing the amount of controlled 

substances that individual pharmacies receive from all of their suppliers.”169 Although DEA collects 

opioid shipment reporting from all distributors in the ARCOS database, HDA has noted that “[d]istributors 

are only aware of the amount that their company has shipped. Only DEA, through its ARCOS database, 

has the complete picture of the totality of distributors serving an individual customer. To date, 

distributors still do not have access to this critical data.”170 HDA President and CEO John Gray has 

further argued that aggregated, blinded ARCOS data could “allow wholesale distributors to consider a 

customer’s orders in the context of that entity’s overall ordering. This would provide additional data 

points in determining whether an order is suspicious.”171 (In February 2018, DEA added a feature to 

ARCOS to allow manufacturers and distributors “to view the number of competitors who have sold a 

particular controlled substance to a prospective customer in the last six months.”172)
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B. Manufacturer Concerns

Like major distributors, Mallinckrodt has also criticized DEA for imposing unreasonable standards for 

monitoring and reporting suspicious orders and providing conflicting advice on compliance efforts. 

Mallinckrodt has “said that it should not be held responsible for what happens to its drugs once the 

distributors send them to their customers, such as doctors and pharmacies” and has “contended that 

the DEA has never required manufacturers to know their customers’ customers and that the agency 

provided the company with conflicting advice about its responsibilities under the law.”173 Descriptions 

of an internal case summary by DOJ prosecutors from August 2014 appear to support this view, at least 

in part; prosecutors reportedly “noted that the DEA had provided conflicting guidance to Mallinckrodt 

about its responsibilities to report suspicious orders from retailers.”174 For example, although the DEA 

supervisor in St. Louis, Missouri, reportedly notified Mallinckrodt of its responsibility to monitor pharmacies 

and physicians—as well as distributors—in 2010, a DEA investigator in New York expressed ignorance of 

obligations to “know your customer’s customer and [stated] that the regulations do not reflect such a 

requirement” during the same year.175

Mallinckrodt echoed language above in correspondence with the Committee, asserting that 

“[b]ecause DEA has declined to provide clear guidance regarding whether manufacturers should 

report orders flagged for further investigation—or only those ultimately not filled after investigation—

Mallinckrodt has adopted a more conservative approach and reports all flagged orders.”176 As 

mentioned previously, this result appears in contrast to the approach Endo adopted between 2012 and 

2017, whereby the company reviewed potential suspicious orders but ultimately filed no related reports 

with DEA during the five-year period.

DECLINING DEA ANTI-DIVERSION EFFORTS MAY EXPLAIN DISPARATE 

INDUSTRY COMPLIANCE RESULTS

The discrepancies in suspicious order reporting and other anti-diversion practices described above 

occurred against the backdrop of declining DEA administrative enforcement from 2011 to the present. 

According to former DEA officials, the revolving door between the agency and the distribution industry 

created an institutional resistance to issuing immediate suspension orders (ISOs)—the most potent 

enforcement action available to diversion control officials—against major distributors. In fact, DEA did 

not issue an ISO against a distributor or a manufacturer between 2012 and 2017, according to 

information the minority staff has reviewed.177 In 2016, the Ensuring Patient Access and Effective Drug 

Enforcement Act formally heightened standards for ISOs—eliminating, as Chief Administrative Law 

Judge John J. Mulrooney II has explained, even the credible threat of the most impactful DEA 

enforcement tool.

As Frank Younker, former diversion group supervisor of the DEA Cincinnati field office, explained during a 

HSGAC roundtable in November 2017, ISOs were “in essence, the only way to get a distributor or 

manufacturer or large pharmacy chain to listen and comply with its obligations under the CSA. During 

my time at DEA, it seemed to me that these larger corporations in the industry were not interested in 

doing the right thing, at least not until their profits were hurt and their names were being tied to the 

opioid epidemic in the headlines.”178 Jonathan Novak, a former DEA enforcement attorney, agreed, 

noting that “it seems like the only time that any of the distributors and manufacturers want to listen is 

when it is hurting their bottom line. If we cannot stop them, we cannot affect their bottom line; they 

have no reason to listen, not just for goodwill.”179

The two overlapping trends described in this report—disparities in industry compliance behavior and 

declining DEA enforcement—suggest, at the very least, a connection between weak DEA oversight 
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and varying anti-diversion efforts. Without the serious threat of an ISO to spur industry compliance, 

distributors may lack the incentive to fully adhere to their responsibilities under the CSA. As Ranking 

Member McCaskill explained during the November 2017 roundtable, “[t]he ISO statute was a deterrent 

to some of the largest companies in America, that there were serious and significant consequences if 

they did not do it by the book. When you remove that deterrent, then things get even sloppier, and 

when things get sloppy in the area of opioids, people die.”180

A. DEA Enforcement Efforts Declined After 2011

Information the minority staff has reviewed suggests that changing agency standards for enforcement 

action—later codified in the 2016 law—have impacted enforcement efforts on multiple fronts. In a 2014 

report, for example, Chief Administrative Law Judge John J. Mulrooney II noted “an alarmingly low rate 

of Agency Diversion enforcement activity on a national level relative to historical data.”181 In a report 

later the same year, Judge Mulrooney described “an unprecedented year in the Agency for lack of 

administrative enforcement actions .... [n]otwithstanding the most current Center for Disease Control 

data which reflects that controlled-drug overdose deaths are at record levels and still on the 

increase.”182

In fact, according to a quarterly report Judge Mulrooney filed in October 2017, the total number of 

charging documents DEA has issued has fallen since 2010, while the percentage of charging 

documents requiring essentially no action on the part of DEA has risen.183 (Judge Mulrooney has 

explained that in “no state authority” or NSA cases—”summary disposition cases where the various 

states have acted on their own to abrogate controlled substance authority”—”DEA’s role is essentially a 

paper drill.”184) Judge Mulrooney also noted in his October 2017 report that “8 DEA states/areas of 

responsibility have filed no administrative charging document in over 7 years...and 19 states/areas of 

responsibility have filed 2 or less cases.”185 See Figure 13.

FIGURE 13: DEA Charging Documents and Claims, 2010-2017186

Fiscal 

Year

Total Charging 

Documents

NSA (% of total 

charging documents)

Charging Documents 

Without NSA Claims

2010 113

2011 125

2012 99

2013 64

2014 41 14 (34%) 23 (56%)

2015 69 23 (33%) 27 (39%)

2016 64 34 (53%) 21 (33%)

2017* 87 46 (53%) 32 (37%)

 *As of 9/30/17

According to information the Committee has received from DEA, moreover, ISOs against all DEA 

registrants fell from 58 in 2011 to eight in 2014, with five orders in 2015, nine in 2016, and six in 2017.187 Less 

severe enforcement actions, including orders to show cause and letters of admonition, remained at 

relatively consistent levels during the same time period.188 These statistics suggest the willingness of DEA 

to issue ISOs had already changed dramatically years before the passage of the Ensuring Patient 

Access and Effective Drug Enforcement Act of 2016. See Figure 14.
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FIGURE 14: Orders to Show Cause and Immediate Suspension Orders, 2011-2018189

Fiscal 

Year

Orders to Show 

Cause Filed

Immediate Suspension 

Orders Filed

2011 66 58

2012 54 46

2013 43 16

2014 32 8

2015 62 5

2016 57 9

2017 79 6

2018* 40 10

 *As of 5/01/2018

A further breakdown of ISO statistics shows that DEA did not issue an ISO to a pharmaceutical distributor 

or manufacturer between fiscal years 2012 and 2017. Instead, each ISO during that period applied to 

pharmacies and practitioners. According to a former assistant special agent in charge of the DEA 

Denver field division, DEA attorneys would frequently ask: “Why would you go after a Fortune 50 

company that’s going to cause all these problems with Ivy League attorneys, when we can go after 

other [DEA registrants] that are much lower, that are going to put up no fight?”190 In total, around 30% 

of ISOs between 2007 and 2017 applied to pharmacies, 63.8% applied to practitioners, and only 4.7% 

and 0.8% applied to distributors and manufacturers, respectively. See Figure 15. In total, DEA issued 

only 12 ISOs to distributors between fiscal years 2007 and 2017.191

FIGURE 15: Percentage of ISOs by Party, 2007-2017192

This relatively small total might suggest that internal policy changes inside DEA had a minimal effect on 

overall enforcement efforts against distributors; however, according to former DEA officials—including 

Frank Younker, former diversion group supervisor of the Cincinnati field office—even the credible threat 

of an ISO represented a powerful tool for changing distributor behavior.193 And as Mr. Rannazzisi noted 

during the HSGAC roundtable on DEA enforcement Ranking Member McCaskill held in November 2017, 

“[h]istorically, the ISO was judiciously deployed in the most egregious circumstances as an action of last 

resort.”194
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According to DEA, the decline in ISOs “does not completely reflect other efforts of DEA and its partners 

in continuing programs to address this important issue,” including increased diversion personnel, stronger 

state laws to curb diversion, and a greater emphasis on the use of prescription drug monitoring 

programs.195 DEA has also pointed to the greater role of tactical diversion squads, which it claims have 

boosted voluntary surrenders of DEA registrations for cause through their criminal investigations.196 See

Figure 16.

FIGURE 16: Tactical Diversion Squad Arrests, Case Initiations, and Voluntary Surrenders

Year

Number of 

Arrests

Case Initiations 

(Opened)

Voluntary 

Surrenders

2011 1,577 1,185 839

2012 1,710 1,345 979

2013 1,715 1,454 1,047

2014 2,525 1,747 922

2015 2,568 1,647 972

2016 2,109 1,591 786

2017* 1,950 1,565 776

 *As of 9/21/2017

Mr. Rannazzisi, however, has explained that pursuing voluntary surrenders of DEA registrations is simply 

not a viable tactic against most drug distributors, which have a strong incentive—and the financial 

means—to contest DEA actions.197 In fact, information from DEA shows that only 22 distributors have 

voluntarily surrendered their DEA registrations between 2011 and 2017, and this list does not include 

McKesson, AmerisourceBergen, or Cardinal Health. As Mr. Rannazzisi explained in November 2017, 

when DEA officials point to voluntary surrenders as effective enforcement tools, “they just show their 

ignorance of the law. A voluntary surrender is not an immediate suspension order. [...] [With a] 

voluntary surrender, the agency is at the behest of the company. And I have asked for voluntary 

surrenders, and big companies do not want to give it.”198 See Figure 17.

FIGURE 17: Voluntary Surrenders of DEA Registrations by Distributors, 2011-2017

Name City State

Krs Global Biotechnology, Inc. West Palm Beach FL

Marnel Pharmaceuticals New Orleans LA

Keysource Medical Cincinnati OH

Aidapak Services, LLC Seattle WA

Ct International Los Angeles CA

Onsite Meds, Inc. Birmingham AL

Nulife Pharmaceuticals, Inc. Los Angeles CA

Trump Wholesale Pharmaceutical, Inc. Miami FL

Martin Surgical Supply Co. Houston TX

Vertical Source Pharma Inc. Miami FL

Ameridose, LLC Boston MA

Sircle Laboratories, LLC Jackson MS

Westside Medical Supply Houston TX

Value Drug Co. Pittsburgh PA

Goodwin Drug Co. Charleston WV

Anda Puerto Rico, Inc. San Juan PR

Axiscare Health Logistics, Inc. San Juan PR

Fox Health Care Co., Inc. Salt Lake City UT
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Name City State

Patterson Veterinary Supply, Inc. Columbus OH

Safe Prep International LLC Greensboro NC

Cina Pharmaceutical Inc. Houston TX

Frank W Kerr Inc. Detroit MI

Despite alleged changes to ISO standards, however, DOJ has recently levied significant civil penalties 

against distributors, as mentioned above. After penalties declined from around $80 million in 2013 to a 

little over $100,000 in 2016, DOJ assessed civil penalties of nearly $200 million in 2017. See Figure 18. 

According to DEA, the total fine amount since FY 2011 “includes fines levied against CVS Pharmacy, 

Inc., ($50 million in FY 2011); Walgreens ($80 million in FY 2013); McKesson ($150 million in FY 2017) and 

Cardinal and Kinray ($44 million in FY 2017.)”199 According to March 2018 testimony from Acting DEA 

Administrator Robert W. Patterson, DOJ “has levied fines totaling nearly $390 million against opioid 

distributors nationwide” over the past decade.200

FIGURE 18: Civil Penalties Paid by Controlled Substances Distributors, 2010-2017

Fiscal Year Civil Penalties

2010 $3,073,496

2011 $58,315,000

2012 $493,276

2013 $80,015,000

2014 $4,000,000

2015 $865,000

2016 $115,000

2017 $194,200,000

Yet these most recent settlements, coming years after compliance failures by distributors, raise the 

implication that DEA actions have been “too little, too late.”201 McKesson, for example, paid $13.25 

million to settle allegations regarding three of its warehouses—and “millions of dosage units of controlled 

substances...diverted from legitimate channels”—nine years before its January 2017 settlement.202 In 

2008, Cardinal Health paid a $34 million fine after its warehouses filled “thousands of suspicious orders 

from Internet pharmacies without reporting them,” but DEA investigators later found evidence of 

widespread drug diversion at a Cardinal Health client in 2010, and the company settled a related 

administrative case without paying a fine in 2012.203 Similarly, an AmerisourceBergen warehouse 

previously escaped paying a fine to DEA in 2007 “amid allegations that it was not controlling shipments 

of hydrocodone.”204

These fine amounts also pale in comparison to the revenue each distributor reported for the years in 

which DEA levied fines. The $150,000,000 fine McKesson paid in 2017, for example, amounts to only .08% 

of FY 2017 revenue for the company.205 Similarly, the $44,000,000 fine Cardinal paid in late 2016 

amounts to only .03% of annual revenue.206 (The generic manufacturer Mallinckrodt paid a 

comparable fine—$35,000,000—in January 2017, which only comprised a little over 1% of the net sales 

the company recorded for the year ending December 29, 2017.207)

FIGURE 19: McKesson and Cardinal Health Fines and Revenue208

Company FY 2017 Fines FY 2017 Revenue

Fines as Percent of 

Revenue

McKesson $150,000,000 $198,533,000,000 0.08%

Cardinal Health $44,000,000 $129,976,000,000 0.03%
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B. The Revolving Door Between DEA and Industry Has Significantly Impacted Enforcement 

Efforts

Statements from a roundtable Ranking Member McCaskill held on November 28, 2017, news accounts 

of internal agency deliberations, and interviews with former senior officials suggest the revolving door 

between DEA and industry significantly impacted enforcement efforts from 2011 to the present.

This alleged revolving door phenomenon at DEA has led ethics experts to raise “serious questions about 

whether the ability of the diversion division to carry out its mission has been compromised by the 

pharmaceutical industry.”209 In fact, “beginning in 2013, some officials at DEA headquarters began to 

block and delay enforcement actions against wholesale drug distributors and others, frustrating 

investigators in the field.”210 Specifically, DEA leadership allegedly required a higher burden of proof—

”beyond a reasonable doubt” instead of “a preponderance of evidence”—before allowing 

enforcement actions against distributors to proceed. 211

According to Mr. Younker, DEA attorney Clifford Lee Reeves II warned of vague agency standards and 

stated “that we were going to lose all of our cases and we didn’t have enough information to go 

forward.”212 As Mr. Novak has explained, “discussions turned to an almost palpable fear that if DEA 

utilized the ISO, and one of these larger companies challenged the ISO, DEA could receive a bad ruling 

against it in federal court, which could ultimately take away DEA's ability to use the ISO at all.”213

When the number of ISOs and DEA civil cases filed against distributors and other registrants dropped 

starting in 2011, Mr. Younker noticed a significant effect on his work in the field. As he explained to 

Ranking Member McCaskill in November 2017, Mr. Younker felt DEA had “a prosecutor that lost 

the...respect of the people in the field.”214 In a call, Mr. Younker complained to Mr. Reeves that “these 

cases are lingering here, they’re down in your shop for six to 12 months.”215

DEA has denied in correspondence with the Committee that its attorneys have required a higher 

standard of proof before proceeding with civil cases, asserting that “the ultimate legal question to be 

decided is, and remains, whether, by a preponderance of the evidence, the DEA registrant’s continued

registration is ‘in the public interest.’”216 Accordingly, DEA has denied (and DEA officials have disputed 

in testimony) reporting from the Washington Post that the burden of proof for administrative cases 

changed from a “preponderance of the evidence” to “beyond a reasonable doubt.”217 Former DEA 

employees, however, have claimed in conversations with minority staff that while officials did not 

formally change the standard, they unofficially raised the bar for proceeding with enforcement 

actions.218

In response to these allegations, Ranking Member McCaskill requested that the Department of Justice 

Office of the Inspector General (DOJ OIG) investigate whether DEA has the capacity to hold distributors 

accountable for their lack of diversion oversight.219 On June 1, 2017, DOJ OIG announced it would 

undertake this review.220

C. The Ensuring Patient Access and Effective Drug Enforcement Act of 2016 Has Further 

Undermined DEA Enforcement Efforts

The Ensuring Patient Access and Effective Drug Enforcement Act of 2016 passed the Senate by 

unanimous consent on March 17, 2016, and became law on April 19, 2016.221 Sponsored by Sen. Hatch 

and Sen. Whitehouse and Representatives Marino and Blackburn in the House, the bill purported to 

“improve enforcement efforts related to prescription drug diversion and abuse” by altering DEA 

procedures for revoking or suspending registrations under the CSA.222 The bill amended the revocation 

and suspension process in two critical ways:
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 Before revoking or suspending a registration under normal circumstances, the DEA must now 

“notify...the registrant of the opportunity to submit a corrective action plan on or before the 

date of appearance.” DEA must then determine whether “denial, revocation, or suspension 

proceedings should be discontinued, or deferred for the purposes of modification, 

amendment, or clarification to such plan.”

 DEA can also suspend a registration immediately when it finds an “imminent danger to the 

public health or safety.” The 2016 bill, however, defines this term as “a substantial likelihood 

of an immediate threat that death, serious bodily harm, or abuse of a controlled substance 

will occur in the absence of an immediate suspension of the registration.”223

The Washington Post has explained that the 2016 bill “was the crowning achievement of a multifaceted 

campaign by the drug industry to weaken aggressive DEA enforcement efforts against drug distribution 

companies.”224 In fact, according to an October 2017 report, the legislation “effectively stripped the 

Drug Enforcement Administration of its most potent weapon against large drug companies suspected 

of spilling prescription narcotics onto the nation’s streets.”225 Mr. Rannazzisi—a major critic of the law—

has claimed that the new standard for immediate suspension makes it so “[t]here’s no way that we 

could meet that burden...because immediate, by definition, means right now.”226 The requirement that 

DEA consider a corrective action plan before issuing a show cause order also provided “the industry 

something it had desperately sought: protection from having its drugs locked up with little notice.”227

The 2016 bill also received support from a number of patient advocacy groups and professional 

societies—many of which were funded in part by opioid manufacturers.228 In a letter dated March 4, 

2015, for example, the American Academy of Pain Management, the American Society for Pain 

Management Nursing, and the U.S. Pain Foundation—among other groups—argued that the legislation 

would “improve the balance between effective enforcement against prescription drug diversion and 

abuse, while ensuring patients who are appropriately prescribed medications continue to have access 

to their treatments.”229 Similarly, the Academy of Integrative Pain Management, the American Society 

for Pain Management Nursing, and the U.S. Pain Foundation, among other groups, sent a letter in 

November 2017 praising the 2016 law and warning that “unchecked DEA authority can result in 

profound consequences for chronic pain sufferers.”230 John Gray, President and CEO of the Healthcare 

Distribution Alliance, later mentioned the advocacy from these groups in his testimony to the U.S. Senate 

Committee on the Judiciary.231

As Ranking Member McCaskill showed in the February 2018 report titled, “Fueling an Epidemic: Exposing 

the Financial Ties Between Opioid Manufacturers and Third Party Advocacy Groups,” the Academy of 

Integrative Pain Management, the American Society for Pain Management Nursing, and the U.S. Pain 

Foundation received $1,265,566.81, $323,212.85, and $2,922,800, respectively, from a number of major 

opioid manufacturers between 2012 and 2017.232

On October 16, 2017, Ranking Member McCaskill introduced legislation repealing amendments the 

Ensuring Patient Access and Effective Drug Enforcement Act of 2016 made to the CSA. 233 On 

November 14, 2017, attorneys general for 42 states, the District of Columbia, and the U.S. Virgin Islands 

wrote in support of the repeal.234 In their letter, the bipartisan group stated that the law “neither 

safeguards patient access to medication nor allows for effective drug enforcement efforts.” 235 

Accordingly, the group urged Congress “to repeal the act so that the public is protected and drug 

manufacturers and distributors may be held accountable for their actions.”236

In recent months, current DEA officials have recognized the impact of the 2016 law on DEA 

enforcement efforts, as well as the need to amend or repeal the law to ensure proper oversight of the 

distribution industry. In her written testimony before the U.S. Senate Committee on the Judiciary on 

December 12, 2017, for example, Acting DEA Assistant Administrator Demetra Ashley stated that “DEA 
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supports changing the Ensuring Patient Access and Effective Drug Enforcement Act, to allow DEA to 

more effectively stop bad actors from engaging in opioid diversion.”237 Ms. Ashley also noted during the 

hearing that “the new standard does make it more difficult to issue an [immediate suspension order] to 

non-compliant manufacturers and distributors.”238

Similarly, in a February 2018 letter to Chairman Greg Walden of the House Committee on Energy and 

Commerce, Assistant Attorney General Stephen E. Boyd recommended replacing the “substantial 

likelihood” standard in the 2016 law with a “probable cause” standard.239 The Department of Justice 

and DEA also recommended that Congress remove the language regarding corrective action plans in 

the law; Mr. Boyd noted that allowing distributors to “submit [these plans] to DEA is duplicative, as a 

registrant has always had the opportunity to present mitigating factors and evidence of corrective 

action as part of any administrative proceeding.”240

CONCLUSION

While the divergent suspicious order reporting outcomes discussed above in no way indicate violations 

of the Controlled Substances Act, they do highlight the difficulties involved in ensuring similar 

compliance levels among major distributors and manufacturers. These difficulties exist despite the 

highly sophisticated—and substantially similar—efforts these companies have undertaken to monitor 

and report suspicious opioid orders. Varying compliance results may also reflect declining DEA 

enforcement efforts since 2011—a period in which, according to former DEA officials, the agency 

disfavored the use of immediate suspension orders against major distributors. As Ranking Member 

McCaskill has stated, without at least the credible threat of an ISO at its disposal, DEA will struggle to 

achieve sufficient compliance among companies with well-documented histories of lax anti-diversion 

approaches. Repealing the Ensuring Patient Access and Effective Drug Enforcement Act of 2016 will 

serve as a critical first step to avoid this outcome and stem the excessive flow of prescription opioids into 

American communities.

 

1 Department of Justice: Mallinckrodt Agrees to Pay Record $35 Million Settlement for Failure to Report Suspicious Orders 

of Pharmaceutical Drugs and for Recordkeeping Violations (July 11, 2017) (www.justice.gov/opa/pr/mallinckrodt-agreespay-record-35-million-settlement-failure-report-suspicious-orders).

2 Attorney General of the State of New York, In the Matter of Endo Health Solutions Inc. and Endo Pharmaceuticals Inc., 

Assurance No.: 15-228 (Mar. 2016) (ag.ny.gov/pdfs/Endo_AOD_030116-Fully_Executed.pdf).

3 See, e.g., Letter from Sen. Claire McCaskill to John H. Hammergren, Chairman, President, and CEO, McKesson 

Corporation (July 26, 2017). 

4 Id. 

5 See, e.g., Letter from Sen. Claire McCaskill to Paul V. Campanelli, President and CEO, Endo International plc (July 26, 

2017). 

6 See, e.g., Email from Counsel for AmerisourceBergen Corporation to Senate Committee on Homeland Security and 

Governmental Affairs Minority Staff (Nov. 28, 2017); Letter from Counsel for Cardinal Health, Inc., to Sen. Claire McCaskill 

(Sept. 29, 2017). 

7 Letter from General Counsel for Mallinckrodt to Sen. Claire McCaskill (Aug. 30, 2017); Email from Mark Tyndall to Senate 

Committee on Homeland Security and Governmental Affairs Minority Staff (Sept. 20, 2017); Letter from Counsel for Endo 

to Sen. Claire McCaskill (Sept. 20, 2017). 

8 Letter from Counsel for Teva to Sen. Claire McCaskill (Aug. 30, 2017). 

9 Id. 

10 Letter from Sen. Claire McCaskill to CEO Kåre Schultz (Sept. 28, 2017). 

11 Id. 

12 Id. 

13 Letter from Counsel for Teva to Sen. Claire McCaskill (Oct. 5, 2017). 

14 Id. 

15 Letter from Sen. Claire McCaskill to Chairman Ron Johnson (Dec. 21, 2017).

16 Letter from Chairman Ron Johnson to Sen. Claire McCaskill (Jan. 12, 2018).

17 Sen. Claire McCaskill: Teva is Stonewalling a Senate Investigation (Mar. 6, 2018).
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18 See Senator Expands Probe into Opioid Addiction Crisis, Wall Street Journal (July 27, 2017) 

(www.wsj.com/articles/senator-expands-probe-into-opioid-addiction-crisis-1501158600).

19 Letter from Sen. Claire McCaskill to Chairman, President, and CEO Brenton L. Saunders (May 21, 2018).

20 Letter from Counsel for Allergan to Sen. Claire McCaskill (May 29, 2018).

21 Id.

22 Id.

23 Id.

24 Id.

25 Missouri Department of Health and Senior Services, Bureau of Vital Statistics, Deaths Due to Opioid Overdoses by 

County of Residence 2012-2016 (County Data Table) (2017) (health.mo.gov/data/opioids/pdf/opioid-dashboard-slide4.pdf). 

26 Kaiser Family Foundation, Prescription Opioid Overdose Deaths and Death Rate per 100,000 Population (Age-Adjusted)

(2017) (www.kff.org/other/state-indicator/prescription-opioid-overdose-deaths-and-death-rate-per-100000-populationage-adjusted/).

27 Department of Health and Human Services, Centers for Disease Control and Prevention, Vital Signs: Trends in 

Emergency Department Visits for Suspected Opioid Overdoses — United States, July 2016–September 2017 (Mar. 9, 2018) 

(www.cdc.gov/mmwr/volumes/67/wr/mm6709e1.htm).

28 Missouri Department of Health and Senior Services, Bureau of Vital Statistics, Quarterly Missouri Resident Heroin and 

Non-Heroin Opioid Deaths 2013-2017 (Chart) (2017) (health.mo.gov/data/opioids/pdf/opioid-dashboard-slide-11.pdf).

29 See Department of Justice, Drug Enforcement Administration, 2016 ARCOS Retail Drug Summary Report 

(www.deadiversion.usdoj.gov/arcos/retail_drug_summary/ report_yr_2016.pdf) (accessed May 14, 2018).

30 Over-Prescribing of Opioid Painkillers Abounds in St. Louis County’s First Year of Monitoring, St. Louis Post-Dispatch (May 

3, 2018) (www.stltoday.com/news/local/metro/over-prescribing-of-opioid-painkillers-abounds-in-st-louiscounty/article_a4cf1028-85d3-5de5-ac15-8709951b3183.html).

31 Missouri Division of Professional Registration, Missouri Board of Pharmacy, Board Disciplinary Actions (Apr. 3, 2018) 

(pr.mo.gov/boards/pharmacy/805458.pdf).

32 Settlement Agreement between Missouri Board of Pharmacy and Bruner’s Pharmacy, Complaint No. 2015-00863 (Nov. 

29, 2017) (pr.mo.gov/boards/pharmacy/ORDERS/PHY-004952.pdf).

33 Stipulation for Cause to Discipline Nyberg Pharmacy, Case No. 15-00074 PH (July 20, 2015) 

(pr.mo.gov/boards/pharmacy/orders/PHY-004441.pdf).

34 Settlement Agreement between State Board of Pharmacy and People’s Health Centers, Inc. dba People’s Health 

Center Pharmacy, Complaint No. 2014-005633 (Jan. 28, 2016) (pr.mo.gov/boards/pharmacy/orders/PHY-005971.pdf).

35 Id.

36 Id.

37 See Settlement Agreement between State Board of Pharmacy and Missouri CVS Pharmacy LLC d/b/a CVS Pharmacy 

#5724, Complaint No. 2013-002238 (Oct. 9, 2014) (pr.mo.gov/boards/pharmacy/orders/PHY-2009008131.pdf) (involving 

4,760 hydrocodone/APAP dosage units); Settlement Agreement between Missouri Board of Pharmacy and Walgreens 

#03598 (June 26, 2017) (pr.mo.gov/boards/pharmacy/orders/PHY-005928.pdf) (involving 1,457 

hydrocodone/acetaminophen dosage units, 695 oxycodone dosage units, and 1,988 tramadol dosage units); 

Settlement Agreement between Missouri Board of Pharmacy and Walgreens #04236 (June 26, 2017) 

(pr.mo.gov/boards/pharmacy/orders/PHY-006484.pdf) (involving 4,246 hydrocodone/APAP dosage units and 3,254 

oxycodone/acetaminophen dosage units); Settlement Agreement between State Board of Pharmacy and Walgreens 

#7185 (Nov. 20, 2015) (pr.mo.gov/boards/pharmacy/orders/PHY-003418.pdf) (involving 254 Norco dosage units, 2,918 

Percocet dosage units, and 16 Tussi-Caps dosage units); Settlement Agreement (Mar. 2, 2016) 

(pr.mo.gov/boards/pharmacy/orders/PHY-2000157695.pdf) (involving 24,495 hydrocodone/APAP dosage units); 

Settlement Agreement between Missouri Board of Pharmacy and Walgreens #04212 (Aug. 7, 2017) 

(pr.mo.gov/boards/pharmacy/ORDERS/PHY-006322.pdf) (involving 2,462 hydrocodone/acetaminophen dosage units 

and 8,067 oxycodone/APAP and oxycodone IR dosage units).

38 Id. 

39 Department of Justice: Local Doctor Indicted on Federal Drug Charges (Oct. 17, 2013) (www.justice.gov/usaoedmo/pr/local-doctor-indicted-federal-drug-charges).

40 Id. 

41 Department of Justice: Former Bolivar Clinic Physician Pleads Guilty to Illegally Dispensing Narcotics (Apr. 9, 2013) 

(www.justice.gov/usao-wdmo/pr/former-bolivar-clinic-physician-pleads-guilty-illegally-dispensing-narcotics).

42 Id. 

43 Id. 

44 Modern Distribution Management, 2017 Top Distributors MDM Market Leaders | Top Pharmaceutical Distributors (2018) 

(www.mdm.com/2017-top-pharmaceuticals-distributors).

45 Fortune, Fortune 500 (fortune.com/fortune500/list/) (accessed Apr. 12, 2018).

46 Securities and Exchange Commission, Form 10-K Submitted by McKesson Corporation (Commission File Number: 1-

13252) (May 22, 2017) (www.sec.gov/Archives/ edgar/data/927653/000092765317000007/mck_10kx3312017.htm); 

Securities and Exchange Commission, Form 10-K Submitted by AmerisourceBergen Corporation (Commission File 

Number: 1-16671) (Nov. 11, 2017) (www.sec.gov/Archives/edgar/data/ 1140859/000114085917000047/abc10-

kxseptember302017.htm); Securities and Exchange Commission, Form 10-K Submitted by Cardinal Health, Inc.
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(Commission File Number: 1-11373) (Aug. 10, 2017) (www.sec.gov/Archives/edgar/data/721371/000072137117000083/ 

a17q4_10kx63017xform10-k.htm).

47 See 21 C.F.R. 1301.74(b). 

48 How Drugs Intended for Patients Ended Up in the Hands of Illegal Users: “No One Was Doing Their Job,” Washington 

Post (Oct. 22, 2016) (www.washingtonpost.com/ investigations/how-drugs-intended-for-patients-ended-up-in-the-handsof-illegal-users-no-one-was-doing-their-job/2016/10/22/10e79396-30a7-11e6-8ff7-7b6c1998b7a0_story.html). 

49 Id. 

50 Department of Justice: McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders 

of Pharmaceutical Drugs (Jan. 17, 2017) (www.justice.gov/opa/pr/mckesson-agrees-pay-record-150-million-settlementfailure-report-suspicious-orders). 

51 Department of Justice: Cardinal Health Agrees to $44 Million Settlement for Alleged Violations of Controlled 

Substances Act (Dec. 23, 2016) (www.justice.gov/usao-md/pr/cardinal-health-agrees-44-million-settlement-allegedviolations-controlled-substances-act). This settlement also resolved “a civil investigation in the Western District of 

Washington concerning alleged violations of CSA record keeping requirements.”

52 The Government’s Struggle to Hold Opioid Manufacturers Accountable, Washington Post (Apr. 2, 2017) 

(www.washingtonpost.com/graphics/investigations/dea-mallinckrodt).

53 Mallinckrodt Settles U.S. Opioid Drug Probe for $35 Million, Reuters (July 11, 2017) (www.reuters.com/article/usmalinckrodt-settlement-idUSKBN19W2EL).

54 The Government’s Struggle to Hold Opioid Manufacturers Accountable, Washington Post (Apr. 2, 2017).

55 Id. 

56 Id. 

57 Securities and Exchange Commission, Form 10-K Submitted by Mallinckrodt Public Limited Company (Commission File 

Number: 001-35803) (Feb. 27, 2018) (www.sec.gov/Archives/edgar/data/1567892/000156789218000010/mnk10-

k122917.htm).

58 Securities and Exchange Commission, Form 10-Q Submitted by Mallinckrodt Public Limited Company (Commission File 

Number: 001-35803) (Aug. 8, 2017) (www.sec.gov/Archives/edgar/data/1567892/000156789217000027/mnk10-

q063017.htm).

59 Securities and Exchange Commission, Form 8-K Submitted by Endo International PLC (Commission File Number: 001-

36326) (Jan. 11, 2018) (investor.endo.com/static-files/28d4f332-f141-424d-bb12-a7869219344f). 

60 Attorney General of the State of New York, In the Matter of Endo Health Solutions Inc. and Endo Pharmaceuticals Inc., 

Assurance No.: 15-228 (Mar. 2016) (ag.ny.gov/pdfs/Endo_AOD_030116-Fully_Executed.pdf).

61 Id.

62 See, e.g., Plaintiff’s Complaint for Violation of Michigan Consumer Protection Act, Public Nuisance, Negligence, Unjust 

Enrichment, and Violation of Racketeer Influenced and Corrupt Organization Act (Jan. 22, 2018) County of Monroe v. 

Purdue Pharma L.P., et al., E.D. Mich. (No. 2:18 CV 10251).

63 Complaint (Oct. 12, 2017), County of Wayne and County of Oakland v. Purdue Pharma L.P., et al., E.D. Mich. (No. 2:17 

CV 13334).

64 Third Amended Complaint (Oct. 25, 2016), City of Chicago v. Purdue Pharma L.P., et al., N.D. Ill. (No. 14 CV 04361).

65 Complaint (May 31, 2017), State of Ohio v. Purdue Pharma L.P., et al., Common Pleas Ct. of Ross Cty. (No. CV 17 CI 

000261). 

66 Letter from Counsel for McKesson to Sen. Claire McCaskill (Mar. 23, 2018); Letter from Counsel for AmerisourceBergen 

Corporation to Sen. Claire McCaskill (Sept. 29, 2017); Letter from Counsel for Cardinal Health to Sen. Claire McCaskill 

(Mar. 7, 2018). 

67 McKesson reported opioid orders from January 1, 2012, through December 18, 2017; Cardinal Health reported orders 

from January 1, 2012, through July 31, 2017; and AmerisourceBergen reported orders from January 1, 2012, through 

August 15, 2017. See Letter from Counsel for McKesson to Sen. Claire McCaskill (Mar. 23, 2018); Letter from Counsel for 

Cardinal Health to Sen. Claire McCaskill (Mar. 7, 2018); Letter from Counsel for AmerisourceBergen Corporation to Sen. 

Claire McCaskill (Sept. 29, 2017); Email from Counsel for AmerisourceBergen Corporation to Senate Committee on 

Homeland Security and Governmental Affairs Minority Staff (Nov. 28, 2017).

68 The U.S. Census Bureau reported a 2010 population for Missouri of 5,988,927 residents; using this baseline for the 2012-

2017 period results in a per capita opioid dosage unit rate of roughly 265 dosage units per person. Applying the July 

2017 Missouri population estimate of 6,113,532 residents to the 2012-2017 period yields a per capita rate of roughly 260 

dosage units per person over the five-year period. See Department of Commerce, U.S. Census Bureau, QuickFacts: 

Missouri (www.census.gov/quickfacts/MO) (accessed Apr. 12, 2018). 

69 In 2015, the three distributors shipped around 314,000,000 opioid dosage units into Missouri; using the 2010 population 

count for Missouri yields a rate of approximately 52 opioid dosage units per capita during this year. Applying the July 

2017 Missouri population estimate yields a per capita rate of roughly 51 opioid dosage units during 2015. 

70 McKesson reported opioid orders from January 1, 2012, through December 18, 2017; Cardinal Health reported orders 

from January 1, 2012, through July 31, 2017; and AmerisourceBergen reported orders from January 1, 2012, through 

August 15, 2017. See Letter from Counsel for McKesson to Sen. Claire McCaskill (Mar. 23, 2018); Letter from Counsel for 

Cardinal Health to Sen. Claire McCaskill (Mar. 7, 2018); Letter from Counsel for AmerisourceBergen Corporation to Sen. 

Claire McCaskill (Sept. 29, 2017); Email from Counsel for AmerisourceBergen Corporation to Senate Committee on 

Homeland Security and Governmental Affairs Minority Staff (Nov. 28, 2017).
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71 Letter from Counsel for McKesson to Sen. Claire McCaskill (Mar. 23, 2018); Letter from Counsel for AmerisourceBergen 

Corporation to Sen. Claire McCaskill (Sept. 29, 2017).

72 Letter from Counsel for Cardinal Health to Sen. Claire McCaskill (Mar. 7, 2018).

73 Letter from Counsel for McKesson to Sen. Claire McCaskill (Mar. 23, 2018).

74 McKesson provided suspicious order reports between August 2013 and December 18, 2017; Cardinal Health provided 

reports between January 2012 and July 2017; and AmerisourceBergen provided reports between January 2012 and 

August 15, 2017. See Letter from Counsel for McKesson to Sen. Claire McCaskill (Mar. 23, 2018); Letter from Counsel for 

Cardinal Health, Inc., to Sen. Claire McCaskill (Sept. 29, 2017); Letter from Counsel for AmerisourceBergen Corporation to 

Sen. Claire McCaskill (Sept. 29, 2017); Email from Counsel for AmerisourceBergen Corporation to Senate Committee on 

Homeland Security and Governmental Affairs Minority Staff (Nov. 28, 2017). 

75 Letter from Sean R. Mitchell, Drug Enforcement Administration, to Sen. Claire McCaskill (Apr. 2, 2018). These records 

only reflect electronic reports distributors filed with DEA headquarters subject to a previous memorandum of 

understanding. In correspondence with the Committee, DEA has noted that “there is no centralized reporting of SORS 

[suspicious order reports].” See Production from the Drug Enforcement Administration to the Senate Committee on 

Homeland Security and Governmental Affairs (Sept. 14, 2017); see also Letter from Sean R. Mitchell, Drug Enforcement 

Administration, to Sen. Claire McCaskill (Apr. 2, 2018). The agency, however, “is drafting new regulations which, if 

promulgated, would require the electronic reporting of SORS to DEA Headquarters in order to remedy this problem.” 

Production from the Drug Enforcement Administration to the Senate Committee on Homeland Security and 

Governmental Affairs (Sept. 14, 2017). In the meantime, distributors not subject to memoranda of understanding file 

suspicious order reports at DEA field offices. Letter from Sean R. Mitchell, Drug Enforcement Administration, to Sen. Claire 

McCaskill (Apr. 2, 2018). Recognizing the limits of reliance on self-reporting from distributors and manufacturers, DEA has 

also stated that “distributors registered with DEA are subject to an unannounced regulatory investigation every three 

years,” during which inspectors compare ARCOS records with source documents, among other activities. According to 

DEA, the agency conducted 352 regulatory investigations of distributors in the United States during FY 2016. See 

Production from the Drug Enforcement Administration to the Senate Committee on Homeland Security and 

Governmental Affairs (Sept. 14, 2017).

76 Letter from Sean R. Mitchell, Drug Enforcement Administration, to Sen. Claire McCaskill (May 30, 2018); Email from Sean 

R. Mitchell, Drug Enforcement Administration, to Senate Committee on Homeland Security and Governmental Affairs 

Staff (May 30, 2017).

77 Letter from Sean R. Mitchell, Drug Enforcement Administration, to Sen. Claire McCaskill (Apr. 2, 2018).

78 Letter from Sean R. Mitchell, Drug Enforcement Administration, to Sen. Claire McCaskill (Apr. 2, 2018).

79 See U.S. Census Bureau, Population Division, Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2017

(Mar. 2018) (factfinder.census.gov/bkmk/table/1.0/ en/PEP/2017/PEPANNRES/0400000US29.05000).

80 Centers for Medicare and Medicaid Services, Medicare Part D Opioid Prescribing Mapping Tool (Nov. 29, 2017) 

(www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-ChargeData/OpioidMap.html).

81 Missouri Department of Health and Senior Services, ER Visits Due to Non-Heroin Opioid Misuse by County of Residence: 

2011-2015 (health.mo.gov/data/opioids/pdf/opioid-dashboard-slide-20.pdf).

82 Missouri Department of Health and Senior Services, Deaths Due to Non-Heroin Opioid Overdoses: 2012-2016 by County 

of Residence (health.mo.gov/data/opioids/pdf/opioid-dashboard-slide-8.pdf).

83 Id. 

84 Centers for Disease Control and Prevention, Vital Signs: Changes in Opioid Prescribing in the United States, 2006-2015

(July 7, 2017) (www.cdc.gov/mmwr/ volumes/66/wr/mm6626a4.htm); see also These Are the Most Opioid-Soaked 

Counties in Kansas and Missouri, Kansas City Star (July 30, 2017) (www.kansascity.com/news/business/healthcare/article164307857.html).

85 Centers for Disease Control and Prevention, Vital Signs: Changes in Opioid Prescribing in the United States, 2006-2015

(July 7, 2017) (www.cdc.gov/mmwr/ volumes/66/wr/mm6626a4.htm); Centers for Disease Control and Prevention, 

Annual Surveillance Report of Drug-Related Risks and Outcomes: United States, 2017 (Aug. 31, 2017) 

(www.cdc.gov/drugoverdose/pdf/pubs/2017-cdc-drug-surveillance-report.pdf). 

86 Letter from Counsel for Endo to Sen. Claire McCaskill (Sept. 20, 2017); see also Production from Endo International plc 

to Senate Committee on Homeland Security and Governmental Affairs Minority Staff (Sept. 20, 2017) 

(ENDO_HSGAC_0017946-ENDO_HSGAC_0017953; ENDO_HSGAC_0017954-ENDO_HSGAC_0017975).

87 Id. 

88 Id. 

89 Production from Endo International plc to Senate Committee on Homeland Security and Governmental Affairs Minority 

Staff (Sept. 20, 2017) (ENDO_HSGAC_0017946-ENDO_HSGAC_0017953; ENDO_HSGAC_0017954-ENDO_HSGAC_0017975).

90 Id. 

91 Letter from Counsel for Endo to Sen. Claire McCaskill (Sept. 20, 2017).

92 Letter from General Counsel for Mallinckrodt to Sen. Claire McCaskill (Aug. 30, 2017).

93 Id. 

94 Letter from Counsel for McKesson Corporation to Sen. Claire McCaskill (Oct. 12, 2017).

95 Letter from Counsel for AmerisourceBergen Corporation to Sen. Claire McCaskill (Sept. 29, 2017).

96 Letter from Counsel for Cardinal Health, Inc., to Sen. Claire McCaskill (Sept. 29, 2017).

97 Letter from Counsel for McKesson Corporation to Sen. Claire McCaskill (Oct. 12, 2017).
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98 Letter from Counsel for AmerisourceBergen Corporation to Sen. Claire McCaskill (Sept. 29, 2017).

99 Letter from Counsel for McKesson Corporation to Sen. Claire McCaskill (Oct. 12, 2017).

100 Id. 

101 Email from Counsel for AmerisourceBergen Corporation to Senate Committee on Homeland Security and 

Governmental Affairs Minority Staff (Nov. 28, 2017).

102 Counsel for Cardinal Health, Inc., Briefing with Senate Committee on Homeland Security and Governmental Affairs 

Minority Staff (June 16, 2017).

103 Email from Counsel for McKesson Corporation to Senate Committee on Homeland Security and Governmental Affairs 

Minority Staff (July 3, 2018).

104 Counsel for McKesson, Briefing with Senate Committee on Homeland Security and Governmental Affairs Minority Staff 

(Jan. 19, 2018); Email from Counsel for McKesson Corporation to Senate Committee on Homeland Security and 

Governmental Affairs Minority Staff (July 6, 2018). 

105 Email from Counsel for AmerisourceBergen Corporation to Senate Committee on Homeland Security and 

Governmental Affairs Minority Staff (Nov. 28, 2017).

106 Counsel for Cardinal Health, Inc., Briefing with Senate Committee on Homeland Security and Governmental Affairs 

Minority Staff (June 16, 2017).

107 Letter from Counsel for AmerisourceBergen Corporation to Sen. Claire McCaskill (Sept. 29, 2017).

108 Id. 

109 Letter from Counsel for McKesson Corporation to Sen. Claire McCaskill (Oct. 12, 2017).

110 DEA Responds to Explosive “60 Minutes”/Washington Post Report About Opioid Crisis, CBS News (Oct. 16, 2017) 

(www.cbsnews.com/news/opioid-crisis-dea-responds-60-minutes-report/); see also LinkedIn, D. Linden Barber 

(www.linkedin.com/in/d-linden-barber-41061314) (accessed Apr. 12, 2018).

111 Letter from Counsel for McKesson Corporation to Sen. Claire McCaskill (Oct. 12, 2017).

112 Id. 

113 Letter from Counsel for Cardinal Health, Inc., to Sen. Claire McCaskill (Sept. 29, 2017).

114 Id. 

115 Id. 

116 Letter from Counsel for AmerisourceBergen Corporation to Sen. Claire McCaskill (Sept. 29, 2017). 

117 Drug Firms Poured 780M Painkillers into WV Amid Rise of Overdoses, Charleston Gazette-Mail (Dec. 17, 2016) 

(www.wvgazettemail.com/news-health/20161217/drug-firms-poured-780m-painkillers-into-wv-amid-rise-of-overdoses).

118 Verified Shareholder Derivative Complaint for Breaches of Fiduciary Duty Owed to the Company (Oct. 20, 2017), 

Steinberg v. McKesson Corporation, et al. Del. Ch. (No. 2017-0736-SG); see also Big McKesson Shareholder, Governance 

Experts Say the Opioid Crisis Should Have Cost the CEO Some Bonus Pay, Fortune (July 10, 2017) 

(fortune.com/2017/07/10/mckesson-ceo-pay-opioid-teamsters/).

119 These totals include salary, cash awards, exercised options, vested stock, and the cash value of other perks. See

Securities and Exchange Commission, Proxy Statement Pursuant to Section 14(a) Submitted by McKesson Corporation

(Commission File Number: 1-13252) (July 27, 2017) (www.sec.gov/Archives/edgar/data/927653/000119312517205237/ 

d341720ddef14a.htm); Securities and Exchange Commission, Proxy Statement Pursuant to Section 14(a) Submitted by 

AmerisourceBergen Corporation (Commission File Number: 1-16671) (Jan. 19, 2018) 

(www.sec.gov/Archives/edgar/data/1140859/ 000104746918000269/a2234204zdef14a.htm); Securities and Exchange 

Commission, Proxy Statement Pursuant to Section 14(a) Submitted by Cardinal Health, Inc. (Commission File Number: 1-

11373) (Sep. 21, 2017) (www.sec.gov/Archives/edgar/data/721371/ 000072137117000124/cah-2017xdef14a.htm).

120 Letter from General Counsel for Mallinckrodt to Sen. Claire McCaskill (Aug. 30, 2017).

121 Letter from Counsel for Endo to Sen. Claire McCaskill (Sept. 20, 2017).

122 Letter from General Counsel for Mallinckrodt to Sen. Claire McCaskill (Aug. 30, 2017).

123 Letter from Counsel for Endo to Sen. Claire McCaskill (Sept. 20, 2017).

124 Id. 

125 Production from Endo International plc to Senate Committee on Homeland Security and Governmental Affairs 

Minority Staff (Sept. 20, 2017) (ENDO_HSGAC_0002755-ENDO_HSGAC_0017945).

126 Production from Endo International plc to Senate Committee on Homeland Security and Governmental Affairs 

Minority Staff (Sept. 20, 2017) (ENDO_HSGAC_0002813).

127 Id. 

128 See, e.g., Production from Endo International plc to Senate Committee on Homeland Security and Governmental 

Affairs Minority Staff (Sept. 20, 2017) (ENDO_HSGAC_0009504-05).

129 Letter from General Counsel for Mallinckrodt to Sen. Claire McCaskill (Aug. 30, 2017).

130 Id. 

131 Letter from General Counsel for Mallinckrodt to Sen. Claire McCaskill (Aug. 30, 2017).

132 Id. 

133 Id. 

134 Id. 

135 Id. 

136 Email from General Counsel for Mallinckrodt to Senate Committee on Homeland Security and Governmental Affairs 

Minority Staff (Sept. 20, 2017).

137 Letter from Counsel for Endo to Sen. Claire McCaskill (Sept. 20, 2017).
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138 Id. 

139 Production from Mallinckrodt to Senate Committee on Homeland Security and Governmental Affairs Minority Staff 

(Aug. 30, 2017) (MNK 000017-002537); Production from Mallinckrodt to Senate Committee on Homeland Security and 

Governmental Affairs Minority Staff (Sept. 20, 2017) (MNK 003297-508).

140 Production from Mallinckrodt to Senate Committee on Homeland Security and Governmental Affairs Minority Staff 

(Aug. 30, 2017) (MNK 000362-63).

141 Production from Mallinckrodt to Senate Committee on Homeland Security and Governmental Affairs Minority Staff 

(Aug. 30, 2017) (MNK 000363).

142 Department of Justice: Mallinckrodt Agrees to Pay Record $35 Million Settlement for Failure to Report Suspicious Orders 

of Pharmaceutical Drugs and for Recordkeeping Violations (July 11, 2017) (www.justice.gov/opa/pr/mallinckrodt-agreespay-record-35-million-settlement-failure-report-suspicious-orders).

143 Id. 

144 Letter from General Counsel for Mallinckrodt to Sen. Claire McCaskill (Aug. 30, 2017).

145 Id. 

146 Letter from Counsel for Endo to Sen. Claire McCaskill (Sept. 20, 2017).

147 Importantly, Mallinckrodt has noted that with the exception of methadone, the company “does not sell its dosage 

opioid products directly to dispensing entities like independent retail pharmacies. The vast majority of Mallinckrodt’s 

dosage opioid products are sold to distributors and central distribution centers of large retail chains.” Letter from 

General Counsel for Mallinckrodt to Sen. Claire McCaskill (Aug. 30, 2017).

148 Production from Mallinckrodt to Senate Committee on Homeland Security and Governmental Affairs Minority Staff 

(Sept. 20, 2017) (MNK 003296).

149 Id. 

150 Endo International plc, Briefing with Senate Committee on Homeland Security and Governmental Affairs Minority Staff 

(July 13, 2017).

151 Production from Mallinckrodt to Senate Committee on Homeland Security and Governmental Affairs Minority Staff 

(Sept. 20, 2017) (MNK 003296).

152 Advanced Pain Centers, Doctor to Pay $820,000 for Medicare Fraud, St. Louis Business Journal (Mar. 9, 2010) 

(www.bizjournals.com/stlouis/stories/2010/03/08/ daily23.html).

153 Pain Center Remains Open Following Raid, Daily Journal (June 28, 2013) (dailyjournalonline.com/news/local/paincenter-remains-open-following-raid/article_ccc2ac30-de9e-11e2-b8a0-001a4bcf887a.html).

154 Amendment to Settlement Agreement (Oct. 17, 2016), In the Matter of Abdul N. Naushad, State of Missouri Board of 

Registration for the Healing Arts (Case No.: 2013-004004); Settlement Agreement (Nov. 23, 2015), In the Matter of Abdul 

N. Naushad, State of Missouri Board of Registration for the Healing Arts (Case No.: 2013-004004).

155 Joint Stipulation of Facts, Waiver of Hearing before the Administrative Hearing Commission, and Consent Order with 

Joint Conclusions of Law (Aug. 25, 2014), Department of Health and Senior Services Bureau of Narcotics and Dangerous 

Drugs v. Naushad, Administrative Hearing Commission (Case No.: 14-0214DH).

156 Production from Mallinckrodt to Senate Committee on Homeland Security and Governmental Affairs Minority Staff 

(Sept. 20, 2017) (MNK 002538-MNK 003295).

157 Id. 

158 Production from Endo International plc to Senate Committee on Homeland Security and Governmental Affairs 

Minority Staff (Sept. 20, 2017) (ENDO_HSGAC_0000001-ENDO_HSGAC_0002754).

159 Id. 

160 Letter from John M. Gray, President and CEO, Healthcare Distribution Alliance to Sen. Claire McCaskill (Nov. 28, 2017). 

161 Healthcare Distribution Alliance, What The Washington Post Won’t Say About Distributors and Regulation of Controlled 

Substances in the Supply Chain (Oct. 15, 2017) (www.hda.org/news/2017-10-15-correcting-the-record). Similarly, the 

Government Accountability Office (GAO) concluded, based in part on a survey of distributors, that “better 

communication and guidance from DEA could help registrants make business decisions that balance ensuring access 

for patients with legitimate needs with controlling abuse and diversion.” Government Accountability Office, More DEA 

Information About Registrants’ Controlled Substances Roles Could Improve Their Understanding and Help Ensure Access

(GAO-15-471) (June 2015). In response, “DEA stated that short of providing arbitrary thresholds to distributors, it cannot 

provide more specific suspicious orders guidance because the variables that indicate a suspicious order differ among 

distributors and their customers. Instead, DEA highlighted regulations that require distributors to design and operate 

systems to disclose suspicious orders.” Id. 

162 House of Representatives Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, 

Testimony of Robert W. Patterson, Acting Administrator, Drug Enforcement Administration, Hearing on the Drug 

Enforcement Administration’s Role in Combating the Opioid Epidemic, 115th Cong. (Mar. 20, 2017) (S. Hrg. 115-XX) 

(docs.house.gov/meetings/IF/IF02/20180320/108026/HHRG-115-IF02-Transcript-20180320.pdf).

163 Senate Committee on Homeland Security and Governmental Affairs, Roundtable Transcript, Minority Roundtable: 

Restoring DEA Enforcement Power Over Drug Distributors, 115th Cong. (Nov. 28, 2017).

164 Id. 

165 Id.; see also remarks from Mr. Novak (“One of the best cases that has ever come out of DEA came out during this 

slowdown, Masters Pharmaceutical. It provides case law clarifying the obligations on the distributors, in terms of due 

diligence and reporting suspicious orders.”); and Mr. Rannazzisi (“I have sent two letters to all registrants in 2007—in 2006 

and 2007—stating that Southwood, which was a case we did, basically buttressed those letters.”). 
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166 See Southwood Pharm., Inc., 72 Fed. Reg. 36,487 (July 3, 2007); Masters Pharmaceuticals, Inc., 80 Fed. Reg. 55,418 

(Sept. 15, 2015). See also Senate Committee on Homeland Security and Governmental Affairs, Roundtable Transcript, 

Minority Roundtable: Restoring DEA Enforcement Power over Drug Distributors, 115th Cong. (Nov. 28, 2017). 

167 Masters Pharmaceuticals, Inc. v. Drug Enforcement Administration, No. 15-1335 (D.C. Cir. 2017). 

168 See Masters Pharmaceuticals, Inc., 80 Fed. Reg. 55,418 (Sept. 15, 2015).

169 Letter from John M. Gray, President and CEO, Healthcare Distribution Alliance to Sen. Claire McCaskill (Nov. 28, 2017).

170 Id. 

171 Senate Committee on the Judiciary, Statement Submitted for the Record of John M. Gray, President and CEO, 

Healthcare Distribution Alliance, Hearing on Oversight of the Ensuring Patient Access and Effective Drug Enforcement 

Act, 115th Cong. (Dec. 12, 2017) (S. Hrg. 115-XX) (www.judiciary.senate.gov/imo/media/doc/12-12-

17%20Gray%20Testimony.pdf).

172 Drug Enforcement Administration: DEA Creates New Resource to Help Distributors Avoid Oversupplying Opioids (Feb. 

14, 2018) (www.dea.gov/divisions/hq/2018/hq021418.shtml).

173 The Government’s Struggle to Hold Opioid Manufacturers Accountable, Washington Post (Apr. 2, 2017).

174 Id. 

175 Id. 

176 Letter from General Counsel for Mallinckrodt to Sen. Claire McCaskill (Aug. 30, 2017).

177 As of May 2018, DEA was unable to provide a breakdown of ISOs by registrant for FY 2018. See Production from the 

Drug Enforcement Administration to the Senate Committee on Homeland Security and Governmental Affairs (May 15, 

2018). The same month, DEA issued a suspension order against the distributor Morris & Dickson, alleging the company 

had failed to “properly identify large suspicious orders for controlled substances sold to independent pharmacies.” The 

Washington Post noted that this was “the first time in six years the DEA had taken such drastic measures against a 

distributor.” Justice Department Rescinds Order Stopping Opioid Sales by Louisiana Distributor, Washington Post (May 18, 

2018). Weeks later, however, DEA rescinded the order after Morris & Dickson disputed agency data and methodology in 

federal court. Id. 

178 Senate Committee on Homeland Security and Governmental Affairs, Roundtable Transcript, Minority Roundtable: 

Restoring DEA Enforcement Power Over Drug Distributors, 115th Cong. (Nov. 28, 2017).

179 Id. 

180 Id. 

181 Office of Administrative Law Judges, FY 2014 Third Quarter Status Report (June 24, 2014); see also Investigation: The 

DEA Slowed Enforcement While the Opioid Epidemic Grew Out of Control, Washington Post (Oct. 22, 2016).

182 Office of Administrative Law Judges, FY 2014 Year End and Fourth Quarter Status Report (Sept. 23, 2014).

183 Office of Administrative Law Judges, FY 2017 Year End and Fourth Quarter Status Report (Oct. 5, 2017). 

184 Id. 

185 Id. 

186 Id. 

187 Production from the Drug Enforcement Administration to the Senate Committee on Homeland Security and 

Governmental Affairs (May 15, 2018). 

188 See Production from the Drug Enforcement Administration to the Senate Committee on Homeland Security and 

Governmental Affairs (Oct. 6, 2017); Production from the Drug Enforcement Administration to the Senate Committee on 

Homeland Security and Governmental Affairs (May 15, 2018). 

189 Production from the Drug Enforcement Administration to the Senate Committee on Homeland Security and 

Governmental Affairs (Oct. 6, 2017).

190 ‘We Feel Like Our System was Hijacked’: DEA Agents Say a Huge Opioid Case Ended in a Whimper, Washington Post 

(Dec. 17, 2017) (www.washingtonpost.com/ investigations/mckesson-dea-opioids-fine/2017/12/14/ab50ad0e-db5b11e7-b1a8-62589434a581_story.html).

191 See Production from the Drug Enforcement Administration to the Senate Committee on Homeland Security and 

Governmental Affairs (May 15, 2018); Production from the Drug Enforcement Administration to the Senate Committee on 

Homeland Security and Governmental Affairs (May 16, 2018).

192 Id. 

193 Frank Younker, Former Diversion Group Supervisor, DEA Cincinnati Resident Office, Interview with Senate Committee 

on Homeland and Governmental Affairs (Nov. 8, 2017). 

194 Senate Committee on Homeland Security and Governmental Affairs, Roundtable Transcript, Minority Roundtable: 

Restoring DEA Enforcement Power Over Drug Distributors, 115th Cong. (Nov. 28, 2017). 

195 Production from the Drug Enforcement Administration to the Senate Committee on Homeland Security and 

Governmental Affairs (Oct. 6, 2017).

196 Email from Sean R. Mitchell, Drug Enforcement Administration, to Senate Committee on Homeland Security and 

Governmental Affairs Staff (Dec. 18, 2017).

197 Senate Committee on Homeland Security and Governmental Affairs, Interview of Joseph Rannazzisi (Nov. 2, 2017). 

198 Senate Committee on Homeland Security and Governmental Affairs, Roundtable Transcript, Minority Roundtable: 

Restoring DEA Enforcement Power Over Drug Distributors, 115th Cong. (Nov. 28, 2017). 

199 Production from the Drug Enforcement Administration to the Senate Committee on Homeland Security and 

Governmental Affairs (Oct. 6, 2017).
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200 House of Representatives Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, 

Testimony of Robert W. Patterson, Acting Administrator, Drug Enforcement Administration, Hearing on the Drug 

Enforcement Administration’s Role in Combating the Opioid Epidemic, 115th Cong. (Mar. 20, 2017) (S. Hrg. 115-XX) 

(docs.house.gov/meetings/IF/IF02/20180320/108026/HHRG-115-IF02-Transcript-20180320.pdf).

201 Drug Distributors Penalized for Turning Blind Eye in Opioid Epidemic, ProPublica (Jan. 27, 2017) 

(www.propublica.org/article/drug-distributors-penalized-for-turning-blind-eye-in-opioid-epidemic). 

202 How Drugs Intended for Patients Ended Up in the Hands of Illegal Users: “No One Was Doing Their Job,” Washington 

Post (Oct. 22, 2016); U.S. Department of Justice: McKesson Corporation Agrees to Pay More than $13 Million to Settle 

Claims that it Failed to Report Suspicious Sales of Prescription Medications (May 2, 2008) (www.justice.gov/archive/opa/ 

pr/2008/May/08-opa-374.html). 

203 Id.

204 Id.

205 Securities and Exchange Commission, Form 10-K Submitted by McKesson Corporation (Commission File Number: 1-

13252) (May 22, 2017) (www.sec.gov/ Archives/edgar/data/927653/000092765317000007/mck_10kx3312017.htm).

206 Securities and Exchange Commission, Form 10-K Submitted by Cardinal Health, Inc. (Commission File Number: 1-11373) 

(Aug. 10, 2017) (www.sec.gov/Archives/edgar/data/ 721371/000072137117000083/a17q4_10kx63017xform10-k.htm).

207 The Government’s Struggle to Hold Opioid Manufacturers Accountable, Washington Post (Apr. 2, 2017); Securities and 

Exchange Commission, Form 10-K Submitted by Mallinckrodt PLC (Commission File Number: 1-35803) (Feb. 27, 2018) 

(www.sec.gov/Archives/edgar/data/1567892/ 000156789218000010/mnk10-k122917.htm).

208 Securities and Exchange Commission, Form 10-K submitted by McKesson Corporation (Commission File Number: 1-

13252) (May 22, 2017) (www.sec.gov/ Archives/edgar/data/927653/000092765317000007/mck_10kx3312017.htm); see

also Securities and Exchange Commission, Form 10-K submitted by Cardinal Health, Inc. (Commission File Number: 1-

11373) (Aug. 10, 2017) (www.sec.gov/Archives/edgar/data/721371/000072137117000083/a17q4_10kx63017xform10-

k.htm).

209 Drug Industry Hired Dozens of Officials from the DEA as the Agency Tried to Curb Opioid Abuse, Washington Post (Dec. 

22, 2016). 

210 How Drugs Intended for Patients Ended Up in the Hands of Illegal Users: “No One Was Doing Their Job,” Washington 

Post (Oct. 22, 2016).

211 Investigation: The DEA Slowed Enforcement While the Opioid Epidemic Grew Out of Control, Washington Post (Oct. 

22, 2016); see also Drug Industry Hired Dozens of Officials from the DEA as the Agency Tried to Curb Opioid Abuse, 

Washington Post (Dec. 22, 2016).

212 The Drug Industry’s Triumph Over the DEA, Washington Post (Oct. 15, 2017).

213 Senate Committee on Homeland Security and Governmental Affairs, Roundtable Transcript, Minority Roundtable: 

Restoring DEA Enforcement Power Over Drug Distributors, 115th Cong. (Nov. 28, 2017).

214 Id. 

215 Investigation: The DEA Slowed Enforcement While the Opioid Epidemic Grew Out of Control, Washington Post (Oct. 

22, 2016).

216 Production from the Drug Enforcement Administration to the Senate Committee on Homeland Security and 

Governmental Affairs (Aug. 3, 2017).

217 Id. See also House of Representatives Committee on Energy and Commerce, Testimony of Neil Doherty, Deputy 

Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration, Hearing on Federal Efforts to 

Combat the Opioid Crisis: A Status Update on CARA and Other Initiatives, 115th Cong. (Oct. 25, 2017) (H. Hrg. 115-XX). 

218 See, e.g., Senate Committee on Homeland Security and Governmental Affairs, Interview of Joseph Rannazzisi (Nov. 2, 

2017); Senate Committee on Homeland Security and Governmental Affairs, Interview of Jonathan Novak (Oct. 31, 2017). 

219 Letter from Sen. Claire McCaskill to Inspector General Michael E. Horowitz, Department of Justice Office of Inspector 

General (Mar. 6, 2017).

220 Department of Justice Office of the Inspector General, Ongoing Work, Review of the Drug Enforcement 

Administration’s Opioid Enforcement Efforts (June 1, 2017) (oig.justice.gov/ongoing/all.htm).

221 Ensuring Patient Access and Effective Drug Enforcement Act of 2016, Pub. L. No. 114-145.

222 Id. 

223 Id. 

224 The Drug Industry’s Triumph over the DEA, Washington Post (Oct. 15, 2017).

225 Id. 

226 Id. 

227 Investigation: The DEA Slowed Enforcement While the Opioid Epidemic Grew Out of Control, Washington Post (Oct. 

22, 2016).

228 See Minority Staff, Senate Committee on Homeland Security and Governmental Affairs, Fueling an Epidemic: Exposing 

the Financial Ties Between Opioid Manufacturers and Third Party Advocacy Groups (Feb. 12, 2018).

229 Letter from Alliance for Patient Access, et al., to Sens. Orrin Hatch and Sheldon Whitehouse (Mar. 4, 2015). 

230 Letter from Academy of Integrative Pain Management, et al., to Sens. Orrin Hatch and Sheldon Whitehouse (Nov. 16, 

2017).

231 Senate Committee on the Judiciary, Statement Submitted for the Record of John M. Gray, President and CEO, 

Healthcare Distribution Alliance, Hearing on Oversight of the Ensuring Patient Access and Effective Drug Enforcement 
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Act, 115th Cong. (Dec. 12, 2017) (S. Hrg. 115-XX) (www.judiciary.senate.gov/imo/media/doc/12-12-

17%20Gray%20Testimony.pdf).

232 Minority Staff, Senate Committee on Homeland Security and Governmental Affairs, Fueling an Epidemic: Exposing the 

Financial Ties Between Opioid Manufacturers and Third Party Advocacy Groups (Feb. 12, 2018).

233 S.1960, 115th Cong. (2017). 

234 See 44 State Attorneys General Want Repeal of Law That Curbed DEA Powers, Washington Post (Nov. 14, 2017) 

(www.washingtonpost.com/national/health-science/44-state-attorneys-general-want-repeal-of-law-that-curbed-deapowers/2017/11/14/4f746f4a-c975-11e7-b0cf-7689a9f2d84e_story.html).

235 Letter from the National Association of Attorneys General to Speaker Paul Ryan, et al. (Nov. 13, 2017). 

236 Id. 

237 Senate Committee on the Judiciary, Testimony Submitted for the Record of Demetra Ashley, Acting Assistant 

Administrator, Drug Enforcement Administration, Hearing on Oversight of the Ensuring Patient Access and Effective Drug 

Enforcement Act, 115th Cong. (Dec. 12, 2017) (S. Hrg. 115-XX). 

238 Senate Committee on the Judiciary, Hearing on Oversight of the Ensuring Patient Access and Effective Drug 

Enforcement Act, 115th Cong. (Dec. 12, 2017) (S. Hrg. 115-XX).

239 Letter from Stephen E. Boyd, Assistant Attorney General, Department of Justice, to Chairman Greg Walden, House 

Committee on Energy and Commerce (Feb. 28, 2018).

240 Id.