Case 1:17-cv-04231-JMS-DML Document 1 Filed 11/14/17 Page 1 of 171 PageID #: 1

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
CITY OF INDIANAPOLIS and MARION
COUNTY,

)
) No. 1:17-cv-04231
)
Plaintiffs,
)
) JURY TRIAL DEMANDED
vs.
)
)
PURDUE PHARMA L.P.; PURDUE PHARMA
)
INC.; THE PURDUE FREDERICK COMPANY,
)
INC.; CEPHALON, INC.; TEVA
)
PHARMACEUTICAL INDUSTRIES, LTD.;
)
TEVA PHARMACEUTICALS USA, INC.;
)
JOHNSON & JOHNSON; JANSSEN
)
PHARMACEUTICALS, INC.; ORTHO-MCNEIL- )
JANSSEN PHARMACEUTICALS, INC. N/K/A
)
JANSSEN PHARMACEUTICALS, INC.;
)
JANSSEN PHARMACEUTICA, INC. N/K/A
)
JANSSEN PHARMACEUTICALS, INC.;
)
NORAMCO, INC.; ENDO HEALTH SOLUTIONS )
INC.; ENDO PHARMACEUTICALS INC.;
)
MALLINCKRODT PLC; MALLINCKRODT LLC; )
ALLERGAN PLC F/K/A ACTAVIS PLS;
)
WATSON PHARMACEUTICALS, INC. N/K/A
)
ACTAVIS, INC.; WATSON LABORATORIES,
)
INC.; ACTAVIS, LLC; ACTAVIS PHARMA,
)
INC. F/K/A/ WATSON PHARMA, INC.;
)
AMERISOURCEBERGEN DRUG
)
CORPORATION; CARDINAL HEALTH, INC.;
)
and MCKESSON CORPORATION,
)
)
Defendants.
)
COMPLAINT

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TABLE OF CONTENTS
INTRODUCTION .......................................................................................................................... 1
NATURE OF THIS ACTION ........................................................................................................ 1
JURISDICTION AND VENUE ................................................................................................... 10
PARTIES ...................................................................................................................................... 11
FACTUAL ALLEGATIONS ....................................................................................................... 18
I.

Opioids Are Addictive....................................................................................................... 18

II.

No Scientific Evidence Supports Long Term Use of Opioids. ......................................... 22

III.

Manufacturer Defendants’ Scheme to Realize Blockbuster Profits. ................................. 23

IV.

Manufacturer Defendants Use “Unbranded” Marketing to Evade Laws
and Regulations. ................................................................................................................ 27
A.

Manufacturer Defendants’ KOLs. ........................................................................ 29

B.

Manufacturer Defendants’ Corrupt Scientific Literature. ..................................... 31

C.

Manufacturer Defendants’ Misuse of Treatment Guidelines................................ 34
1.

FSMB ........................................................................................................ 34

2.

AAPM/APS Guidelines ............................................................................ 35

3.

Guidelines Not Supported by Manufacturer Defendants .......................... 37

D.

Manufacturer Defendants’ Misuse of CMEs. ....................................................... 38

E.

Manufacturer Defendants’ Misuse of Patient Education Materials
and Front Groups. ................................................................................................. 40
1.

American Pain Foundation ....................................................................... 41

2.

The American Academy of Pain Medicine ............................................... 42

V.

Manufacturer Defendants Acted in Concert with KOLs and Front Groups
in the Creation, Promotion, and Control of Unbranded Marketing. ................................. 43

VI.

Manufacturer Defendants’ Misrepresentations. ................................................................ 45
A.

Manufacturer Defendants Misrepresented How Opioids Lead To Addiction. ..... 47

B.

Manufacturer Defendants Misrepresent That Opioids Improve Function. ........... 51

C.

Manufacturer Defendants Misrepresent That Addiction Risk Can
Be Effectively Managed. ...................................................................................... 53

D.

Manufacturer Defendants Mislead With Use Of Purportedly
Scientific Terms Like “Pseudoaddiction.” ............................................................ 56

E.

Manufacturer Defendants Claim Withdrawal Is Easily Managed. ....................... 57

F.

Manufacturer Defendants Misrepresent Increased Doses Pose No
Significant Additional Risks. ................................................................................ 58

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G.

Manufacturer Defendants Deceptively Omit or Minimize The Effects Of
Opioids And Overstate Risks Of Alternative Forms Of Pain Treatment.............. 60

VII.

Manufacturer Defendants Deceptively Promote Their Drugs. ......................................... 61

VIII.

Manufacturer Defendants Knew Their Marketing Was False, Unfounded,
Dangerous, and Would Harm Plaintiffs. ........................................................................... 64

IX.

Manufacturer Defendants Fraudulently Concealed Their Misrepresentations. ................ 65

X.

Distributor Defendants Have A Duty to Report and Stop Suspicious
Orders of Opioids. ............................................................................................................. 66

XI.

A.

Distributor Defendants’ Duties. ............................................................................ 66

B.

The ARCOS Database. ......................................................................................... 72

Distributor Defendants Breached Their Duties And The DEA Gets Involved. ................ 73
A.

The DEA Sent Letters to the Distributor Defendants. .......................................... 73

B.

DEA Actions against the Distributor Defendants. ................................................ 75

C.

Distributor Defendants Misled the Public Concerning their Duties and
Compliance. .......................................................................................................... 81

D.

Distributor Defendants Breached their Duties. ..................................................... 86

XII.

The Manufacturer Defendants Also Fail to Prevent Diversion and Monitor,
Report, and Stop Suspicious Orders. ................................................................................ 88

XIII.

Defendants’ Conduct and Breaches of Duties Caused the Plaintiffs’ Harm. .................... 93

XIV.

Defendants’ Opioid Marketing and Diversion in Indiana. ................................................ 96

The Results of Defendants’ Wrongful Conduct On Indiana and Plaintiffs ................................ 100
I.

Indiana, Indianapolis, and Marion County are Flooded with Prescription
Opioids as a Result of Defendants’ Conduct. ................................................................. 100

II.

Opioids Are Killing Hoosiers.......................................................................................... 101
A.

Prescription Opioid Abuse and its Effect on Indianapolis and
Marion County. ................................................................................................... 101

B.

Impact on Services Offered by Indiana, Indianapolis, and Marion County. ...... 105

C.

Impact on Children. ............................................................................................ 109

D.

Overdose Deaths. ................................................................................................ 111

TOLLING AND FRAUDULENT CONCEALMENT ............................................................... 118
COUNT I: PUBLIC NUISANCE ............................................................................................... 122
COUNT II: RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT,
18 U.S.C. § 1961, ET SEQ. ........................................................................................................ 123
I.

The Opioid Diversion Enterprise .................................................................................... 127

II.

Conduct of the Opioid Diversion Enterprise .................................................................. 139

III.

Pattern of Racketeering Activity ..................................................................................... 144
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IV.

A.

The RICO Defendants Engaged in Mail and Wire Fraud. .................................. 144

B.

The RICO Defendants Manufactured, Sold, and/or Dealt in Controlled
Substances and Their Crimes Are Punishable as Felonies. ................................ 152

Damages .......................................................................................................................... 158

COUNT III: RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT,
18 U.S.C. § 1962(D), ET. SEQ. .................................................................................................. 159
I.

The Opioid Diversion Enterprise .................................................................................... 159

II.

Conduct of the Opioid Diversion Enterprise .................................................................. 159

III.

Pattern of Racketeering Activity ..................................................................................... 159

IV.

Damages .......................................................................................................................... 160

COUNT IV: ORDINANCE VIOLATION ................................................................................. 160
COUNT V: NEGLIGENCE ....................................................................................................... 161
COUNT VI: UNJUST ENRICHMENT ..................................................................................... 164
COUNT VII: DAMAGES RESULTING FROM CIVIL CONSPIRACY ................................. 165
CLAIM FOR RELIEF ................................................................................................................ 166
DEMAND FOR JURY TRIAL .................................................................................................. 167

iii

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INTRODUCTION
Plaintiffs City of Indianapolis and Marion County, by counsel, for their Complaint
against Defendants Purdue Pharma L.P., Purdue Pharma Inc., The Purdue Frederick Company,
Inc., Cephalon, Inc., Teva Pharmaceutical Industries, Ltd., Teva Pharmaceuticals USA, Inc.,
Johnson & Johnson, Janssen Pharmaceuticals, Inc., Ortho-McNeil-Janssen Pharmaceuticals, Inc.
n/k/a Janssen Pharmaceuticals Inc., Janssen Pharmaceutica, Inc. n/k/a Janssen Pharmaceuticals,
Inc., Noramco, Inc., Endo Health Solutions Inc., Endo Pharmaceuticals Inc., Mallinckrodt Plc,
Mallinckrodt LLC, Allergan PLC f/k/a Actavis PLS, Watson Pharmaceuticals, Inc. n/k/a Actavis,
Inc., Watson Laboratories, Inc., Actavis, LLC, Actavis Pharma, Inc. f/k/a/ Watson Pharma, Inc.,
(“Manufacturer Defendants”), AmerisourceBergen Drug Corporation; Cardinal Health, Inc., and
McKesson Corporation (“Distributor Defendants”) (collectively “Defendants”) allege as follows:
NATURE OF THIS ACTION
1.

Opioid addiction is ravaging Indianapolis and Marion County:

o

Opioid overdoses claimed the lives of 345 Marion County residents last year—a figure
over four times the number of traffic-related deaths.

o

In 2013, a 31% rise in cases in the Marion County Juvenile Court in which parental rights
were terminated has been attributed to the opioid crisis.

o

Indiana ranks high in the nation for overdose deaths, and Marion County has led the state
with the highest numbers of deaths due to drug overdose and non-fatal emergency
department visits.

o

Marion County has led the state—which has led the country—in pharmacy robberies.

o

Indianapolis Emergency Medical Services (“IEMS”) is on pace to surpass last year’s
record-high number of administrations of naloxone for opioid-related overdoses.

o

In 2014, nearly 200 infants were born in Marion County with neonatal abstinence
syndrome (“NAS”), a group of problems that occur in newborns exposed to opioids in the
mother’s womb.

1

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2.

A dramatic increase in the use of prescription opioid pain medications, brought on

by Manufacturer Defendants’ deceptive marketing campaign and Defendants’ failure to identify,
report, and stop suspicious orders of those medications, has caused this growing crisis.
3.

Plaintiffs bring this action to eliminate the hazard to public health and safety

caused by the opioid epidemic, to abate the nuisance caused thereby, and to recoup monies spent
because of Defendants’ actions. These economic damages were foreseeable to Defendants and
were caused by Defendants’ actions.
4.

Plaintiffs spend millions of dollars each year to provide or pay for necessary

services and programs on behalf of Indianapolis and Marion County residents affected by the
opioid epidemic. Plaintiffs also provide a wide range of other services on behalf of their
residents, including services for families and children, public assistance, and law enforcement,
the costs of which have all dramatically increased because of Defendants’ misconduct.
5.

Opioids include brand-name drugs like OxyContin and generics like oxycodone

and hydrocodone. They are derived from or possess properties similar to opium and heroin, are
highly addictive and dangerous, and are regulated by the United States Food and Drug
Administration (“FDA”) and under the Controlled Substances Act (“CSA”) as Schedule II
controlled substances. Substances in this schedule have a high potential for abuse, which may
lead to severe psychological or physical dependence, and are dangerous.
6.

Opioids provide effective treatment for short-term post-surgical and trauma-

related pain, and for palliative end-of-life care. Manufacturer Defendants, however, have
manufactured, promoted, and marketed opioids for the management of other forms of pain by
misleading consumers and medical providers through misrepresentations or omissions regarding
the appropriate uses, risks, and safety of opioids.

2

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7.

Addiction is a spectrum of substance use disorders (“SUDs”) that range from

misuse and abuse of drugs to addiction.1 Manufacturer Defendants knew that, barring
exceptional circumstances, opioids are too addictive and too debilitating for long-term use for
chronic non-cancer pain lasting three months or longer (“chronic pain”).
8.

Manufacturer Defendants knew that, with prolonged use, the effectiveness of

opioids wanes, requiring increases in doses to achieve pain relief and increasing the risk of
significant side effects and addiction.2
9.

Manufacturer Defendants knew that controlled studies of the safety and efficacy

of opioids were limited to short-term use in managed settings (e.g., hospitals) where the risk of
addiction and other adverse outcomes was minimized.
10.

To date, there have been no long-term studies demonstrating the safety and

efficacy of opioids for long-term use.
11.

In 2017, the U.S. Food and Drug Administration requested “that Endo

Pharmaceuticals remove its opioid pain medication, reformulated Opana ER (oxymorphone
hydrochloride), from the market.”3 The agency sought removal “based on its concern that the
benefits of the drug may no longer outweigh its risks.”4

1

Diagnostic and Statistical Manual of Mental Disorders (5th ed. 2013) (“DSM-V”).

2

See, e.g., Portenoy, Russell K., “Opioid Therapy for Chronic Nonmalignant Pain:
Current Status,” 1 Progress in Pain Res. & Mgmt., 247-287 (H.L. Fields and J.C. Liebeskind
eds., 1994).
3

FDA News Release, “FDA Requests Removal of Opana ER for Risks Related to Abuse,
June 8, 2017, U.S. Food & Drug Administration, 8 June 2017. Web. 10 Oct. 2017.
4

Id.

3

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12.

Despite their knowledge, to expand the market for opioids and realize blockbuster

profits, Manufacturer Defendants sought to create a false perception of the safety and efficacy of
opioids in the minds of medical professionals and members of the public, even going so far as to
target veterans, to encourage the use of opioids for longer periods of time and to treat a wider
range of problems, including such common aches and pains as lower back pain, arthritis, and
headaches.
13.

Manufacturer Defendants successfully created that false perception through a

coordinated, sophisticated, and highly deceptive marketing campaign. Manufacturer Defendants
accomplished their marketing campaign goal by convincing doctors, patients, and others,
including veterans, that the benefits of using opioids to treat chronic pain outweighed the risks,
and that opioids could be safely used by most patients. Manufacturer Defendants, individually
and collectively, knowing that long-term opioid use causes addiction, misrepresented the dangers
of long-term opioid use to physicians, pharmacists, and patients by engaging in a campaign to
minimize the risks of, and to encourage, long-term opioid use.
14.

Manufacturer Defendants’ marketing campaign has succeeded in expanding

opioid use. In 2010, 20% of all doctors’ visits resulted in the prescription of an opioid (nearly
double the rate in 2000).5 While Americans represent only 4.6% of the world’s population, they
consume 80% of the opioids supplied around the world and 99% of the global hydrocodone

5

Daubresse, M. et al., “Ambulatory Diagnosis and Treatment of Nonmalignant Pain in the
United States,” 2000-2010, 51(10) Med. Care 870-78 (2013).

4

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supply. 6 By 2014, nearly two million Americans either abused or were dependent on
opioids.7
15.

Manufacturer Defendants’ campaign has been profitable for them. In 2012

alone, opioids generated $8 billion in revenue for drug companies. 8 Of that amount, $3.1 billion
went to Purdue for its OxyContin sales. 9 Purdue Pharma is 100% owned by the Sackler family,
the 16th richest family in America with a $14 billion net worth, who made their fortune on
OxyContin. 10
16.

Manufacturer Defendants’ marketing campaign has achieved no material health

care benefits. Since 1999, there has been no overall change in pain that Americans report. 11
17.

The National Institutes of Health (“NIH”) not only recognizes the opioid abuse

problem, but also identifies Manufacturer Defendants’ “aggressive marketing” as a major cause:
“Several factors are likely to have contributed to the severity of the current prescription drug
abuse problem. They include drastic increases in the number of prescriptions written and
dispensed, greater social acceptability for using medications for different purposes, and

6

Manchikanti, L. et al., “Therapeutic Use, Abuse, and Nonmedical Use of Opioids: A TenYear Perspective,” 13 Pain Physician 401-435 (2010).
7

“CDC Guideline for Prescribing Opioids for Chronic Pain,” Centers for Disease
Control and Prevention. Web. 24 Oct. 2017.
8

See “The Soaring Cost of the Opioid Economy,” The New York Times, 22 June 2013.
Web. 10 Oct. 2017.
9

Eban, Katherin, “OxyContin: Purdue Pharma’s Painful Medicine, Fortune.com, 9 Nov.
2011. Web. 10 Oct. 2017.
10

Morrell, Alex, “The OxyContin Clan: The $14 Billion Newcomer to Forbes 2015 List
of Richest U.S. Families,” Forbes.com, 1 July 2015. Web. 10 Oct. 2017.
11

“Prescribing Data,” Centers for Disease Control and Prevention. Web. 24 Oct. 2017.

5

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aggressive marketing by pharmaceutical companies.” 12 The drastic increases in the number of
prescriptions written and dispensed and the greater social acceptability for using medications for
different purposes result directly from the aggressive marketing by pharmaceutical companies.
18.

To regulate highly addictive drugs, like opioids, in 1970, Congress devised a

“closed” chain of distribution specifically designed to prevent the diversion of legally produced
controlled substances into the illicit market.13 This closed system imposes duties on the
Distributor Defendants and Manufacturer Defendants to monitor, identify, halt, and report
“suspicious orders” of controlled substances.14
19.

Distributor Defendants control 85% of the market share for distributing

prescription opioids. Distributor Defendants are Fortune 500 corporations on the New York
Stock Exchange engaged in the nationwide wholesale distribution of prescription drugs.15
20.

Data that reveals the specific amount of opioids Distributor Defendants

distributed in Indiana, Indianapolis, and Marion County is hidden from public view in the DEA’s
confidential ARCOS database. 16 Neither the DEA17 nor the Distributor Defendants18 will
voluntarily disclose the data necessary to identify with specificity those transactions.

12

Volkow, Nora D., M.D., “America’s Addiction to Opioids: Heroin and Prescription
Drug Abuse,” National Institute on Drug Abuse, 14 May 2014. Web. 24 Oct. 2017.
13

See Gonzales v. Raich, 545 U.S. 1, 12–14 (2005); 21 U.S.C. § 801(2); 21 U.S.C. §§
821-824, 827, 880; H.R. Rep. No. 91-1444, 1970 U.S.C.C.A.N. 4566, 4572 (Sept. 10, 1970).
14

See 21 C.F.R. § 1301.74; Masters Pharm., Inc. v. Drug Enf't Admin., 861 F.3d 206
(D.C. Cir. 2017).
15

See Fed. Trade Comm'n v. Cardinal Health, Inc., 12 F. Supp. 2d 34, 37 (D.D.C. 1998).

16

See Madel v. USDOJ, 784 F.3d 448 (8th Cir. 2015).

17

See Declaration of Katherine L. Myrick, Chief, Freedom of Information (FOI)/Privacy
Act Unit (“SARF”), FOI, Records Management Section (“SAR”), Drug Enforcement
6

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21.

Based on the data publicly available, Distributor Defendants failed to identify,

report, and stop obviously suspicious orders, flooding the market with opioid prescriptions in
Indianapolis and Marion County. For example, since 1999, the amount of prescription opioids
sold in the U.S. nearly quadrupled.19 In 2010, 254 million prescriptions for opioids were filled in
the U.S.—enough to medicate every adult in America around the clock for a month. In
2012, Indiana was among a handful of states whose opioid prescriptions roughly equaled its
population.20
22.

A reporter in West Virginia was able to obtain the confidential ARCOS data that

Distributor Defendants refuse to release that revealed that “drug companies shipped nearly 9
million [opioid] pills over two years to one pharmacy in the town of Kermit, W. Va., population
392. All told, the newspaper reported, drug wholesalers distributed 780 million pills of
oxycodone and hydrocodone in the state over six years.”21 Those shipments amounted to 433

Administration (DEA), United States Department of Justice (DOJ) (filed in Madel v. USDOJ,
Case No. 0:13-cv-02832-PAM-FLN, Doc. 23, ¶ 40 (D. Minn. Feb. 6, 2014) (noting that “the data
is kept confidential by the DEA. . .”).)
18

See Declaration of Tina Lantz, Cardinal Health VP of Sales Operation, (filed in Madel
v. USDOJ, Case No. 0:13-cv-02832-PAM-FLN, Doc. 93, ¶ 6 (D. Minn. Nov. 2, 2016) (“Cardinal
Health does not customarily release any of the information identified by the DEA notice letter to
the public, nor is the information publicly available. Cardinal Health relies on DEA to protect its
confidential business information reported to the Agency.”).)
19

“Understanding the Epidemic, Drug Overdose Deaths in the United States Continue to
Increase in 2015,” Centers for Disease Control and Prevention. Web. 24 Oct. 2017.
20

Lapowsky, Issie, “Indiana, Reeling from Opioid Crisis, Arms Officials with Data,”
Wired.com, 14 Sept. 2017. Web. 10 Oct. 2017.
21

Ornstein, Charles, “Drug Distributors Penalized for Turning Blind Eye in Opioid
Epidemic,” NPR.org, 27 Jan. 2017. Web. 24 Oct. 2017.

7

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pain pills for every person in West Virginia. The numbers for Indiana will be similarly
staggering.
23.

Each Distributor Defendant has been investigated—and some fined—by the DEA

for failing to report suspicious orders of opioids to the DEA. As recognized by a DEA
supervisor, “The distributors are important. They’re like the quarterback. They distribute the
ball.”22
24.

Defendants’ wrongful conduct has been extremely harmful to Indianapolis and

Marion County. Overdoses from prescription pain relievers are a driving factor in a 15-year
increase in opioid overdose deaths. “Since 1999, the number of overdose deaths involving
opioids (including prescription opioids and heroin) quadrupled.” 23 From 2000 to 2015, more
than half a million people died from drug overdoses and 91 Americans die every day from an
opioid overdose.24 From 2000 to 2015, opioid-involved poisoning deaths erased two and a half
months from overall life expectancy at birth in the United States.25 Every 25 minutes a baby is
born suffering from opioid withdrawal.26

22

Id.

23

“Understanding the Epidemic, Drug Overdose Deaths in the United States Continue to
Increase in 2015,” Centers for Disease Control and Prevention. Web. 24 Oct. 2017.
24

Id.

25

“Opioid Epidemic Lowers Overall Life Expectancy in U.S.,” The National Law
Review, 10 Oct. 2017. Web. 24 Oct. 2017.
26

“Dramatic Increases in Maternal Opioid Use and Neonatal Abstinence Syndrome,”
National Institute on Drug Abuse. Web. 24 Oct. 2017.

8

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25.

On March 22, 2016, the FDA recognized opioid abuse as a “public health crisis”

that has a “profound impact on individuals, families and communities across our country.”27
26.

“Prescription opioids, heroin, and synthetic opioid drugs all work through the

same mechanism of action.”28 The National Institute on Drug Abuse states that “[p]rescription
opioid pain medicines such as OxyContin® and Vicodin® have effects similar to heroin.
Research suggests that misuse of these drugs may open the door to heroin use. Nearly 80 percent
of Americans using heroin (including those in treatment) reported misusing prescription opioids
first.”29
27.

“The emergence of illicitly manufactured synthetic opioids including fentanyl,

carfentanil, and their analogues represents an escalation of the ongoing opioid overdose
epidemic.”30
28.

The rising numbers of persons addicted to opioids have led to increased health

care costs and a dramatic increase in social problems, including drug abuse and diversion and the
commission of criminal acts to obtain opioids throughout the United States, including
Indianapolis and Marion County. Public health and safety throughout the United States,

27

FDA News Release, “FDA Announces Enhanced Warnings for Immediate-Release
Opioid Pain Medications Related to Risks of Misuse, Abuse, Addiction, Overdose and Death,”
U.S. Food and Drug Administration, 22 Mar. 2016. Web. 10 Oct. 2017.
28

Compton, Wilson M. M.D., “Research on the Use and Misuse of Fentanyl and Other
Synthetic Opioids,” National Institute on Drug Abuse, 30 June 2017. Web. 24 Oct. 2017.
29

“What is heroin?” National Institute on Drug Abuse, Revised July 2017. Web. 24 Oct.

2017.
30

Compton, Wilson M. M.D., “Research on the Use and Misuse of Fentanyl and Other
Synthetic Opioids,” National Institute on Drug Abuse, 30 June 2017. Web. 24 Oct. 2017.

9

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including Indianapolis and Marion County, has been significantly and negatively affected due to
widespread inappropriate use of the drugs manufactured and distributed by Defendants.
29.

As a direct and foreseeable consequence of Defendants’ wrongful conduct,

Plaintiffs spent millions of dollars each year in efforts to combat the opioid epidemic created by
Defendants’ conduct. Plaintiffs have incurred and continue to incur costs related to opioid
addiction and abuse, including, but not limited to, health care costs, criminal justice and
victimization costs, social costs, lost productivity, and lost revenue.
JURISDICTION AND VENUE
30.

This Court has jurisdiction over this action under 28 U.S.C. § 1331 based on the

federal claims asserted under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.
§ 1961, et seq. (“RICO”). This Court has supplemental jurisdiction over Plaintiffs’ state-law
claims under 28 U.S.C. § 1367 because those claims are so related to Plaintiffs’ federal claims
that they form part of the same cause or controversy.
31.

This Court also has subject-matter jurisdiction over this action under 28 U.S.C. §

1332(a) based on complete diversity of citizenship between Plaintiffs and all Defendants. The
amount in controversy exceeds $75,000, exclusive of interest and costs.
32.

This Court has personal jurisdiction over Defendants because they conduct

business in Indiana, purposefully direct or directed their actions toward Indiana, consensually
submitted to the jurisdiction of Indiana when obtaining a manufacturer or distributor license, and
have the requisite minimum contacts with Indiana necessary to constitutionally permit the Court
to exercise jurisdiction.
33.

Venue is proper in this District under 28 U.S.C. § 1391 and 18 U.S.C. § 1965

because a substantial part of the events or omissions giving rise to the claim occurred in this

10

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District and each Defendant transacted affairs and conducted activity that gives rise to the claim
of relief in this District.
PARTIES
34.

Plaintiff City of Indianapolis is the capital of, and most populous city in, Indiana

and is the seat of Marion County. The City of Indianapolis is the third most populous city in the
Midwest and 14th most populous in the United States.
35.

Plaintiff Marion County is the most populous county in Indiana and consists of

numerous municipalities and townships.
36.

Plaintiffs provide a wide range of services on behalf of their residents, including

services for families and children, public health, public assistance, law enforcement, and
emergency care.
37.

Defendant Purdue Pharma L.P. (“PPL”) is a limited partnership organized under

the laws of Delaware with its principal place of business in Stamford, Connecticut.
38.

Defendant Purdue Pharma Inc. (“PPI”) is a New York corporation with its

principal place of business in Stamford, Connecticut.
39.

Defendant The Purdue Frederick Company, Inc. (“PFC”) is a New York

corporation with its principal place of business in Stamford, Connecticut.
40.

PPL, PPI, and PFC (collectively, “Purdue”) are engaged in the manufacture,

promotion, distribution, and sale of opioids nationally and in Indianapolis and Marion County,
including the following:
Drug Name

Schedule31

Chemical Name

31

Since passage of the Controlled Substances Act (“CSA”) in 1970, opioids have been
regulated as controlled substances. As controlled substances, they are categorized in five
schedules, ranked in order of their potential for abuse, with Schedule I being the most
dangerous. The CSA imposes a hierarchy of restrictions on prescribing and dispensing drugs
11

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OxyContin
MS Contin
Dilaudid
Dilaudid-HP
Butrans
Hysingla ER
Targiniq ER

41.

Oxycodone hydrochloride extended release
Morphine sulfate extended release
Hydromorphone hydrochloride
Hydromorphone hydrochloride
Byprenorpine
Hydrocodone bitrate
Oxycodone hydrochloride and naloxone
hydrochloride

Schedule II
Schedule II
Schedule II
Schedule II
Schedule III
Schedule II
Schedule II

OxyContin is Purdue’s largest-selling opioid. Since 2009, Purdue’s national

annual sales of OxyContin have fluctuated between $2.47 billion and $2.99 billion, up four-fold
from 2006 sales of $800 million. OxyContin constitutes roughly 30% of the entire market for
analgesic drugs (i.e., painkillers).
42.

In 2007, Purdue and three of its executives pled guilty to federal criminal charges

for misleading regulators, doctors, and patients about OxyContin’s risk of addiction and its
potential to be abused.32
43.

Defendant Cephalon, Inc. is a Delaware corporation with its principal place of

business in Frazer, Pennsylvania.
44.

Defendant Teva Pharmaceutical Industries, Ltd. (“Teva Ltd.”) is an Israeli

corporation with its principal place of business in Petah Tikva, Israel. In 2011, Teva Ltd.
acquired Cephalon, Inc.

based on their medicinal value, likelihood of addiction or abuse, and safety. Opioids
generally had been categorized as Schedule II or Schedule III drugs. Schedule II drugs have a
high potential for abuse, have a currently accepted medical use, and may lead to severe
psychological or physical dependence. Schedule III drugs are deemed to have a lower potential
for abuse, but their abuse still may lead to moderate or low physical dependence or high
psychological dependence.
32

Meier, Barry, “In Guilty Plea, OxyContin Maker to Pay $600 Million,” The New York
Times, 10 May 2017. Web. 24 Oct. 2017.

12

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45.

Defendant Teva Pharmaceuticals USA, Inc. (“Teva USA”) is a Delaware

corporation with its principal place of business in North Wales, Pennsylvania and is a wholly
owned subsidiary of Teva Ltd. in Pennsylvania. Teva USA acquired Cephalon in October 2011.
46.

Cephalon, Inc., Teva Ltd., and Teva USA (collectively, “Cephalon”) work

together to manufacture, promote, distribute and sell both brand name and generic versions of the
opioids nationally and in Indianapolis and Marion County, including the following:
Drug Name
Actiq
Fentora

47.

Chemical Name
Fentanyl citrate
Fentanyl citrate

Schedule
Schedule II
Schedule II

Teva USA sold generic opioids, including a generic form of OxyContin from

2005 to 2009 nationally and in Indianapolis and Marion County.
48.

Defendant Johnson & Johnson (“J&J”) is a New Jersey corporation with its

principal place of business in New Brunswick, New Jersey.
49.

Defendant Janssen Pharmaceuticals, Inc. (“Janssen Pharmaceuticals”) is a

Pennsylvania corporation with is principal place of business in Titusville, New Jersey, and is a
wholly owned subsidiary of J&J.
50.

Janssen Pharmaceuticals, Inc. was formerly known as Ortho-McNeil-Janssen

Pharmaceuticals, Inc., which was formerly known as Janssen Pharmaceutica, Inc.
51.

Defendant Noramco, Inc. (“Noramco”) is a Delaware company headquartered in

Wilmington, Delaware and was a wholly owned subsidiary of J&J until July 2016.
52.

Defendant Ortho-McNeil-Janssen Pharmaceuticals, Inc. (“OMP”), now known as

Janssen Pharmaceuticals, Inc., is a Pennsylvania corporation with its principal place of business
in Titusville, New Jersey.

13

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53.

Janssen Pharmaceutica, Inc. (“Janssen Pharmaceutica”), now known as Janssen

Pharmaceuticals, Inc., is a Pennsylvania corporation with its principal place of business in
Titusville, New Jersey.
54.

J&J is the only company that owns over 10% of Janssen Pharmaceuticals stock.

J&J controls the sale and development of Janssen Pharmaceuticals drugs and Janssen
Pharmaceuticals profits inure to J&J’s benefit.
55.

J&J, Janssen Pharmaceuticals, Noramco, OMP, and Janssen Pharmaceutica

(collectively, “Janssen”) are or have been engaged in the manufacture, promotion, distribution,
and sale of opioids nationally and in Indianapolis and Marion County, including the following:
Drug Name
Duragesic
Nucynta33
Nucynta ER

56.

Chemical Name
Fentanyl
Tapentadol extended release
Tapentadol

Schedule
Schedule II
Schedule II
Schedule II

Together, Nucynta and Nucynta ER accounted for $172 million in sales in 2014.

Prior to 2009, Duragesic accounted for at least $1 billion in annual sales.
57.

Defendant Endo Health Solutions Inc. (“EHS”) is a Delaware corporation with its

principal place of business in Malvern, Pennsylvania.
58.

Defendant Endo Pharmaceuticals Inc. (“EPI”) is a wholly owned subsidiary of

EHS and is a Delaware corporation with its principal place of business in Malvern, Pennsylvania.
59.

EHS and EPU (collectively, “Endo”) manufacture, promote, distribute and sell

opioids nationally and in Indianapolis and Marion County, including the following:
Drug Name
Opana ER
33

Chemical Name
Oxymorphone hydrochloride extended release

Schedule
Schedule II

Depomed, Inc. acquired the rights to Nucynta and Nucynta ER from Janssen in 2015.

14

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Opana
Percodan
Percocet

Oxymorphone hydrochloride
Oxymorphone hydrochloride and aspirin
Oxymorphone hydrochloride and
acetaminophen

60.

Schedule II
Schedule II
Schedule II

Opioids made up roughly $403 million of Endo’s overall revenues of $3 billion in

2012. Opana ER yielded revenue of $1.15 billion from 2010 to 2013, and it accounted for 10%
of Endo’s total revenue in 2012. Opana ER was the opioid at the center of the HIV outbreak in
Indiana in 2015.34 After the outbreak, the FDA requested “that Endo Pharmaceuticals remove its
opioid pain medication, reformulated Opana ER (oxymorphone hydrochloride), from the
market.”35 The agency sought removal “based on its concern that the benefits of the drug may no
longer outweigh its risks.”36
61.

Endo also manufactures and sells generic opioids, both directly and through its

subsidiary, Qualitest Pharmaceuticals, Inc., including generic oxycodone, oxymorphone,
hydromorphone, and hydrocodone products.
62.

Defendant Mallinckrodt PLC is an Irish public limited company headquartered in

Staines-upon-Thames, United Kingdom and maintains a U.S. headquarters in St. Louis,
Missouri.
63.

Defendant Mallinckrodt, LLC is a limited liability company organized and

existing under the laws of the State of Delaware. Mallinckrodt, LLC is a wholly owned
subsidiary of Mallinckrodt, Plc. Mallinckrodt, Plc and Mallinckrodt, LLC are collectively
34

CNN Wire, “FDA wants Opioid at Center of Scott County HIV Outbreak Pulled off
Market,” Fox59.com, 9 June 2017. Web. 25 Oct. 2017.
35

FDA News Release, “FDA Requests Removal of Opana ER for Risks Related to
Abuse,” U.S. Food & Drug Administration, 8 June 2017. Web. 10 Oct. 2017.
36

Id.

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referred to as “Mallinckrodt.” Mallinckrodt is engaged in the manufacture, promotion, and
distribution of Roxicodone and Oxycodone among other drugs in Indianapolis and Marion
County.
64.

In 2017, The Department of Justice (DOJ) fined Mallinckrodt $35 million for

failure to report suspicious orders of controlled substances, including opioids, and for violating
recordkeeping requirements.37
65.

Defendant Allergan Plc is a public limited company incorporated in Ireland with

its principal place of business in Dublin, Ireland. Defendant Actavis Plc acquired Defendant
Allergan Plc in March 2015, and the combined company changed its name to Allergan Plc in
January 2013. Before that, Defendant Watson Pharmaceuticals, Inc. acquired Defendant Actavis,
Inc. in October 2012, and the combined company changed its name to Actavis, Inc. as of January
2013 and then Actavis Plc in October 2013.
66.

Defendant Watson Laboratories, Inc. is a Nevada corporation with its principal

place of business in Corona, California, and is a wholly-owned subsidiary of Defendant Allergan
Plc (f/k/a Actavis, Inc., f/k/a Watson Pharmaceuticals, Inc.). Defendant Actavis Pharma, Inc.
(f/k/a Actavis, Inc.) is a Delaware corporation with its principal place of business in New Jersey
and was formerly known as Watson Pharma, Inc. Defendant Actavis LLC is a Delaware limited
liability company with its principal place of business in Parsippany, New Jersey. Each of these
defendants is owned by Defendant Allergan Plc, which uses them to market and sell its drugs in
the United States. Defendant Allergan Plc exercises control over these marketing and sales
efforts and profits from the sale of Allergan/Actavis products ultimately inure to its benefit.
37

Press Release, “Mallinckrodt Agrees to Pay Record $35 Million Settlement for Failure
to Report Suspicious Orders of Pharmaceutical Drugs and for Recordkeeping Violations,” U.S.
Dept. of Justice, 11 July 2017. Web. 16 Sept. 2017.

16

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Allergan Plc, Actavis Plc, Actavis, Inc., Actavis LLC, Actavis Pharma, Inc., Watson
Pharmaceuticals, Inc., Watson Pharma, Inc., and Watson Laboratories, Inc. are referred to as
“Actavis.”
67.

Actavis manufactures, promotes, sells, and distributes opioids, including the

branded drugs Kadian and Norco, a generic version of Kadian, and generic versions of Duragesic
and Opana in the United States. Actavis acquired the rights to Kadian from King
Pharmaceuticals, Inc. on December 30, 2008, and began marketing Kadian in 2009.
68.

Defendant AmerisourceBergen Drug Corporation (“AmerisourceBergen”) is a

Delaware corporation with its principal place of business located in Chesterbrook, Pennsylvania.
AmerisourceBergen is the second largest pharmaceutical distributor in North America.
AmerisourceBergen does substantial business in the State of Indiana where it distributes
pharmaceuticals in Indianapolis and Marion County.
69.

Defendant Cardinal Health, Inc. (“Cardinal” or “Cardinal Health”) is an Ohio

Corporation with its principal place of business in Dublin, Ohio. In 2013, Cardinal paid a $34
million fine for failing to report suspicious orders of controlled substances. Cardinal does
substantial business in the State of Indiana where it distributes pharmaceuticals in Indianapolis
and Marion County.
70.

Defendant McKesson Corporation (“McKesson”) is a Delaware Corporation with

its principal place of business located in San Francisco, California. McKesson is the largest
pharmaceutical distributor in North America. McKesson delivers approximately one-third of all
pharmaceuticals used in North America. McKesson does substantial business in Indiana where it
distributes pharmaceuticals in Indianapolis and Marion County.

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FACTUAL ALLEGATIONS
I.

Opioids Are Addictive.
71.

The pain-relieving properties of opium have long been recognized. So has the

magnitude of its potential for abuse and addiction. Opioids are related to illegal drugs like opium
and heroin.
72.

During the Civil War, opioids gained popularity among doctors and pharmacists

for their ability to reduce anxiety and relieve pain – particularly on the battlefield – and they
were popularly used in a wide variety of commercial products ranging from pain elixirs to cough
suppressants to beverages. 38 By 1900, about 300,000 people were addicted to opioids in the
United States,39 and many doctors prescribed opioids solely to avoid patients’ withdrawal.
73.

Both the numbers of opioid addicts and the difficulty in weaning patients from

opioids made clear their highly addictive nature. “By the 1920s, doctors were aware of the highly
addictive nature of opioids and tried to avoid treating patients with them.”40
74.

Due to concerns about their addictive properties, opioids have been regulated at

the federal level as controlled substances by the U.S. Drug Enforcement Administration (“DEA”)
since 1970.
75.

“By the mid- and late-1970s . . . doctors had long been taught to avoid prescribing

highly addictive opioids to patients.”41 Studies and articles from the 1970s and 1980s made clear
38

Moghe, Sonia, “Opioid History: From ‘Wonder Drug’ to Abuse Epidemic, CNN.com,
Cable News Network, 14 Oct. 2016. Web. 24 Oct. 2017.
39

Substance Abuse and Mental Health Services Administration, Medication-Assisted
Treatment for Opioid Addiction in Opioid Treatment Programs, Treatment Improvement Protocol
(TIP Services), No. 43 (2005).
40

Moghe, Sonia, “Opioid History: From ‘Wonder Drug’ to Abuse Epidemic, CNN.com,
Cable News Network, 14 Oct. 2016. Web. 24 Oct. 2017.

18

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the reasons to avoid opioids. Scientists observed negative outcomes from long-term opioid
therapy in pain management programs; opioids’ mixed record in reducing pain long-term and
failure to improve patients’ function; greater pain complaints as most patients developed
tolerance to opioids; opioid patients’ diminished ability to perform basic tasks; their inability to
make use of complementary treatments like physical therapy due to the side effects of opioids;
and addiction. Leading authorities discouraged, or even prohibited, using opioid therapy for
chronic pain.
76.

In 1986, Dr. Portenoy, who later became Chairman of the Department of Pain

Medicine and Palliative Care at Beth Israel Medical Center in New York while serving as a top
spokesperson for drug companies, published an article reporting that “[f]ew substantial gains in
employment or social function could be attributed to the institution of opioid therapy.”42
77.

Writing in 1994, Dr. Portenoy described the prevailing attitudes regarding the

dangers of long-term use of opioids:
The traditional approach to chronic non-malignant pain does not accept the longterm administration of opioid drugs. This perspective has been justified by the
perceived likelihood of tolerance, which would attenuate any beneficial effects
over time, and the potential for side effects, worsening disability, and addiction.
According to conventional thinking, the initial response to an opioid drug may
appear favorable, with partial analgesia and salutary mood changes, but adverse
effects inevitably occur thereafter. It is assumed that the motivation to improve
function will cease as mental clouding occurs and the belief takes hold that the
drug can, by itself, return the patient to a normal life. Serious management
problems are anticipated, including difficulty in discontinuing a problematic
therapy and the development of drug seeking behavior induced by the desire to
maintain analgesic effects, avoid withdrawal, and perpetuate reinforcing psychic

41

Id.

42

Portenoy, R. & Foley, K . , “ Chronic Use of Opioid Analgesics in Non-Malignant
Pain: Report of 38 cases,” 25(2) Pain 171 (1986).

19

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effects. There is an implicit assumption that little separates these outcomes from
the highly aberrant behaviors associated with addiction.43
According to Dr. Portenoy, the foregoing problems could constitute “compelling reasons to
reject long-term opioid administration as a therapeutic strategy in all but the most desperate cases
of chronic nonmalignant pain.”44
78.

For all the reasons outlined by Dr. Portenoy, and in the words of one researcher

from the University of Washington in 2012, and quoted by a Harvard researcher the same year,
“it did not enter [doctors’] minds that there could be a significant number of chronic pain patients
who were successfully managed with opioids, because if there were any, we almost never saw
them.”45
79.

Discontinuing opioids after more than just a few weeks of therapy will cause most

patients to experience withdrawal symptoms. These withdrawal symptoms include: severe
anxiety, nausea, vomiting, headaches, agitation, insomnia, tremors, hallucinations, delirium,
pain, and other serious symptoms, which may persist for months after a complete withdrawal
from opioids, depending on how long the opioids were used.46
80.

When under the continuous influence of opioids over time, patients grow tolerant

to their analgesic effects. As tolerance increases, a patient typically requires progressively higher

43

Portenoy, R., “Opioid Therapy for Chronic Nonmalignant Pain: Current Status,” 1
Progress in Pain Res. & Mgmt., 247-287 (H.L. Fields and J.C. Liebeskind eds., 1994) (emphasis
added).
44

Id.

45

Loeser, J., “Five Crises in Pain Management, Pain Clinical Updates,” 2012; 20 (1):1–4
(cited by I. Kissin, Long-term opioid treatment of chronic nonmalignant pain: unproven efficacy
and neglected safety?, 6 J. Pain Research 513, 514 (2013)).
46

“Health Guide: Opiate Withdrawal,” The New York Times. Web. 24 Oct. 2017.

20

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doses to obtain the same levels of pain reduction to which he has become accustomed – up to and
including doses that are “frighteningly high.”47 At higher doses, the effects of withdrawal are
more substantial leaving a patient at a much higher risk of addiction. A patient can take the
opioids at the continuously escalating dosages to match pain tolerance and still overdose at
recommended levels.
81.

Opioids vary by duration. Long-acting opioids, such as Purdue’s OxyContin and

MS Contin, Janssen’s Nucynta ER and Duragesic, Endo’s Opana ER, and Actavis’s Kadian, are
designed to be taken once or twice daily and are purported to provide continuous opioid therapy
for, in general, 12 hours. Short-acting opioids, such as Cephalon’s Actiq and Fentora, are
designed to be taken in addition to long-acting opioids to address “episodic pain” and provide
fast-acting, supplemental opioid therapy lasting approximately 4 to 6 hours.
82.

In 2013, the FDA warned of the “grave risks” of opioids, including “addiction,

overdose, and even death.” The FDA further warned, “[e]ven proper use of opioids under
medical supervision can result in life- threatening respiratory depression, coma, and death.”
Because of those grave risks, the FDA said that long-acting or extended release opioids “should
be used only when alternative treatments are inadequate.”48
83.

The facts on which the FDA relied were well known to Manufacturer Defendants

in the 1990s when their deceptive marketing began.

47

Katz, M., “Long-term Opioid Treatment of Nonmalignant Pain: A Believer Loses His
Faith,” 170(16) Archives of Internal Med. 1422 (2010).
48

Letter from Janet Woodcock, M.D., Dir., Ctr. For Drug Eval. & Res., to Andrew
Kolodny, M.D., Pres. Physicians for Responsible Opioid Prescribing, Re Docket No. FDA2012-P-0818 (Sept. 10, 2013) (emphasis in original).

21

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II.

No Scientific Evidence Supports Long Term Use of Opioids.
84.

There is no scientific evidence supporting the safety or efficacy of opioids for

long-term use.49 Manufacturer Defendants are aware of the lack of such scientific evidence.
While promoting opioids to treat chronic pain, Manufacturer Defendants failed to disclose the
lack of evidence to support their use long-term and have failed to disclose the substantial
scientific evidence that chronic opioid therapy makes patients sicker.
85.

There are no controlled studies of the use of opioids beyond 12 weeks, and no

evidence that opioids improve patients’ pain and function long-term.50 A 2007 systematic review
of opioids for back pain concluded that opioids have limited, if any, efficacy for back pain and
that evidence did not allow judgments regarding long- term use.51
86.

Substantial evidence exists that opioid drugs are ineffective to treat chronic pain,

and actually worsen patients’ health. A 2006 study-of-studies found that opioids as a class did
not demonstrate improvement in functional outcomes over other non-addicting treatments.52
49

See, e.g., S. Quinones, Dreamland 92 (2015) (noting that researchers other than
Manufacturer Defendants’ KOLs “had been issuing papers saying that many chronic-pain
patients using opiate invariably ended up addicted”).
50

See, e.g., Dowell, Deborah MD et al., “CDC Guideline for Prescribing Opioids for
Chronic Pain,” Centers for Disease Control and Prevention, 18 Mar. 2016. Web. 24 Oct. 2017.
51

Martell, BA. et al., “Systematic Review: Opioid Treatment for Chronic Back Pain:
Prevalence, Efficacy, and Association with Addiction,” Ann Intern Med. 2007 Jan
16;146(2):116-27.
52

Furlan, AD. et al., “Opioids for Chronic Noncancer Pain: a Meta-Analysis of
Effectiveness and Side Effects,” CMAJ. 2006 May 23;174(11):1589-94. This same study
revealed that efficacy studies do not typically include data on opioid addiction. In many cases,
patients who may be more prone to addiction are pre-screened out of the study pool. This does
not reflect how doctors actually prescribe the drugs, because even patients who have past or
active substance use disorders tend to receive higher doses of opioids. See Seal, Karen et al.,
“Association of Mental Health Disorders with Prescription Opioids and High- Risk Opioids in
US Veterans of Iraq and Afghanistan,” JAMA. 2012;307(9):940-947.

22

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87.

Increasing duration of opioid use is strongly associated with an increasing

prevalence of mental health conditions (including depression, anxiety, post-traumatic stress
disorder, or substance abuse), increased psychological distress, and greater health care
utilization.53
88.

While opioids may work acceptably well for a while, when used on a long term

basis, patient function declines, as does general health, mental health, and social function. Over
time, even high doses of potent opioids often fail to control pain, and patients exposed to such
doses cannot function normally.54
89.

Studies of the use of opioids long-term for chronic lower back pain cannot

demonstrate an improvement in patients’ function. Instead, research consistently shows that
long-term opioid therapy for patients who have lower back injuries does not cause patients to
return to work or physical activity. This is due partly to addiction and other side effects. 55
III.

Manufacturer Defendants’ Scheme to Realize Blockbuster Profits.
90.

Before Manufacturer Defendants began the marketing campaign that is the subject

of this complaint, generally accepted standards of medical practice dictated that opioids should
only be used short-term, for instance, for acute pain, pain relating to recovery from surgery, or
for cancer or palliative care.

53

“Effects of Opioid Abuse on Your Mental Health,” Disorders.org. Web. 24 Oct. 2017.

54

See Rubenstein, Andrea, “Are we Making Pain Patients Worse?” Sonoma Medicine.
Web. 25 Oct. 2017.
55

Freud, J. et al., “How Effective are Opioids for Chronic Low Back Pain?,” J. Fam.
Pract., 64(9):584-585 (Sept. 2015).

23

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91.

Manufacturer Defendants promoted that pain should be treated by taking long-

acting opioids continuously and supplementing them by also taking short-acting, rapid- onset
opioids for episodic pain.
92.

“For generations, physicians have been taught that opioid painkillers are highly

addictive and should be used sparingly and primarily in patients near death.”56
93.

The market for short-term pain relief, however, is significantly more limited than

the market for long-term chronic pain relief. Manufacturer Defendants recognized that if they
could sell opioids not just for short term pain relief but also for long-term chronic pain relief,
they could achieve blockbuster levels of sales and their profits:
From the start, Purdue promoted OxyContin far beyond the cancer and
postsurgical patients . . . The company aimed to convince doctors to aggressively
treat noncancer pain, and prescribe OxyContin for moderate pain lasting more
than a few days. OxyContin ought to be used for bad backs, knee pain, tooth
extraction, headaches, fibromyalgia, as well as football, hockey, and dirt-bike
injuries, broken bones, and, of course, after surgery. This was a vast new market
for an opiate painkiller. U.S. back pain patients alone numbered some thirtyfive million people; the total number of cancer patients was a fifth of that.57
94.

Cephalon promoted its Actiq for migraines, sickle-cell pain, and injuries, although

the FDA had approved its use only for cancer pain.58 Cephalon pled guilty to a criminal violation
of the Federal Food, Drug and Cosmetic Act for its misleading promotion of Actiq and two other
drugs, and agreed to pay $425 million.59
56

Ryan, H. et al., “OxyContin goes Global––‘We’re only just getting started’,” The Los
Angeles Times, 18 Dec. 2016. Web. 24 Oct. 2017.
57

S. Quinones, Dreamland 126–27 (2015).

58

J. Temple, American Pain 49 (2015).

59

Press Release, “Biopharmaceutical Company, Cephalon, to Pay $425 Million & Enter
Plea to Resolve Allegations of Off-Label Marketing,” U.S. Dept. of Justice, 29 Sept. 2008.
Web. 24 Oct. 2017.
24

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95.

Janssen promoted its Ultracet for everyday chronic pain, distributing posters to

doctor’s offices that showed people in active professions with the tagline “Pain doesn’t fit their
schedules.”60
96.

Endo, maker of Opana, Percocet, and Percodan, distributed a patient education

publication that said withdrawal symptoms and increased tolerance to opioids are not the same as
addiction: “Addicts take opioids for other reasons, such as unbearable emotional problems.”61
97.

Internal Purdue documents show that OxyContin was developed to cure its

financial problems. In the late 1980s, the patent on its main source of revenue, a morphine pill
for cancer patients call MS Contin, was running out. Executives “anticipated a massive loss of
revenue as generic versions drove down the price of MS Contin” so a 1990 memo stated that
“other controlled-release opioids must be considered.”62 It certainly worked––the success of
OxyContin brought a whole new level of wealth to the Sackler family that owns Purdue. Forbes
magazine last year estimated the Sacklers’ worth at $14 billion, which put the family ahead of
American dynasties such as the Mellons and Rockefellers.63
98.

Manufacturer Defendants knew that to increase their profits from the sale of

opioids they would need to convince doctors and patients that long-term opioid therapy was safe
and effective. Manufacturer Defendants needed to persuade physicians to abandon their long-

60

J. Temple, American Pain 49 (2015).

61

Id.

62

Ryan, Harriet, et al., “‘You want a Description of Hell?’ Oxycontin’s 12-Hour
Problem,” The Los Angeles Times, 5 May 2016. Web. 25 Oct. 2017.
63

Id.

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held apprehensions about prescribing opioids, and instead to prescribe opioids for durations
previously understood to be unsafe.
99.

An internal Purdue document admits that the company did “not want to niche

OxyContin just for cancer pain,” so it spent $207 million on the launch of OxyContin and
doubled its sales force to 600.64
100.

Manufacturer Defendants knew that their goal of increasing profits by promoting

the prescription of opioids for chronic pain would lead directly to an increase in health care costs
for patients, health care insurers, and cities and counties.
101.

Marshalling help from consultants and public relations firms, Manufacturer

Defendants developed and executed a common strategy to reverse the long-settled understanding
of the relative risks and benefits of chronic opioid therapy. Unable to add to the collective body
of legitimate medical knowledge concerning the best ways to treat pain and improve patient
quality of life, however, Manufacturer Defendants instead sought to distort medical and public
perception of existing scientific data.
102.

Manufacturer Defendants, collectively and individually, poured vast sums of

money into generating articles, continuing medical education courses (“CMEs”), and other
“educational” materials, conducting sales visits to individual doctors, and supporting a network
of professional societies and advocacy groups, which was intended to, and which did, create a
new but fake “consensus” supporting the long-term use of opioids.

64

Id.

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IV.

Manufacturer Defendants Use “Unbranded” Marketing to Evade Laws and
Regulations.
103.

Drug companies’ promotional activity can be branded or unbranded; unbranded

marketing refers not to a specific drug, but more generally to a disease state or treatment. By
using unbranded communications, drug companies can evade the extensive regulatory
framework governing branded communications because unbranded advertising isn’t regulated by
the FDA.65
104.

The federal Food, Drug, and Cosmetic Act (“FDCA”) prohibits the sale in

interstate commerce of drugs that are “misbranded.” A drug is “misbranded” if it lacks “adequate
directions for use” or if the label is false or misleading “in any particular.”
105.

Manufacturer Defendants generally avoided using branded advertisements to

spread their deceptive messages and claims regarding opioids to evade regulatory review.
106.

Instead, Manufacturer Defendants disseminated much of their false, misleading,

imbalanced, and unsupported statements through unregulated, unbranded marketing materials –
materials that generally promoted opioid use but did not name a specific opioid while doing so.
Through these unbranded materials, Manufacturer Defendants presented information and
instructions concerning opioids generally that were false and misleading.
107.

By acting through third parties, Manufacturer Defendants could give the false

appearance that their messages reflected the views of independent third parties. Later,
Manufacturer Defendants cited to these sources as “independent” corroboration of their own
65

See, e.g., In re Testosterone Replacement Therapy Prod. Liab. Litig. Coordinated
Pretrial Proceedings, No. 14 C 1748, 2017 WL 1836443, 92 UCC Rep. Serv. 2d 729 (N.D. Ill.
May 8, 2017) (“Unbranded advertisements do not require FDA review because the FDA
considers unbranded advertisements educational rather than promotional”).

27

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statements. Further, as one physician adviser to Manufacturer Defendants noted, third-party
documents had not only greater credibility, but also broader distribution, as doctors did not “push
back” at having materials, for example, from the non-profit American Pain Foundation (“APF”)
on display in their offices, as they would with drug company materials.
108.

As part of their marketing scheme, Manufacturer Defendants spread and validated

their deceptive messages through the following unbranded scheme (“the Unbranded Scheme”):
(i) so-called “key opinion leaders” (i.e., physicians who influence their peers’ medical practice,
including but not limited to prescribing behavior) (“KOLs”), who wrote favorable journal
articles and delivered supportive CMEs; (ii) a body of biased and unsupported, purportedly
scientific, literature; (iii) treatment guidelines; (iv) CMEs; and (v) unbranded patient education
materials disseminated through groups purporting to be patient-advocacy and professional
organizations (“Front Groups”), which exercised their influence both directly and indirectly
through Defendant-controlled KOLs who served in leadership roles in these organizations.
109.

Manufacturer Defendants disseminated many of their false, misleading,

imbalanced and unsupported messages through the Unbranded Scheme because those messages
appeared to uninformed observers to be independent. Through unbranded materials,
Manufacturer Defendants presented information and instructions concerning opioids generally
that were false and misleading.
110.

Even where such unbranded messages were disseminated through third-parties,

Manufacturer Defendants adopted these messages as their own when they cited to, edited,
approved, and distributed such materials knowing they were false, misleading, unsubstantiated,
unbalanced, and incomplete. Manufacturer Defendants’ sales representatives distributed thirdparty marketing material to Manufacturer Defendants’ target audience that was deceptive.

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111.

Manufacturer Defendants took an active role in guiding, reviewing, and approving

many of the misleading statements issued by third parties, ensuring that Manufacturer
Defendants were consistently in control of their content. By funding, directing, editing, and
distributing these materials, Manufacturer Defendants exercised control over their deceptive
messages and acted in concert with these third parties fraudulently to promote the use of opioids
for the treatment of to treat chronic pain.
112.

The unbranded marketing materials that Manufacturer Defendants assisted in

creating and distributing did not disclose the risks of addiction, abuse, misuse, and overdose, and
affirmatively denied or minimized those risks.
113.

In 2007, multiple States sued Purdue for engaging in unfair and deceptive

practices in its marketing, promotion, and sale of OxyContin. Certain states settled their claims
in a series of Consent Judgments that prohibited Purdue from making misrepresentations in the
promotion and marketing of OxyContin in the future. By using indirect and unbranded marketing
strategies, however, Purdue intentionally circumvented these restrictions.
A.

Manufacturer Defendants’ KOLs.

114.

After Purdue launched OxyContin in the U.S. in 1996, the company ran training

seminars for KOLs in the pain field. Doctors were invited to all-expenses paid weekends in
resort locations like Boca Raton, Florida, and Scottsdale, Arizona. The company found that
doctors who attended seminars in 1996 wrote more than twice as many prescriptions as those
who didn’t, according to a company analysis.66 Several thousand of these specialists signed on to

66

Ryan, H. et al., “OxyContin goes Global––‘We’re only just getting started’,” The Los
Angeles Times, 18 Dec. 2016. Web. 24 Oct. 2017.

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the Purdue “speakers bureau,” which paid them to make speeches about opioids at medical
conferences and at hospitals.
115.

All Manufacturer Defendants cultivated a select circle of doctors chosen and

sponsored by Manufacturer Defendants solely because they favored the aggressive treatment of
chronic pain with opioids. Pro-opioid doctors have been at the hub of Manufacturer Defendants’
promotional efforts, presenting the appearance of unbiased and reliable medical research
supporting the broad use of opioid therapy for chronic pain. These pro-opioid doctors have
written, consulted on, edited, and lent their names to books and articles, and given speeches and
CMEs supportive of opioid therapy for chronic pain. They have served on committees that
developed treatment guidelines that strongly encouraged the use of opioids to treat chronic pain
and on the boards of purportedly independent pro-opioid advocacy groups and professional
societies that develop, select, and present CMEs. Manufacturer Defendants were able to exert
control of each of these modalities through their KOLs.
116.

In return for their pro-opioid advocacy, Manufacturer Defendants’ KOLs received

money, prestige, recognition, research funding, and avenues to publish.
117.

Manufacturer Defendants cited and promoted their KOLs and studies or articles

by their KOLs to broaden the chronic opioid therapy market. By contrast, Manufacturer
Defendants did not support, acknowledge, or disseminate the publications of doctors critical of
using chronic opioid therapy.
118.

Manufacturer Defendants carefully vetted their KOLs to ensure that they were

likely to remain on-message and supportive of their agenda. Manufacturer Defendants also kept
close tabs on the content of the materials published by these KOLs.

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119.

In their promotion of using opioids to treat chronic pain, Manufacturer

Defendants’ KOLs knew that their statements were false and misleading, or they recklessly
disregarded the truth, but they continued to publish their misstatements to benefit themselves and
Manufacturer Defendants.
B.

Manufacturer Defendants’ Corrupt Scientific Literature.

120.

Rather than test the safety and efficacy of opioids for long- term use,

Manufacturer Defendants led physicians, patients, and the public to believe that such tests had
already been done. Manufacturer Defendants created a body of false, misleading, and
unsupported medical and popular literature about opioids that (a) understated the risks and
overstated the benefits of long-term use; (b) appeared to result from independent, objective
research; and (c) was likely to shape the perceptions of prescribers, patients, and payors. This
literature was marketing material intended to persuade doctors and consumers that the benefits of
long- term opioid use outweighed the risks.
121.

To accomplish their goal, Manufacturer Defendants—sometimes through third-

party consultants and/or front groups—commissioned, edited, and arranged for the placement of
favorable articles in academic journals.
122.

Manufacturer Defendants’ plans for these materials did not originate in the

departments responsible for research, development, or any other area that would have specialized
knowledge about the drugs and their effects on patients; rather, they originated in Manufacturer
Defendants’ marketing departments and with Manufacturer Defendants’ marketing and public
relations consultants.
123.

In these materials, Manufacturer Defendants (or their surrogates) often claimed to

rely on “data on file” or presented posters, neither of which are subject to peer review. Still,
Manufacturer Defendants presented these materials to the medical community as scientific
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articles or studies, although Manufacturer Defendants’ materials were not based on reliable data
and subject to the scrutiny of experts in the field.
124.

Manufacturer Defendants also made sure that favorable articles were

disseminated and cited widely in the medical literature, even when Manufacturer Defendants
knew that the articles distorted the significance or meaning of the underlying study.
125.

Most notably, Purdue frequently cited a 1980 item in the well-respected New

England Journal of Medicine, J. Porter & H. Jick, Addiction Rare in Patients Treated with
Narcotics, 302 (2) New Eng. J. Med. 123 (1980) (“Porter & Jick Letter”), in a manner that makes
it appear that the item reported the results of a peer reviewed study. It is also cited in two CME
programs sponsored by Endo.
126.

Manufacturer Defendants and those acting on their behalf failed to reveal this

“article” is actually a letter to the editor, not a study, much less a peer-reviewed study. The oneparagraph letter, reproduced in full below, states that the authors only examined their files of
hospitalized patients who had received opioids.

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127.

The patients referred to in the letter were all treated prior to the letter, which was

published in 1980. Because of standards of care prior to 1980, the treatment of those patients
with opioids would have been limited to acute or end-of-life situations, not chronic pain. The
letter notes that, when these patients' records were reviewed, the authors found almost no
references to signs of addiction, though there is no indication that caregivers were instructed to
look for, assess, or document signs of addiction. Nor is there any indication whether the patients
were followed after they were discharged from the hospital or, if they were, for how long. None
of these serious limitations was disclosed when Manufacturer Defendants and those acting on
their behalf cited the letter, typically as the sole scientific support for the proposition that opioids
are rarely addictive.
128.

“That single paragraph, buried in the back pages of the New England Journal of

Medicine, was mentioned, lectured on, and cited until it emerged transformed into, in the words
of one textbook, a ‘landmark report’ that ‘did much to counteract’ fears of addiction in pain
patients treated with opiates.”67
129.

Dr. Jick has complained that his letter has been distorted and misused. Dr. Jick

states that the letter “does not speak to the level of addiction in outpatients who take these drugs
for chronic pain.”68
130.

Manufacturer Defendants worked to not only create and promote favorable

studies in the literature, but to discredit or suppress negative information. Manufacturer
Defendants’ studies and articles often targeted articles that contradicted Manufacturer
Defendants’ claims or raised concerns about chronic opioid therapy. To do so, Manufacturer
67

S. Quinones, Dreamland 108 (2015).

68

Id. (emphasis in original).

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Defendants – often with the help of third- party consultants – used a broad range of media to get
their message out, including negative review articles, letters to the editor, commentaries, casestudy reports, and newsletters.
131.

Manufacturer Defendants’ strategy – to plant and promote supportive literature

and then to cite the pro-opioid evidence in their promotional materials, while failing to disclose
evidence that contradicted those claims – flatly contradicted their legal obligations. The strategy
was intended to, and did, distort prescribing patterns by distorting the truth regarding the risks
and benefits of opioids for chronic pain relief.
C.

Manufacturer Defendants’ Misuse of Treatment Guidelines.

132.

Treatment guidelines have been particularly important in securing acceptance for

chronic opioid therapy. They are relied upon by doctors, especially the general practitioners and
family doctors targeted by Manufacturer Defendants, who are generally not experts, and who
generally have no special training, in the treatment of chronic pain. Treatment guidelines not
only directly inform doctors’ prescribing practices, but also are cited throughout scientific
literature and relied on by third-party payors in determining whether they should pay for
treatments for specific indications.
1.

FSMB

133.

The Federation of State Medical Boards (“FSMB”) is a trade organization

representing the various state medical boards in the United States. The state boards that comprise
the FSMB membership have the power to license doctors, investigate complaints, and discipline
physicians. The FSMB finances opioid- and pain-specific programs through grants from
Manufacturer Defendants.
134.

Since 1998, the FSMB has been developing treatment guidelines for using opioids

to treat pain. The 1998 version, Model Guidelines for the Use of Controlled Substances for the
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Treatment of Pain (“1998 Guidelines”) was produced “in collaboration with pharmaceutical
companies” and taught not that opioids could be appropriate in limited cases after other
treatments had failed, but that opioids were “essential” for treatment of chronic pain, including as
a first prescription option.
135.

A 2004 iteration of the 1998 Guidelines and the 2007 book, Responsible Opioid

Prescribing, also made the same claims as the 1998 Guidelines. These guidelines were posted
online and were available to and intended to reach physicians nationwide, including in
Indianapolis and Marion County.
136.

The publication of Responsible Opioid Prescribing was backed largely by drug

manufacturers. 163,131 copies of Responsible Opioid Prescribing were distributed by state
medical boards (and through the boards, to practicing doctors). The FSMB website describes the
book as the “leading continuing medication (CME) activity for prescribers of opioid
medications.”
137.

Manufacturer Defendants relied on 1998 Guidelines to convey the alarming

message that “under-treatment of pain” would result in official discipline, but no discipline
would result if opioids were prescribed as part of an ongoing patient relationship and prescription
decisions were documented. FSMB turned doctors’ fear of discipline on its head: doctors, who
used to believe that they would be disciplined if their patients became addicted to opioids, were
taught instead that they would be punished if they failed to prescribe opioids to their patients
with chronic pain.
2.

AAPM/APS Guidelines

138.

American Academy of Pain Medicine (“AAPM”) and the American Pain Society

(“APS”) are professional medical societies, each of which received substantial funding from
Manufacturer Defendants from 2009 to 2013. In 1997, AAPM issued a “consensus” statement
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that endorsed opioids to treat chronic pain and claimed that the risk that patients would become
addicted to opioids was low.69 The Chair of the committee that issued the statement, Dr. J. David
Haddox, was at the time a paid speaker for Purdue. The sole consultant to the committee was Dr.
Portenoy. The consensus statement, which also formed the foundation of the 1998 Guidelines,
was published on the AAPM’s website.
139.

AAPM and APS issued their own guidelines in 2009 (“2009 Guidelines”) and

continued to recommend the use of opioids to treat chronic pain. Fourteen of the 21 panel
members who drafted the 2009 Guidelines, including KOLs Dr. Portenoy and Dr. Fine, received
financial support from Manufacturer Defendants Janssen, Cephalon, Endo, and Purdue.
140.

The 2009 Guidelines promote opioids as “safe and effective” for treating chronic

pain and conclude that the risk of addiction is manageable for patients regardless of past abuse
histories. The 2009 Guidelines have been a particularly effective channel of deception and have
influenced not only treating physicians, but also the body of scientific evidence on opioids; they
were reprinted in the Journal of Pain, have been cited hundreds of times in academic literature,
were disseminated in Indianapolis and Marion County during the relevant time period, and were
and are available online.
141.

Manufacturer Defendants widely cited and promoted the 2009 Guidelines without

disclosing the lack of evidence to support their conclusions.

69

“The Use of Opioids for the Treatment of Chronic Pain,” American Academy of Pain
Medicine & American Pain Society (1997). Web. 25 Oct. 2017.

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3.

Guidelines Not Supported by Manufacturer Defendants

142.

The extent of Manufacturer Defendants’ influence on treatment guidelines is

demonstrated because independent guidelines – the authors of which did not accept drug
company funding – reached very different conclusions.
143.

The 2012 Guidelines for Responsible Opioid Prescribing in Chronic Non- Cancer

Pain, issued by the American Society of Interventional Pain Physicians (“ASIPP”), warned that
“[t]he recent revelation that the pharmaceutical industry was involved in the development of
opioid guidelines as well as the bias observed in the development of many of these guidelines
illustrate that the model guidelines are not a model for curtailing controlled substance abuse and
may, in fact, be facilitating it.” ASIPP’s Guidelines further advise that “therapeutic opioid use,
specifically in high doses over long periods of time in chronic non-cancer pain starting with
acute pain, not only lacks scientific evidence, but is in fact associated with serious health risks
including multiple fatalities, and is based on emotional and political propaganda under the guise
of improving the treatment of chronic pain.” ASIPP recommends long-acting opioids in high
doses only “in specific circumstances with severe intractable pain” and only when coupled with
“continuous adherence monitoring, in well-selected populations, in conjunction with or after
failure of other modalities of treatments with improvements in physical and functional status and
minimal adverse effects.”70
144.

Similarly, the 2011 Guidelines for the Chronic Use of Opioids, issued by the

American College of Occupational and Environmental Medicine, recommend against the

70

Manchikanti, L. et al., “American Society of Interventional Pain Physicians (ASIPP)
Guidelines for Responsible Opioid Prescribing in Chronic Non-Cancer Pain: Part 1, Evidence
Assessment,” 15 Pain Physician (Special Issue) S1-S66; Part 2 – Guidance, 15 Pain Physician
(Special Issue) S67-S116 (2012).

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“routine use of opioids in the management of patients with chronic pain,” finding “at least
moderate evidence that harms and costs exceed benefits based on limited evidence.”71
145.

The Clinical Guidelines on Management of Opioid Therapy for Chronic Pain,

issued by the U.S. Department of Veterans Affairs (“VA”) and Department of Defense (“DOD”)
in 2010, notes the lack of solid evidence-based research on the efficacy of long-term opioid
therapy.72

D.

Manufacturer Defendants’ Misuse of CMEs.

146.

Doctors must attend a certain number and, often, type of CME programs each

year as a condition of their licensure. These programs are delivered in person, often in
connection with professional organizations’ conferences, and online, or through written
publications. Doctors rely on CMEs not only to satisfy licensing requirements, but also to get
information on new developments in medicine or to deepen their knowledge in specific areas of
practice. Because CMEs typically are taught by KOLs highly respected in their fields, and are
thought to reflect these physicians’ medical expertise, they can be especially influential with
doctors.
147.

The countless doctors and other health care professionals who participate in

accredited CMEs constitute an enormously important audience for opioid reeducation. As one
target, Manufacturer Defendants aimed to reach general practitioners, whose broad area of
practice and lack of expertise and specialized training in pain management made them

71

“Guidelines for the Chronic Use of Opioids,” American College of Occupational and
Environmental Medicine (ACOEM), 2011.
72

“VA/DoD Clinical Practice Guideline for Management of Opioid Therapy for Chronic
Pain,” The Dept. of Veterans Affairs and The Dept. of Defense, p. 5, May 2010.

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particularly dependent upon CMEs and especially susceptible to Manufacturer Defendants’
deceptions.
148.

Manufacturer Defendants sponsored CMEs delivered thousands of times,

promoting chronic opioid therapy and supporting and disseminating the deceptive and biased
messages described in this Complaint. These CMEs, while often generically titled to relate to the
treatment of chronic pain, focus on opioids to the exclusion of alternative treatments, inflate the
benefits of opioids, and frequently omit or downplay their risks and adverse effects.
149.

The American Medical Association (“AMA”) has recognized that support from

drug companies with a financial interest in the content being promoted “creates conditions in
which external interests could influence the availability and/or content” of the programs and
urges that “[w]hen possible, CME[s] should be provided without such support or the
participation of individuals who have financial interests in the education subject matter.”73
150.

Physicians from Indianapolis and Marion County attended or reviewed

Manufacturer Defendants’ sponsored CMEs during the relevant time period and were misled by
them.
151.

By sponsoring CME programs put on by Front Groups like APF, AAPM and

others, Manufacturer Defendants gained messages favorable to them, as these organizations
depended on Manufacturer Defendants for other projects. The sponsoring organizations hired
pro-opioid KOLs to give talks that supported chronic opioid therapy. Defendant-driven content
in these CMEs had a direct and immediate effect on prescribers’ views on opioids. Producers of
CMEs and Manufacturer Defendants measure the effects of CMEs on prescribers’ views on
73

“Opinion 9.0115 - Financial Relationships with Industry in CME, American Medical
Association (AMA), Nov. 2011.

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opioids and their absorption of specific messages, confirming the strategic marketing purpose in
supporting them.
E.

Manufacturer Defendants’ Misuse of Patient Education Materials and Front
Groups.

152.

Pharmaceutical industry marketing experts see patient-focused advertising,

including direct-to-consumer marketing, as particularly valuable in “increas[ing] market share . .
. by bringing awareness to a particular disease that the drug treats.”74 The United States and New
Zealand are the only two developed nations that permit direct-to-consumer marketing.75
Physicians are more likely to prescribe a drug if a patient specifically requests it, and physicians’
willingness to acquiesce to such patient requests holds true even for opioids and for conditions
for which they are not approved.76 Recognizing this phenomenon, Manufacturer Defendants use
relationships with Front Groups to engage in largely unbranded patient education about opioid
treatment for chronic pain.
153.

Manufacturer Defendants entered into arrangements with numerous Front Groups

to promote opioids. These organizations depend upon Manufacturer Defendants for significant
funding and, sometimes, for their survival. They were involved not only in generating materials
and programs for doctors and patients that supported chronic opioid therapy, but also in assisting
Manufacturer Defendants’ marketing in other ways—for example, responding to negative
74

Johar, Kanika, “An Insider’s Perspective: Defense of the Pharmaceutical Industry’s
Marketing Practices,” 76 Albany L. Rev. 299, 308 (2013).
75

“Keeping Watch Over Direct-to-Consumer Ads,” U.S. Food & Drug Administration,
16 Oct. 2017. Web. 25 Oct. 2017.
76

In one study, for example, nearly 20% of sciatica patients requesting oxycodone
received a prescription for it, compared with 1% of those making no specific request. McKinlay,
John B. et al., “Effects of Patient Medication Requests on Physician Prescribing Behavior”
Results of a Factorial Experiment,” Med Care. 2014 Apr; 52(4): 294–299.

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articles and advocating against regulatory changes that would constrain opioid prescribing. They
developed and disseminated pro-opioid treatment guidelines; conducted outreach to groups
targeted by Manufacturer Defendants, such as veterans and the elderly; and developed and
sponsored CMEs that focused exclusively on use of opioids to treat chronic pain. Manufacturer
Defendants funded these Front Groups to ensure supportive messages from these seemingly
neutral and credible third parties, and their funding did, in fact, achieve that goal.
1.

American Pain Foundation

154.

The most prominent of Manufacturer Defendants’ Front Groups was the

American Pain Foundation (“APF”), which received more than $10 million in funding from
opioid manufacturers from 2007 until it closed its doors in May 2012.
155.

APF issued purported “education guides” for patients, the news media, and

policymakers that touted the benefits of opioids for chronic pain and trivialized their risks,
particularly the risk of addiction. APF also engaged in a significant multimedia campaign –
through radio, television and the internet – to “educate” patients about their “right” to pain
treatment with opioids. All of the programs and materials were intended to, and did, reach a
national audience, including residents of Indianapolis and Marion County.
156.

By 2011, APF depended on incoming grants from Manufacturer Defendants

Purdue, Cephalon, Endo, and others. APF board member, Dr. Portenoy, explained the lack of
funding diversity was one of the biggest problems at APF.
157.

APF held itself out as an independent patient advocacy organization, yet engaged

in grassroots lobbying against various legislative initiatives that might limit opioid prescribing.
In reality, APF functioned largely as an advocate for the interests of Manufacturer Defendants,
not patients.

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158.

APF operated in close collaboration with Manufacturer Defendants. APF

submitted grant proposals seeking to fund activities and publications suggested by Manufacturer
Defendants. APF also assisted in marketing projects for Manufacturer Defendants.
159.

The close relationship between APF and Manufacturer Defendants demonstrates

APF's clear lack of independence in its finances, management, and mission and its willingness to
allow Manufacturer Defendants to control its activities and messages supports an inference that
each Manufacturer Defendant that worked with it could exercise editorial control over its
publications.
160.

In May 2012, the U.S. Senate Finance Committee investigated APF to determine

the links, financial and otherwise, between the organization and the manufacturers of opioid
painkillers. Within days of being targeted by the Senate investigation, APF’s board voted to
dissolve the organization “due to irreparable economic circumstances.” APF then “cease[d] to
exist, effective immediately.”77
2.

The American Academy of Pain Medicine

161.

The American Academy of Pain Medicine (“AAPM”), with the assistance,

prompting, involvement, and funding of Manufacturer Defendants, issued improper opioid
treatment guidelines and sponsored and hosted CMEs essential to Manufacturer Defendants’
deceptive marketing scheme.
162.

AAPM received over $2.2 million in funding since 2009 from opioid

manufacturers. AAPM maintained a corporate relations council, whose members paid $25,000
per year (on top of other funding) to participate. The benefits included allowing members to

77

Ornstein, Charles et al., “Senate Panel Investigates Drug Companies ties to Pain
Groups,” The Washington Post, 8 May 2012. Web. 25 Oct. 2017.

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present educational programs at off-site dinner symposia in connection with AAPM’s marquee
event – its annual meeting held in Palm Springs, California, or other resort locations. AAPM
describes the annual event as an “exclusive venue” for offering CMEs to doctors. Membership in
the corporate relations council also allows drug company executives and marketing staff to meet
with AAPM executive committee members in small settings. Manufacturer Defendants Endo,
Purdue, and Cephalon were members of the council and presented deceptive programs to doctors
who attended this annual event.
163.

The conferences sponsored by AAPM heavily emphasized CME sessions on

opioids—37 out of roughly 40 at one conference alone. AAPM’s presidents have included top
industry-supported KOLs, Dr. Fine, Dr. Portenoy, and Dr. Webster. Dr. Webster was elected
president of AAPM while under a DEA investigation. Another past AAPM president, Dr. Scott
Fishman, stated that he would place the organization “at the forefront” of teaching that “the risks
of addiction are … small and can be managed.”
164.

AAPM’s staff understood that they and their industry funders were engaged in a

common task. Manufacturer Defendants could influence AAPM through both their significant
and regular funding and the leadership of pro-opioid KOLs within the organization.
V.

Manufacturer Defendants Acted in Concert with KOLs and Front Groups in the
Creation, Promotion, and Control of Unbranded Marketing.
165.

Like cigarette makers, which engaged in an industry-wide effort to misrepresent

the safety and risks of smoking, Manufacturer Defendants worked with each other and with the
Front Groups and KOLs they funded and directed to carry out a common scheme to deceptively
market opioids by misrepresenting the risks, benefits, and superiority of opioids to treat chronic
pain.

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166.

Manufacturer Defendants acted through and with the same network of Front

Groups, funded the same KOLs, and often used the same language and format to disseminate the
same deceptive messages regarding the appropriate use of opioids to treat chronic pain. Although
participants knew this information was false and misleading, these misstatements were
disseminated nationwide, including to Indianapolis and Marion County prescribers and patients.
167.

One vehicle for Manufacturer Defendants’ marketing collaboration was Pain Care

Forum (“PCF”). PCF began in 2004 as an APF project with the stated goals of offering “a setting
where multiple organizations can share information” and “promote and support taking
collaborative action regarding federal pain policy issues.” APF President Will Rowe described
the forum as “a deliberate effort to positively merge the capacities of industry, professional
associations, and patient organizations.”
168.

PCF comprises representatives from opioid manufacturers and distributors

(including Cephalon, Endo, Janssen, and Purdue); doctors and nurses in the field of pain care;
professional organizations (including AAPM, APS, and American Society of Pain Educators);
patient advocacy groups (including APF and American Chronic Pain Association (“ACPA”));
and other similar organizations, almost all of which received substantial funding from
Manufacturer Defendants.
169.

PCF, for example, developed and disseminated “consensus recommendations” for

a Risk Evaluation and Mitigation Strategy (“REMS”) for long-acting opioids that the FDA
mandated in 2009 to communicate the risks of opioids to prescribers and patients.78 This was
critical because a REMS that went too far in narrowing the uses or benefits or highlighting the
78

The FDA can require a drug maker to develop a REMS—which could entail (as in this
case) an education requirement or distribution limitation—to manage serious risks associated
with a drug.

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risks of chronic opioid therapy would undermine Manufacturer Defendants’ marketing efforts.
The recommendations claimed that opioids were “essential” to the management of pain, and that
the REMS “should acknowledge the importance of opioids in the management of pain and
should not introduce new barriers.” Manufacturer Defendants worked with PCF members to
limit the reach and manage the message of the REMS, which enabled them to maintain, not
undermine, their deceptive marketing of opioids for chronic pain.

VI.

Manufacturer Defendants’ Misrepresentations.
170.

Manufacturer Defendants, through their own marketing efforts and publications

and through their sponsorship and control of patient advocacy and medical societies and projects,
caused deceptive materials and information to be placed into the marketplace, including to
prescribers, patients, and payors in Indianapolis and Marion County. These promotional
messages were intended to and encouraged patients to ask for, doctors to prescribe, and payors to
pay for chronic opioid therapy.
171.

Doctors are the gatekeepers for all prescription drugs so, not surprisingly,

Manufacturer Defendants focused the bulk of their marketing efforts, and their multi-million
dollar budgets, on the professional medical community. Particularly because of barriers to
prescribing opioids, which are regulated as controlled substances, Manufacturer Defendants
knew doctors would not treat patients with common chronic pain complaints with opioids unless
doctors were persuaded that opioids had real benefits and minimal risks. Accordingly,
Manufacturer Defendants did not disclose to prescribers, patients or the public that evidence to
support their promotional claims was inconclusive, non-existent or unavailable. Rather, each
Manufacturer Defendant disseminated misleading and unsupported messages that caused the
target audience to believe those messages were corroborated by scientific evidence. As a result,

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Indianapolis and Marion County doctors prescribed opioids long-term to treat chronic pain –
something that most never would have considered prior to Manufacturer Defendants’ campaign.
172.

Drug company marketing materially impacts doctors’ prescribing behavior.79

Doctors rely on drug companies to provide them with truthful information about the risks and
benefits of their products, and they are influenced by their patients’ requests for particular drugs.
173.

Manufacturer Defendants spent millions of dollars to market their drugs to

prescribers and patients and meticulously tracked their return on that investment. In one recent
survey published by the AMA, even though nine in ten general practitioners reported
prescription drug abuse to be a moderate to large problem in their communities, 88% of the
respondents said they were confident in their prescribing skills, and nearly half were comfortable
using opioids for chronic non-cancer pain.80 These results are directly due to Manufacturer
Defendants’ fraudulent marketing campaign.
174.

Manufacturer Defendants:

a.

misrepresented the truth about how opioids lead to addiction;

b.

misrepresented that opioids improve function;

c.

misrepresented that addiction risk can be managed;

79

See, e.g., Manchanda, P. & Chintagunta, P.K. Marketing Letters (2004) 15: 129;
Larken, Ian et al., “Restrictions on Pharmaceutical Detailing Reduced Off-Label Prescribing of
Antidepressants and Antipsychotics in Children,” Health Affairs 33, no.6 (2014):1014-1023
(finding academic medical centers that restricted direct promotion by pharmaceutical sales
representatives resulted in a 34% decline in on-label use of promoted drugs). See also Van Zee,
Art, “The Promotion and Marketing of OxyContin: Commercial Triumph, Public Health
Tragedy.” American Journal of Public Health 99.2 (2009): 221–227. PMC. (noting an increase
of OxyContin prescriptions from 670,000 annually in 1997 to about 6.2 million in 2002 and an
approximate doubling of Purdue’s internal sales force from 1996 to 2000.)
80

Hwang, Catherine S. et al., “Prescription Drug Abuse A National Survey of Primary
Care Physicians.,” JAMA Intern Med. 2015;175(2):302–304.

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d.

misled doctors, patients, and payors through misleading terms like
“pseudoaddiction;

e.

falsely claimed that opioid withdrawal is simply managed;

f.

misrepresented that increased doses pose no significant additional risks;

g.

falsely omitted or minimized the adverse effects of opioids and overstated the
risks of alternative forms of pain treatment.

175.

Underlying each of Manufacturer Defendants’ misrepresentations and deceptions

in promoting the long-term continuous use of opioids to treat chronic pain was Manufacturer
Defendants’ collective effort to hide from the medical community the fact that there exist no
adequate and well-controlled studies of opioid use longer than 12 weeks.81
A.

Manufacturer Defendants Misrepresented How Opioids Lead To Addiction.

176.

Manufacturer Defendants’ fraudulent representation that opioids are rarely

addictive is central to Manufacturer Defendants’ scheme. Through their well-funded,
comprehensive, aggressive marketing efforts, Manufacturer Defendants succeeded in changing
the perceptions of many physicians, patients, and health care payors and in getting them to
accept that addiction rates are low and that addiction is unlikely to develop when opioids are
prescribed for pain. That, in turn, directly led to the expected, intended, and foreseeable result
that doctors prescribed more opioids to more patients – thereby enriching Manufacturer
Defendants.

81

Letter from Janet Woodcock, M.D., Dir., Ctr. For Drug Eval. & Res., to Andrew
Kolodny, M.D., Pres. Physicians for Responsible Opioid Prescribing, Re Docket No. FDA2012-P-0818 (Sept. 10, 2013).

47

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177.

For example, Cephalon and Purdue sponsored APF’s Treatment Options: A Guide

for People Living with Pain (2007), which taught that addiction is rare and limited to extreme
cases of unauthorized dose escalations, obtaining opioids from multiple sources, or theft.
178.

For another example, Endo sponsored a website, painknowledge.com, through

APF, which claimed that: “[p]eople who take opioids as prescribed usually do not become
addicted.” Although the term “usually” is not defined, the overall presentation suggests that the
rate is so low as to be immaterial. The language also implies that as long as a prescription is
given, opioid use will not become problematic. The website also contained a flyer called “Pain:
Opioid Therapy.” This publication included a list of adverse effects that omitted significant
adverse effects including hyperalgesia, immune and hormone dysfunction, cognitive impairment,
tolerance, dependence, addiction, and death. The website also claimed in 2009 that with opioids,
“your level of function should improve; you may find you are now able to participate in activities
of daily living, such as work and hobbies, that you were not able to enjoy when your pain was
worse.” Elsewhere, the website touted improved quality of life and “improved function” as
benefits of opioid therapy.
179.

For another example, Endo distributed a patient education pamphlet edited by Dr.

Portenoy entitled Understanding Your Pain: Taking Oral Opioid Analgesics. It claimed that
“[a]ddicts take opioids for other reasons [than pain relief], such as unbearable emotional
problems.” This implies that patients prescribed opioids for genuine pain will not become
addicted, which is unsupported and untrue.
180.

For another example, Janssen sponsored a patient education guide entitled

Finding Relief: Pain Management for Older Adults (2009) in conjunction with the AAPM,
ACPA and APF, which described as a “myth” the fact that opioids are addictive and asserts as

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fact that “[m]any studies show that opioids are rarely addictive when used properly for the
management of chronic pain.”
181.

The guide states as a “fact” that “Many studies” show that opioids are rarely

addictive when used for chronic pain. No such studies exist.
182.

For another example, Purdue sponsored and Janssen provided grants to APF to

distribute Exit Wounds (2009) to veterans, which taught, “[l]ong experience with opioids shows
that people who are not predisposed to addiction are very unlikely to become addicted to opioid
pain medications”
183.

For another example, Purdue sponsored APF’s A Policymaker’s Guide to

Understanding Pain & Its Management, which inaccurately claimed that less than 1% of
children prescribed opioids would become addicted.82 This publication also falsely asserted that
pain is undertreated due to “misconceptions about opioid addiction.”
184.

For another example, in the 1990s, Purdue amplified the pro-opioid message with

promotional videos and featuring Dr. Portenoy and other doctors, which claimed, “the likelihood
that the treatment of pain using an opioid drug which is prescribed by a doctor will lead to
addiction is extremely low.”83
185.

Rather than honestly disclose the risk of addiction, Manufacturer Defendants

attempted to portray those who were concerned about addiction as callously denying treatment to
suffering patients. To increase pressure on doctors to prescribe chronic opioid therapy,
82

In support of this contention, it misleadingly cites a 1996 article by Dr. Kathleen Foley
concerning cancer pain.
83

Excerpts from one such video, including the statement quoted here, may be viewed at
“Thousands Die Annually from Pain Med Overdose,” The Wall Street Journal, 14 Dec. 2012,
http://www.wsj.com/video/thousands-die-annually-from-pain-med-overdose/6E7C0A5F-48F547CE-9A0E-64439EF7A5AB.html.

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Manufacturer Defendants turned the tables: they suggested that doctors who failed to treat their
patients’ chronic pains with opioids were failing their patients and risking professional
discipline, while doctors who relieved their patients’ pain using long-term opioid therapy were
following the compassionate (and professionally less risky) approach. Manufacturer Defendants
claimed that purportedly overblown worries about addiction cause pain to be under- treated and
opioids to be over-regulated and under-prescribed. The Treatment Options guide funded by
Purdue and Cephalon states “[d]espite the great benefits of opioids, they are often underused.”
The APF publication funded by Purdue, A Policymaker’s Guide to Understanding Pain & Its
Management, laments that: “Unfortunately, too many Americans are not getting the pain care
they need and deserve. Some common reasons for difficulty in obtaining adequate care
include . . . misconceptions about opioid addiction.”84
186.

Let’s Talk Pain, sponsored by APF, AAPM and Janssen, likewise warns, “strict

regulatory control has made many physicians reluctant to prescribe opioids. The unfortunate
casualty in all of this is the patient, who is often undertreated and forced to suffer in silence.”
The program says, “[b]ecause of the potential for abusive and/or addictive behavior, many health
care professionals have been reluctant to prescribe opioids for their patients…. This prescribing
environment is one of many barriers that may contribute to the undertreatment of pain, a serious
problem in the United States.”
187.

The Joint Commission even published a guide sponsored by Purdue on pain

management that stated “[s]ome clinicians have inaccurate and exaggerated concerns about

84

This claim also appeared in a 2009 publication by APF, A Reporter’s Guide.

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addiction, tolerance and risk of death. This attitude prevails despite the fact there is no evidence
that addiction is a significant issue when persons are given opioids for pain control.”85
B.

Manufacturer Defendants Misrepresent That Opioids Improve Function.

188.

Manufacturer Defendants produced, sponsored, or controlled materials with the

expectation that, by instructing patients and prescribers that opioids would improve patient
functioning and quality of life, patients would demand opioids and doctors would prescribe
them. These claims also encouraged doctors to continue opioid therapy for patients in the belief
that lack of improvement in quality of life could be alleviated by increasing doses or prescribing
supplemental short-acting opioids to take as-needed for breakthrough pain.
189.

Research such as a 2008 study in the journal Spine has shown that pain sufferers

prescribed opioids long-term suffered addiction that made them more likely to be disabled and
unable to work.86 Despite this lack of evidence of improved function, and the existence of
evidence to the contrary, Manufacturer Defendants consistently promoted opioids as capable of
improving patients’ function and quality of life without disclosing the lack of evidence for this
claim.
190.

Claims that opioids improve patients’ function are misleading because such

claims have “not been demonstrated by substantial evidence or substantial clinical experience.”87

85

Hirsch, Ronald, “The Opioid Epidemic: It’s Time to Place Blame Where It Belongs,”
Observer.com, 23 May 2016. Web. 25 Oct. 2017.
86

Dersh, Jeffrey et al., “Prescription Opioid Dependence is Associated with Poorer
Outcomes in Disabling Spinal Disorders,” Spine (Phila Pa 1976). 2008 Sep 15;33(20):2219-27.
87

Letter from Thomas W. Abrams, RPh., MBA, Dir., Div. of Marketing, Advertising and
Communications to Brian A. Markison, Chairman, King Pharmaceuticals, Re: NDA 21-260
(March 24, 2008).

51

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191.

The Federation of State Medical Boards’ Responsible Opioid Prescribing (2007),

sponsored by drug companies including Cephalon, Endo and Purdue, taught that relief of pain
itself improved patients’ function: “While significant pain worsens function, relieving pain
should reverse that effect and improve function.”
192.

The APF’s Treatment Options: A Guide for People Living with Pain taught

patients that opioids, when used properly “give [pain patients] a quality of life we deserve.” The
Treatment Options guide notes that non-steroidal anti-inflammatory drugs (e.g., Aspirin or
Ibuprofen) have greater risks with prolonged duration of use, but there was no similar warning
for opioids. The APF distributed 17,200 copies of this guide in one year alone, according to its
2007 annual report, and it is available online.
193.

Janssen sponsored a patient education guide entitled Finding Relief: Pain

Management for Older Adults with the AAPM, ACPA and APF. This guide features a man
playing golf on the cover and lists examples of expected functional improvement from opioids
like sleeping through the night, returning to work, recreation, sex, walking, and climbing stairs.
194.

The guide states as a “fact” that “opioids may make it easier for people to live

normally” (emphasis in the original). The myth/fact structure implies authoritative support for
the claim that does not exist. Targeting older adults also ignored heightened opioid risks in this
population.
195.

The website Let’s Talk Pain in 2009 featured a video interview, which was edited

by Janssen personnel, claiming that opioids were what allowed a patient to “continue to
function,” falsely implying that her experience would be representative.
196.

Purdue sponsored APF’s A Policymaker’s Guide to Understanding Pain & Its

Management, which inaccurately claimed that “multiple clinical studies” have shown that

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opioids are effective in improving daily function, psychological health, and health-related quality
of life for chronic pain patients,” with the implication these studies presented claims of long-term
improvement.
197.

To the contrary, the sole reference for the functional improvement claim (i) noted

the absence of long- term studies and (ii) stated, “For functional outcomes, the other analgesics
were significantly more effective than were opioids.”

C.

Manufacturer Defendants Misrepresent That Addiction Risk Can Be
Effectively Managed.

198.

Manufacturer Defendants each continue to maintain to this day that most patients

safely can take opioids long-term for chronic pain without becoming addicted. Presumably to
explain why doctors encounter so many patients addicted to opioids, Manufacturer Defendants
admit that some patients could become addicted, but that doctors can avoid or manage that risk
by using screening tools or questionnaires. These tools, they say, identify those with higher
addiction risks (stemming from personal or family histories of substance abuse, mental illness, or
abuse) so doctors can more closely monitor patients at greater risk of addiction.
199.

There are three fundamental flaws in Manufacturer Defendants’ representations

that doctors can consistently identify and manage the risk of addiction. First, there is no reliable
scientific evidence that doctors can depend on the screening tools currently available to
materially limit the risk of addiction. Even if the tools are effective, they may not always be
applied correctly, and are subject to manipulation by patients. Second, there is no reliable
scientific evidence that high-risk or addicted patients identified through screening can take
opioids long-term without triggering or worsening addiction, even with enhanced monitoring.
Third, there is no reliable scientific evidence that patients not identified through such screening
can take opioids long-term without significant danger of addiction.
53

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200.

Addiction is difficult to predict on a patient-by-patient basis, and there are no

reliable, validated tools to do so. An Evidence Report by the Agency for Healthcare Research
and Quality (“AHRQ”), which “systematically review[ed] the current evidence on long-term
opioid therapy for chronic pain” identified “[n]o study” that had “evaluated the effectiveness of
risk mitigation strategies, such as use of risk assessment instruments, opioid management plans,
patient education, urine drug screening, prescription drug monitoring program data, monitoring
instruments, more frequent monitoring intervals, pill counts, or abuse-deterrent formulations on
outcomes related to overdose, addiction, abuse or misuse.”88 Furthermore, attempts to treat highrisk patients, like those who have a documented predisposition to substance abuse, by resorting
to patient contracts, more frequent refills, or urine drug screening are not proven to work in the
real world, but doctors were misled to employ them.89
201.

Manufacturer Defendants’ misrepresentations regarding the risk of addiction from

chronic opioid therapy were particularly dangerous because they were aimed at general
practitioners or family doctors, who treat many chronic conditions but lack the time and
expertise to closely manage patients on opioids by reviewing urine screens, counting pills, or
conducting detailed interviews to identify other signs or risks of addiction. One study conducted
by pharmacy benefits manager Express Scripts concluded, after analyzing 2011–2012 narcotic
prescription data of the type regularly used by Manufacturer Defendants to market their drugs,
88

“The Effectiveness and Risks of Long-Term Opioid Treatment of Chronic Pain,”
Agency for Healthcare Research and Quality, U.S. Department of Health and Human Services,
Evidence Report/Technology Assessment No. 218, ES-2, ES-21, Sep. 2014.
89

See Von Korff, Michael et al., “Long-Term Opioid Therapy Reconsidered,” Ann Intern
Med. 2011 Sep 6; 155(5): 325–328; Manchikanti, L. et al., “American Society of Interventional
Pain Physicians (ASIPP) Guidelines for Responsible Opioid Prescribing in Chronic Non-Cancer
Pain: Part 1, Evidence Assessment,” 15 Pain Physician (Special Issue) S1-S66; Part 2 –
Guidance, 15 Pain Physician (Special Issue) S67-S116 (2012).

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that, of the more than half million prescribers of opioids during that time period, only 385 were
identified as pain specialists.90
202.

In materials they produced, sponsored, or controlled, Manufacturer Defendants

instructed patients and prescribers that screening tools can identify patients predisposed to
addiction, thus making doctors feel more comfortable prescribing opioids to their patients and
patients more comfortable starting on opioid therapy for chronic pain. Manufacturer Defendants’
marketing scheme contemplated a “heads we win; tails we win” outcome: patients deemed low
risk were to receive opioids on a long-term basis without enhanced monitoring, while and
patients deemed high risk were also to receive opioids on a long-term basis but with more
frequent visits, tests and monitoring.
203.

APF’s Treatment Options: A Guide for People Living with Pain falsely reassured

patients that “opioid agreements” between doctors and patients can “ensure that you take the
opioid as prescribed.”
204.

Endo paid for a 2007 supplement available for continuing education credit in the

Journal of Family Practice written by a doctor who became a member of Endo’s speaker’s
bureau in 2010. This publication, entitled Pain Management Dilemmas in Primary Care: Use of
Opioids, (i) recommended screening patients using tools like (a) the Opioid Risk Tool created by
Dr. Webster and linked to Janssen or (b) the Screener and Opioid Assessment for Patients with
Pain, and (ii) taught that patients at high risk of addiction could safely receive chronic opioid
therapy using a “maximally structured approach” involving toxicology screens and pill counts.

90

“Identifying High Prescribers,” Lab.express-scripts.com, Express Scripts, 9 Jun 2014.
Web. 25 Oct. 2017.

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205.

Purdue sponsored a 2011 webinar taught by Dr. Webster, entitled Managing

Patient’s Opioid Use: Balancing the Need and Risk. This publication misleadingly taught
prescribers that screening tools, urine tests, and patient agreements have the effect of preventing
“overuse of prescriptions” and “overdose deaths.”
D.

Manufacturer Defendants Mislead With Use Of Purportedly Scientific
Terms Like “Pseudoaddiction.”

206.

Manufacturer Defendants instructed patients and prescribers that signs of

addiction are actually the product of untreated pain, thereby causing doctors to prescribe ever
more opioids despite signs that the patient was addicted. The word “pseudoaddiction” was
concocted by Dr. J. David Haddox, who later went to work for Purdue, and was popularized in
opioid therapy for chronic pain by Dr. Portenoy, who consulted for Manufacturer Defendants
Cephalon, Endo, Janssen, and Purdue. Much of the same language appears in other Manufacturer
Defendants’ treatment of this issue, highlighting the contrast between “undertreated pain” and
“true addiction”—as if patients could not experience both.
207.

In the materials they produced, sponsored, or controlled, Manufacturer

Defendants misrepresented that the concept of “pseudoaddiction” is substantiated by scientific
evidence.
208.

FSMB’s Responsible Opioid Prescribing taught that behaviors such as

“requesting drugs by name,” “demanding or manipulative behavior,” seeing more than one
doctor to obtain opioids, and hoarding, which are in fact signs of genuine addiction, are all really
signs of “pseudoaddiction.”

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209.

Purdue did not mention that the author who concocted both the word and the

phenomenon it purported to describe became a Purdue Vice President; nor did Purdue disclose
the lack of scientific evidence to support the existence of “pseudoaddiction.”91
210.

Purdue posted an unbranded pamphlet entitled Clinical Issues in Opioid

Prescribing on its unbranded website, PartnersAgainstPain.com, in 2005, and circulated this
pamphlet after 2007. The pamphlet listed conduct including “illicit drug use and deception” that
it claimed was not evidence of true addiction but was indicative of “pseudoaddiction” caused by
untreated pain. It also stated, “Pseudoaddiction is a term which has been used to describe patient
behaviors that may occur when pain is untreated … . Even such behaviors as illicit drug use and
deception can occur in the patient’s efforts to obtain relief. Pseudoaddiction can be distinguished
from true addiction in that the behaviors resolve when the pain is effectively treated.”
E.

Manufacturer Defendants Claim Withdrawal Is Easily Managed.

211.

To underplay the risk and impact of addiction, Manufacturer Defendants claimed

that, while patients become physically “dependent” on opioids, physical dependence is not the
same as addiction and can be addressed, if and when pain relief is no longer desired, by
gradually tapering patients’ dosage to avoid the adverse effects of withdrawal. Manufacturer
Defendants fail to disclose the difficult and painful effects that patients can experience when
removed from opioids – an adverse effect that also makes it less likely that patients can stop
using the drugs.
212.

In materials Manufacturer Defendants produced, sponsored, and controlled,

Manufacturer Defendants made misrepresentations to persuade doctors and patients that

91

Weissman, DE & Haddox, JD, “Opioid Pseudoaddiction – an Iatrogenic Syndrome,”
Pain. 1989 Mar;36(3):363-6.

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withdrawal from their opioids was not a problem and they should not be hesitant about
prescribing or using opioids. These claims were not supported by scientific evidence.
213.

A CME sponsored by Endo entitled Persistent Pain in the Older Adult, taught that

withdrawal symptoms can be avoided entirely by tapering a patient’s opioid dose by 10% to 20%
per day for ten days. This claim was misleading because withdrawal in a patient already
physically dependent would take longer than ten days – when it succeeds at all.92
214.

Purdue sponsored APF’s A Policymaker’s Guide to Understanding Pain & Its

Management, which taught that “Symptoms of physical dependence can often be ameliorated by
gradually decreasing the dose of medication during discontinuation,” but the guide did not
disclose the significant hardships that often accompany cessation of use.
F.

Manufacturer Defendants Misrepresent Increased Doses Pose No Significant
Additional Risks.

215.

Manufacturer Defendants claimed that patients and prescribers could increase

doses of opioids indefinitely without added risk, even when pain was not decreasing or when
doses had reached levels that were “frighteningly high,” suggesting that patients would
eventually reach a stable, effective dose. Each of Manufacturer Defendants’ claims was
deceptive in that it omitted warnings of increased adverse effects that occur at higher doses.
216.

In materials Manufacturer Defendants produced, sponsored or controlled,

Manufacturer Defendants instructed patients and prescribers that patients could remain on the
same dose indefinitely, assuaging doctors’ concerns about starting patients on opioids or
increasing their doses during treatment, or about discontinuing their patients’ treatment as doses
escalated. These claims were not supported by scientific evidence.
92

See Ballantyne, Jane C. et al., “New Addiction Criteria: Diagnostic Challenges Persist in
Treating Pain With Opioids,” Intl. Assoc. for the Study of Pain, Vol. XXI No. 5, Dec. 2013.

58

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217.

APF’s Treatment Options: A Guide for People Living with Pain claims that some

patients “need” a larger dose of an opioid, regardless of the dose currently prescribed. The guide
taught that opioids differ from NSAIDs because they have “no ceiling dose” and are therefore
the most appropriate treatment for severe pain. The publication attributes 10,000 to 20,000
deaths annually to NSAID overdose when the true figure was closer to 3,200 at the time.93
218.

Cephalon sponsored a CME written by KOL Dr. Webster, Optimizing Opioid

Treatment for Breakthrough Pain, offered by Medscape, LLC from September 28, 2007 through
December 15, 2008. The CME taught that non-opioid analgesics and combination opioids
containing non-opioids such as aspirin and acetaminophen are less effective at treating
breakthrough pain because of dose limitations on the non-opioid component.
219.

Endo claimed in 2009 that opioids may be increased until “you are on the right

dose of medication for your pain,” at which point further dose increases would not be required.
220.

Endo distributed a patient education pamphlet edited by KOL Dr. Portenoy

entitled Understanding Your Pain: Taking Oral Opioid Analgesics, which was published on
Endo’s website. In Q&A format, it asked, “If I take the opioid now, will it work later when I
really need it?” The response is, “The dose can be increased. … You won’t ‘run out’ of pain
relief.”
221.

APF’s A Policymaker’s Guide to Understanding Pain & Its Management taught

that dose escalations are “sometimes necessary,” even indefinite ones, but did not disclose the
risks from high-dose opioids. This publication is still available online.

93

Tarone, Robert E. et al., “Nonselective Nonaspirin Nonsteroidal Anti-Inflammatory
Drugs and Gastrointestinal Bleeding: Relative and Absolute Risk Estimates from Recent
Epidemiologic Studies,” Am J Ther. 2004 Jan-Feb;11(1):17-25.

59

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222.

Purdue sponsored Overview of Management Options, a CME issued by the AMA

in 2003, 2007, 2010, and 2013. The 2013 version remains available for CME credit. The CME
was edited by KOL Dr. Portenoy, among others, and taught that NSAIDs and other drugs, but
not opioids, are unsafe at high doses.
G.

Manufacturer Defendants Deceptively Omit or Minimize The Effects Of
Opioids And Overstate Risks Of Alternative Forms Of Pain Treatment.

223.

In materials they produced, sponsored or controlled, Manufacturer Defendants

omitted known risks of chronic opioid therapy and emphasized or exaggerated risks of
competing products so that prescribers and patients would be more likely to choose opioids and
would favor opioids over other therapies such as over-the-counter acetaminophen or over-thecounter or prescription NSAIDs. None of these claims was supported by scientific evidence.
224.

In addition to failing to disclose in promotional materials the risks of addiction,

abuse, overdose, and respiratory depression, Manufacturer Defendants routinely ignored the risks
of hyperalgesia, a “known serious risk associated with chronic opioid analgesic therapy in which
the patient becomes more sensitive to certain painful stimuli over time;”94 hormonal
dysfunction;95 decline in immune function; mental clouding, confusion, and dizziness; increased
falls and fractures in the elderly;96 neonatal abstinence syndrome (when an infant exposed to
opioids prenatally suffers withdrawal after birth), and potentially fatal interactions with alcohol
94

Letter from Janet Woodcock, M.D., Dir., Ctr. For Drug Eval. & Res., to Andrew
Kolodny, M.D., Pres. Physicians for Responsible Opioid Prescribing, Re Docket No. FDA2012-P-0818 (Sept. 10, 2013).
95

See Daniell, H.W., “Hypogonadism in Men Consuming Sustained-Action Oral
Opioids, J Pain. 2002 Oct;3(5):377-84.
96

See Bernhard M., “The Risk of Fall Injury in Relation to Commonly Prescribed
Medications Among Older People – a Swedish Case-Control Study,” European Journal of
Public Health, Volume 25, Issue 3, 1 June 2015, Pages 527–532.
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or benzodiazepines, which are used to treat post-traumatic stress disorder and anxiety. Posttraumatic stress disorder and anxiety also often accompany chronic pain symptoms.97
225.

APF’s Exit Wounds omits warnings of the risk of potentially fatal interactions

between opioids and certain anti-anxiety medicines called benzodiazepines, commonly
prescribed to veterans with post-traumatic stress disorder.
226.

Because of Manufacturer Defendants’ campaign of deception, promoting opioids

over safer and more effective drugs, opioid prescriptions increased even as the percentage of
patients visiting a doctor for pain remained constant. A study of 7.8 million doctor visits between
2000 and 2010 found that opioid prescriptions increased from 11.3% to 19.6% of visits, as
NSAID and acetaminophen prescriptions fell from 38% to 29%, driven primarily by the decline
in NSAID prescribing.98
VII.

Manufacturer Defendants Deceptively Promote Their Drugs.
227. While Manufacturer Defendants worked in concert to expand the market for

opioids, they also worked to maximize their individual shares of that market. Each Defendant
promoted opioids for chronic pain through sales representatives (which Manufacturer Defendants
called “detailers” to deemphasize their primary sales role) and small group speaker programs to
contact individual prescribers nationwide and in Indianapolis and Marion County. By

97

Seal, Karen H., “Association of Mental Health Disorders With Prescription Opioids
and High-Risk Opioids in US Veterans of Iraq and Afghanistan,” 307(9) J. Am. Med. Ass’n 94047 (2012).
98

Daubresse, M. et al., “Ambulatory Diagnosis and Treatment of Nonmalignant Pain in
the United States,” 2000-2010, 51(10) Med. Care 870-78 (2013). For back pain alone, the
percentage of patients prescribed opioids increased from 19% to 29% between 1999 and 2010,
even as the use of NSAIDs or acetaminophen declined from 39.9% to 24.5% of these visits; and
referrals to physical therapy remained steady. See also Mafi, JN et al., “Worsening Trends in the
Management and Treatment of Back Pain,” JAMA Intern Med. 2013 Sep 23;173(17):1573-81.

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establishing close relationships with doctors, Manufacturer Defendants could disseminate their
misrepresentations in targeted, one-on-one settings that allowed them to differentiate their
opioids and to allay individual prescribers’ concerns about prescribing opioids for chronic pain.
228. Manufacturer Defendants’ detailers pitched opioids to general practitioners to
treat common conditions such as back aches and knee pain. Sales detailers showered prescribers
with gifts, invited doctors to dinner seminars, and flew them to weekend junkets at resort hotels,
where they were encouraged to prescribe opioids and promote it to colleagues back home.99
Purdue, for example, used presentations and training materials to train sales reps to remind
doctors there is no ceiling on the amount of OxyContin a patient can be prescribed.100 Purdue
also had at least 10 sales representatives assigned to central Indiana, including Indianapolis and
Marion County.
229. Manufacturer Defendants compensated sales detailers for this conduct:


A West Virginia supervisor for Purdue told one of his highest performing
sales detailers in a 1999 letter she could “blow the lid off” her sales and earn a
trip to Hawaii if she persuaded more doctors to write larger doses.



In an August 1996 memo headlined “$$$$$$$$$$$$$ It’s Bonus Time in the
Neighborhood!” a Purdue manager reminded Tennessee detailers that raising
dosage strength was the key to a big payday.101

230.

Manufacturer Defendants developed sophisticated methods for selecting doctors

for sales visits based on the doctors’ prescribing habits. Under common industry practice,
Manufacturer Defendants purchase and closely analyze prescription sales data from IMS Health,

99

Ryan, Harriet, et al., “‘You want a Description of Hell?’ Oxycontin’s 12-Hour
Problem,” The Los Angeles Times, 5 May 2016. Web. 25 Oct. 2017.
100

Id.

101

Id.

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a healthcare data collection, management and analytics corporation. This data allows them to
track precisely the rates of initial and renewal prescribing by individual doctors, which allows
them to target and tailor their sales practices. Sales representatives visited hundreds of thousands
of doctors and disseminated the misinformation and materials described above throughout the
United States, including doctors in Indianapolis and Marion County.
231.

The IMS Heath data was vital to Manufacturer Defendants’ sales departments.

Sales detailers working on commission could identify doctors writing a small number of opioid
prescriptions who might be persuaded to write more. Manufacturer Defendants also could
identify physicians writing large numbers of prescriptions.
232.

The highest prescribing doctors were added to Purdue’s confidential roster of

physicians suspected of recklessly prescribing. Purdue calls that list Region Zero and has been
adding names to it since 2002. An LA Times investigation only recently discovered the existence
of that list. As of 2013, Purdue acknowledged there were over 1,800 doctors in Region Zero.
Purdue had reported less than 8% on the list to authorities.102
233.

Manufacturer Defendants also offer discounts, known as “chargebacks,” based on

sales to certain downstream customers. Distributor Defendants provide information on the
downstream customer purchases to Manufacturer Defendants to obtain the chargeback.103
234.

Manufacturer Defendants also collected information about the highest prescribing

doctors. For example, “Purdue collected extensive evidence suggesting illegal trafficking of

102

Girion, Lisa, “Dissecting an OxyContin Pipeline,” Portland Press Herald, 16 July
2016. Web. 25 Oct. 2017.
103

Press Release, “Mallinckrodt Agrees to Pay Record $35 Million Settlement for Failure
to Report Suspicious Orders of Pharmaceutical Drugs and for Recordkeeping Violations,” U.S.
Dept. of Justice, 11 July 2017. Web. 16 Sept. 2017.

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OxyContin and, in many cases, did not share it with law enforcement or cut off the flow of pills.
A former Purdue executive, who monitored pharmacies for criminal activity, acknowledged that
even when the company had evidence pharmacies were colluding with drug dealers, it did not
stop supplying distributors selling to those stores.”104 Instead, sales detailers would continue to
visit these places trafficking its opioids.
VIII. Manufacturer Defendants Knew Their Marketing Was False, Unfounded,
Dangerous, and Would Harm Plaintiffs.
235.

Manufacturer Defendants made, promoted, and profited from their

misrepresentations—individually and collectively—knowing that their statements regarding the
risks, benefits, and superiority of opioids for chronic pain were false and misleading. Cephalon
and Purdue entered into settlements in the hundreds of millions of dollars to resolve criminal and
federal charges involving nearly identical conduct.
236.

Manufacturer Defendants expected and intended that their misrepresentations

would induce doctors to prescribe, patients to use, and payors to pay for their opioids for chronic
pain.
237.

When they began their deceptive marketing practices, Manufacturer Defendants

recklessly disregarded the harm that their practices were likely to cause. As their scheme was
implemented, and as the reasonably foreseeable harm began to occur, Manufacturer Defendants
knew that it was occurring. Manufacturer Defendants closely monitored their own sales and the
habits of prescribing doctors, which allowed them to see sales balloon—overall, in individual
practices, and for specific indications. Their sales representatives knew what types of doctors
were receiving their messages and how they were responding. Moreover, Manufacturer
104

Girion, Lisa, “Dissecting an OxyContin Pipeline,” Portland Press Herald, 16 July
2016. Web. 25 Oct. 2017.

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Defendants had access to, and carefully monitored government and other data that tracked the
explosive rise in opioid use, addiction, injury, and death.
IX.

Manufacturer Defendants Fraudulently Concealed Their Misrepresentations.
238.

Manufacturer Defendants tried to avoid detection of, and to fraudulently conceal,

their deceptive marketing and conspiratorial behavior.
239.

Manufacturer Defendants disguised their own roles in the deceptive marketing by

funding and working through Front Groups purporting to be patient advocacy and professional
organizations and through paid KOLs. Manufacturer Defendants purposefully hid behind the
assumed credibility of the front organizations and KOLs and relied on them to vouch for the
accuracy and integrity of Manufacturer Defendants’ false and misleading statements about
opioid use for chronic pain.
240.

Manufacturer Defendants did not disclose their role in shaping, editing, and

approving the content of the Front Groups publications. Manufacturer Defendants secretly
influenced these purportedly “educational” or “scientific” materials in emails, correspondence,
and meetings with KOLs, Front Groups, and public relations companies.
241.

Besides hiding their own role in generating the deceptive content, Manufacturer

Defendants manipulated their promotional materials and the scientific literature to make it appear
these items were accurate, truthful, and supported by substantial scientific evidence.
Manufacturer Defendants distorted the meaning or import of materials they cited and offered
them as evidence for propositions the materials did no support. The true lack of support for
Manufacturer Defendants’ deceptive messages was not apparent to the medical professionals
who relied upon them in making treatment decisions. The false and misleading nature of
Manufacturer Defendants’ marketing was not known to, nor could it reasonably have been
discovered by, Plaintiffs or their residents.
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242.

Manufacturer Defendants also concealed their participation by extensively using

the public relations companies they hired to work with Front Groups to produce and disseminate
deceptive materials.
243.

Manufacturer Defendants concealed from the medical community, patients, and

health care payors facts sufficient to arouse suspicion of the existence of claims that Plaintiffs
now assert. Plaintiffs did not discover the existence and scope of Manufacturer Defendants’
industry-wide fraud and could not have acquired such knowledge earlier through the exercise of
reasonable diligence.
244.

Through the public statements, marketing, and advertising, Manufacturer

Defendants’ deceptions deprived Plaintiffs of actual or implied knowledge of facts sufficient to
put them on notice of potential claims.
X.

Distributor Defendants Have A Duty to Report and Stop Suspicious Orders of
Opioids.

A.

Distributor Defendants’ Duties.

245.

Distributor Defendants have an affirmative duty to act as a gatekeeper guarding

against the diversion of the highly addictive, dangerous opioid drugs.
246.

Congress created a closed system of distribution of prescription opioids with the

Controlled Substance Act of 1970 that required all manufacturers and distributors to obtain
registrations and investigate, report, and stop suspicious orders of prescription opioids.
247.

The closed loop system established by the Controlled Substances Act combats

diversion by requiring that “all legitimate handlers of controlled substances must obtain a DEA
[Drug Enforcement Administration] registration and, as a condition of maintaining such

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registration, must take reasonable steps to ensure that their registration is not being utilized as a
source of diversion.”105
248.

The Controlled Substances Act and its implementing regulations restrict the

distribution of controlled substances by requiring drug distributors and manufacturers to monitor,
identify, stop, and report suspicious orders of controlled substances, including orders of unusual
size, orders deviating substantially from a normal pattern, and orders of unusual frequency.106
249.

The Distributor Defendants are required to register with the Drug Enforcement

Administration (DEA), pursuant to the Controlled Substances Act.107
250.

Accordingly, each of the Defendant Distributors is a “registrant” as a wholesale

distributor in the chain of distribution of Schedule II controlled substances (opioids) with a duty
to comply with all security requirements imposed under that statutory scheme.
251.

In evaluating a distributor’s operations, the DEA considers “(1) whether the

distributor has maintained “effective control[s] against diversion of particular controlled
substances into other than legitimate medical, scientific, and industrial channels”; (2) whether the
distributor has complied with applicable state and local laws; (3) whether the distributor has
previously been convicted under federal or state laws for a crime related to the sale of controlled
substances; (4) the distributor's past experience with controlled substances; and (5) “such other
factors as may be relevant to and consistent with the public health and safety.”108
105

Letter from Joseph T. Rannazzisi, Deputy Assis. Admin., Office of Diversion Control,
to Cardinal Health, Sept. 27, 2006, p. 1 (“2006 Rannazzisi Letter”) (filed in Cardinal Health,
Inc. v. Holder, No. 1:12-cv-00185-RBW, Doc. 14-51 (D.D.C.).)
106

See 21 U.S.C. §§ 801-971; 21 C.F.R. §§ 1300-1321.

107

See 21 U.S.C. § 823(b), (e); 28 C.F.R. § 0.100; Masters Pharm., Inc., 861 F.3d at 21.

108

Masters Pharm., Inc., 861 F.3d at 212 (quoting 21 U.S.C. § 823(b), (e)).
67

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252.

Distributors are “one of the key components of the distribution chain” and “must

be vigilant in deciding whether a prospective customer can be trusted to deliver controlled
substances only for lawful purposes. This responsibility is critical, as Congress has expressly
declared that the illegal distribution of controlled substances has a substantial and detrimental
effect on the health and general welfare of the American people.”109
253.

Federal regulations require that Distributor Defendants “shall provide effective

controls and procedures to guard against theft and diversion of controlled substances.”110
254.

Distributor Defendants must not ship a suspicious order.111 Every registrant under

the Controlled Substances Act, including Distributor Defendants, is required to notify the DEA
of suspicious orders and stop such orders, thereby ensuring that prescription opioids are not
diverted for illegal purposes.
255.

The implementing federal regulations provide, “[t]he registrant shall design and

operate a system to disclose to the registrant suspicious orders of controlled substances. The
registrant shall inform the Field Division Office of the Administration in his area of suspicious
orders when discovered by the registrant.112
256.

“Suspicious orders include orders of unusual size, orders deviating substantially

from a normal pattern, and orders of unusual frequency.”113 The criteria for suspicious orders:
109

2006 Rannazzisi letter, p. 1.

110

21 C.F.R. § 1301.71(a). See also 21 U.S.C. § 823(b).

111

See Prevoznik, Thomas W., “Distributor Initiative: A National Perspective,”
Deadiversion.usdoj.gov, U.S. Dept. of Justice, Drug Enforcement Administration, 22 Oct. 2013.
Web. 25 Oct. 2017.
112

21 C.F.R. § 1301.74(b) (emphasis added).

113

21 C.F.R. § 1301.74(b).

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are disjunctive and are not all inclusive. For example, if an order deviates
substantially from a normal pattern, the size of the order does not matter and the
order should be reported a suspicious. Likewise, a registrant need not wait for a
“normal pattern” to develop over time before determining whether a particular
order is suspicious. The size of the order alone, whether or not it deviates from a
normal pattern, is enough to trigger the registrant’s responsibility to report the
order as suspicious. The determination of whether an order is suspicious depends
not only on the ordering patterns of the particular customer, but also on the
patterns of the registrant’s customer base and the patterns throughout the relevant
segment of the regulated industry.114
257.

“Once a distributor has reported a suspicious order, it must make one of two

choices: decline to ship the order, or conduct some “due diligence” and—if it is able to
determine that the order is not likely to be diverted into illegal channels—ship the order.”115
258.

Indiana also places duties on drug distributors. Indiana law requires that “[e]very

person who manufactures or distributes any controlled substance within this state or who
proposes to engage in the manufacture or distribution of any controlled substance within this
state, must obtain biennially a registration issued by the board [Indiana state board of pharmacy]
in accordance with the board's rules.”116
259.

The Indiana Administrative Code also requires that “[e]very person who

manufactures, distributes, or dispenses any controlled substance or who proposes to engage in
the manufacture, distribution, or dispensing of any controlled substance shall obtain annually a
registration unless exempted by law. . . .”117
114

Letter from Joseph T. Rannazzisi, Deputy Assis. Admin., Office of Diversion Control,
to Cardinal Health, Dec. 27, 2007, p. 1 (“2007 Rannazzisi Letter”) (filed in Cardinal Health, Inc.
v. Holder, No. 1:12-cv-00185-RBW, Doc. 14-8 (D.D.C.).)
115

Masters Pharm., Inc., 861 F.3d at 212–13.

116

Ind. Code § 35-48-3-3(a). See also Ind. Code § 35-48-1-6 (““Board” refers to the
Indiana state board of pharmacy.”)
117

856 Ind. Admin. Code 2-3-2.

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260.

Indiana law provides that the state board of pharmacy “shall register an applicant

to manufacture or distribute controlled substances unless it determines that the issuance of that
registration would be inconsistent with the public interest.”118 One of the factors the Indiana state
board of pharmacy shall consider in determining the public interest is “maintenance of effective
controls against diversion of controlled substances into other than legitimate medical, scientific,
or industrial channels. . . .”119
261.

The Indiana Administrative Code further requires distributors to inform the board

of pharmacy of suspicious orders when discovered by the distributor. A distributor:
shall design and operate a system to disclose to the registrant suspicious orders of
controlled substances. The registrant shall inform the Indiana Board of Pharmacy
of suspicious orders when discovered by the registrant. Suspicious orders include
orders of unusual size, orders deviating substantially from a normal pattern, and
orders of unusual frequency.120
262.

The Distributor Defendants knew they were required to monitor, detect, and halt

suspicious orders. Industry compliance guidelines established by the Healthcare Distribution
Management Association, the trade association of pharmaceutical distributors, explain that
distributors are “[a]t the center of a sophisticated supply chain” and therefore “are uniquely
situated to perform due diligence in order to help support the security of the controlled
substances they deliver to their customers.” 121 The guidelines set forth recommended steps in the

118

Ind. Code § 35-48-3-4(a).

119

Ind. Code § 35-48-3-4(a)(1).

120

856 Ind. Admin. Code 2-3-33(b) (emphasis added). See also Ind. Code § 35-48-3-7
(“Persons registered to manufacture, distribute, or dispense controlled substances under this
article shall keep records and maintain inventories in conformance with the record-keeping and
inventory requirements of federal law and with any additional rules the board issues.”).
121

Healthcare Distribution Management Association (HDMA) Industry Compliance
Guidelines: Reporting Suspicious Orders and Preventing Diversion of Controlled Substances
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“due diligence” process, and note in particular “[i]f an order meets or exceeds a distributor’s
threshold, as defined in the distributor’s monitoring system, or is otherwise characterized by the
distributor as an order of interest, the distributor should not ship to the customer, in fulfillment of
that order, any units of the specific drug code product as to which the order met or exceeded a
threshold or as to which the order was otherwise characterized as an order of interest.”122
263.

The Distributor Defendants sold prescription opioids in Indianapolis and Marion

County, which Defendants knew were likely to be diverted in Indianapolis and Marion County.
264.

Each Distributor Defendant owes a duty to monitor and detect suspicious orders

of prescription opioids.
265.

Each Distributor Defendant owes a duty to investigate and refuse suspicious

orders of prescription opioids.
266.

Each Distributor Defendant owes a duty to report suspicious orders of

prescription opioids.
267.

Each Distributor Defendant owes a duty to prevent the diversion of prescription

opioids into illicit markets in Indiana and Indianapolis and Marion County.
268.

The foreseeable harm resulting from a breach of these duties is the diversion of

prescription opioids for nonmedical purposes and the subsequent opioid addiction crisis ravaging
Indianapolis and Marion County and the damages caused thereby.

(filed in Cardinal Health, Inc. v. Holder, No. 12-5061, Doc. No. 1362415 (App’x B) (D.C. Cir.
Mar. 7, 2012).
122

Id.

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B.

The ARCOS Database.

269.

Pills made and distributed in the United States are tracked in a confidential DEA

database called Automation of Reports and Consolidated Orders System (ARCOS).
270.

The ARCOS database “is an automated, comprehensive drug reporting system

which monitors the flow of DEA controlled substances from their point of manufacture through
commercial distribution channels to point of sale or distribution at the dispensing/retail level––
hospitals, retail pharmacies, practitioners, mid-level practitioners, and teaching institutions.”123
271.

Distributor Defendants are required to maintain records of their transactions

involving controlled substances and are required to file reports of distributions of certain
controlled substances to the ARCOS database.124
272.

ARCOS registrants must report all movement of drugs quarterly but they may

elect to report on a monthly basis. There are approximately 30,000,000+ transactions reported
yearly.125 ARCOS data is used in criminal and civil prosecutions and provides data for trend
analysis for other agencies.
273.

Neither the DEA nor the Defendants will voluntarily disclose the ARCOS data.

274.

However, ARCOS data for West Virginia revealed that distributors and

manufacturers knew of, but did not report or stop, suspicious orders of prescription opioids.

123

“Automation of Reports and Consolidated Orders System (ARCOS),”
Deadiversion.usdoj.gov, U.S. Dept. of Justice, Drug Enforcement Administration. Web. 23 Sept.
2017.
124

See 2006 Rannazzisi letter, p. 2. See also “Automation of Reports and Consolidated
Orders System (ARCOS), Questions & Answers,” Deadiversion.usdoj.gov. Web. 25 Oct. 2017.
125

“Automation of Reports and Consolidated Orders System (ARCOS), Questions &
Answers,” Deadiversion.usdoj.gov, U.S. Dept. of Justice, Drug Enforcement Administration.
Web. 25 Oct. 2017.

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XI.

Distributor Defendants Breached Their Duties And The DEA Gets Involved.
A.

The DEA Sent Letters to the Distributor Defendants.

275.

As a result of the Distributor Defendants’ failure to comply with federal law, the

DEA has taken a number of actions against them.
276.

On September 27, 2006, the DEA sent a letter to “every commercial entity in the

United States registered with the Drug Enforcement Administration (DEA) to distribute
controlled substances.”126
277.

The letter states that manufacturers and distributors “share responsibility for

maintaining appropriate safeguards against diversion” and “given the extent of prescription drug
abuse in the United States, along with the dangerous and potentially lethal consequences of such
abuse, even just one distributor that uses its DEA registration to facilitate diversion can
cause enormous harm.”127
278.

The letter advised that “DEA will use its authority to revoke and suspend

registrations in appropriate cases.”128
279.

The letter also provides that “in addition to reporting all suspicious orders, a

distributor has a statutory responsibility to exercise due diligence to avoid filling suspicious orders
that might be diverted into other than legitimate medical, scientific, and industrial channels.”129
280.

The letter further discusses that “distributors must be vigilant in deciding whether

a prospective customer can be trusted to deliver controlled substances only for lawful purposes.
126

2006 Rannazzisi Letter, p. 1.

127

Id., p. 2 (emphasis added).

128

Id.

129

Id.

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This responsibility is critical, as Congress has expressly declared that the illegal distribution of
controlled substances has a substantial and detrimental effect on the health and general welfare of
the American people.”130
281.

The DEA sent another letter on December 27, 2007 to “reiterate the

responsibilities of controlled substance manufacturers and distributors to inform DEA of
suspicious orders.”131
282.

This letter reminded manufacturers and distributors of their obligation to “maintain

effective controls against diversion” and “design and operate a system to disclose to the registrant
suspicious orders of controlled substances.”132
283.

The letter stated that in terms of reporting suspicious orders:

Registrants that rely on rigid formulas to define whether an order is
suspicious may be failing to detect suspicious orders. For example, a system that
identifies orders as suspicious only if the total amount of a controlled substance
ordered during one month exceeds the amount ordered the previous month by a
certain percentage or more is insufficient. This system fails to identify orders
placed by a pharmacy if the pharmacy placed unusually large orders from the
beginning of its relationship with the distributor. Also, this system would not
identify orders as suspicious if the order were solely for one highly abused
controlled substance if the orders never grew substantially. Nevertheless, ordering
one highly abused controlled substance and little or nothing else deviates from the
normal pattern of what pharmacies generally order.
When reporting an order as suspicious, registrants must be clear in their
communications with DEA that the registrant is actually characterizing an order as
suspicious. Daily, weekly, or monthly reports submitted by a registrant indicating
"excessive purchases" do not comply with the requirement to report suspicious
orders, even if the registrant calls such reports “suspicious order reports.”133
130

Id., p.1.

131

2007 Rannazzisi Letter, p. 1.

132

Id.

133

Id., at p. 2.

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284.

The 2007 letter also said that “[f]ailure to maintain effective controls against

diversion is inconsistent with the public interest . . . and may result in the revocation of the
registrant’s DEA Certificate of Registration.”134
285.

The 2007 letter also references the final order issued in Southwood

Pharmaceuticals, Inc., 72 FR 36487 (2007), which “[i]n addition to discussing the obligation to
report suspicious orders when discovered” and “some criteria to use when determining whether
an order is suspicious”, the order “also specifically discusses your obligation to maintain
effective controls against the diversion of controlled substances.”135
B.

DEA Actions against the Distributor Defendants.

286.

Because of the Distributor Defendants’ refusal to comply with their legal

obligations, the DEA has repeatedly taken administrative action to force compliance. The United
States Department of Justice, Office of the Inspector General, Evaluation and Inspections
Division, reported that the DEA issued final decisions in 178 registrant actions between 2008
and 2012.136 “The Office of Administrative Law Judges issued a recommended decision in a
total of 117 registrant actions before the DEA issued its final decision, including 76 actions
involving orders to show cause and 41 actions involving immediate suspension orders.”137

134

Id., at pp. 1-2.

135

Id., at p. 2.

136

“The Drug Enforcement Administration’s Adjudication of Registrant Actions,”
Oig.justice.gov, United States Department of Justice, Office of the Inspector General, Evaluation
and Inspections Divisions, I-2014-003, p. 6 (May 2014). Web. 25 Oct. 2017.
137

Id.

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287.

In 2007, the DEA suspended AmerisourceBergen’s license to distribute from an

Orlando facility, alleging that the distribution center “had inadequate controls against diversion
of controlled substances by retail internet pharmacies.”138
288.

In 2012, AmerisourceBergen received subpoenas from United States’ prosecutors

and the DEA requesting “documents concerning a program for controlling and monitoring
diversion of controlled substances into channels other than for legitimate medical, scientific, and
industrial purposes.”139
289.

In 2008, McKesson agreed to pay more than $13 million to settle DEA claims that

it failed to report hundreds of suspicious orders from internet pharmacies that sold drugs online
to customers who did not have legal prescriptions. 140
290.

As DEA Acting Administrator Michele M. Leonhart publicly stated in 2008,

“[b]y failing to report suspicious orders for controlled substances that it received from rogue
Internet pharmacies, the McKesson Corporation fueled the explosive prescription drug abuse
problem we have in this country.”141
291.

In 2008, McKesson entered into a Settlement Agreement with the DOJ and an

Administrative Memorandum of Agreement with the DEA requiring that McKesson
“maintain a compliance program designed to detect and prevent the diversion of controlled
138

Reuters Staff, “Amerisource says US DEA OKs Controlled Drug Permit,” Reuters, 27
Aug. 2007. Web. 16, Sept. 2017.
139

Reuters Staff, “US Seeks Info on Drug Diversion from Amerisource Bergen,” Reuters,
9 Aug. 2012. Web. 2, Oct. 2017.
140

See Press Release, “McKesson Corporation Agrees to Pay More than $13 Million to
Settle Claims that it Failed to Report Suspicious Sales of Prescription Medications,” U.S. Dept.
of Justice, 2 May 2008. Web. 2 Oct. 2017.
141

Id.

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substances, inform DEA of suspicious orders required by 21 CFR § 1301.74(b), and follow
the procedures established by its Controlled Substance Monitoring Program.”142
292.

As a result of these agreements, “McKesson recognized that it had a duty to

monitor its sales of all controlled substances and report suspicious orders to DEA.”143
293.

Despite these prior penalties, McKesson’s pattern of failing to report suspicious

orders continued for many years.
294.

From 2008 until 2013, McKesson “supplied various U.S. pharmacies an

increasing amount of oxycodone and hydrocodone pills, frequently misused products that are
part of the current opioid epidemic.”144 “[E]ven after designing a compliance program after the
2008 settlement, McKesson did not fully implement or adhere to its own program.”145
295.

In January 2017, the DOJ announced that McKesson had agreed to pay a record

$150 million fine and suspend the sale of controlled substances from distribution centers in
Colorado, Ohio, Michigan, and Florida.146
296.

In an Administrative Memorandum of Agreement entered into between

McKesson, DOJ, and the DEA in 2017, the DOJ and DEA recognized, for example:


“McKesson failed to maintain effective controls against diversion of particular
controlled substances into other than legitimate medical, scientific, and

142

2017 McKesson Administrative Memorandum of Agreement, p. 3, Justice.gov, U.S.
Dept. of Justice. Web. 25 Oct. 2017.
143

Id.

144

Press Release, “McKesson Agrees to Pay Record $150 Million Settlement for Failure
to Report Suspicious Orders of Pharmaceutical Drugs,” U.S. Dept. of Justice Office of Public
Affairs, 17 Jan. 2017. Web. 9 Oct. 2017.
145

Id.

146

Id.

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industrial channels by sales to certain of its customers in violation of the CSA
and the CSA’s implementing regulations at McKesson Distribution Centers. . .
;”147


“McKesson failed to properly monitor its sales of controlled substances and/or
report suspicious order to the DEA, in accordance with McKesson’s
obligations under the 2008 Agreements, the CSA, and 21 C.F.R. §
1301.74(b);”148



“McKesson failed to conduct adequate due diligence of its customers, failed
to keep complete and accurate records in the CMSP files maintained for many
of its customers, and bypassed suspicious order reporting procedures set forth
in the McKesson CMSP;”149



“McKesson failed to inform the DEA Field Offices and/or DEA Headquarters
of suspicious orders of controlled substances made by its customers . . .
including orders of unusual size, orders deviating substantially from normal
patterns, and orders of unusual frequency, as required by and in violation of
21 C.F.R. §1301.74(b), 21 U.S.C. § 842(a)(5), and the 2008 Agreements;”150



“McKesson failed to report suspicious orders for controlled substances in
accordance with the standards identified and outlined in the DEA Letters;”151



“The McKesson Distribution Centers distributed controlled substances to
pharmacies even though those Distribution Centers should have known that
the pharmacists practicing within those pharmacies had failed to fulfill their
corresponding responsibility to ensure that controlled substances were
dispensed pursuant to prescriptions issued for legitimate medical purposes by
practitioners acting in the course of their professional practice, as required by
21 C.F.R. § 1306.04(a).”152

147

2017 McKesson Administrative Memorandum of Agreement, p. 3, Justice.gov, U.S.
Dept. of Justice. Web. 25 Oct. 2017.
148

Id,. at p. 4.

149

Id.

150

Id.

151

Id.

152

Id.

78

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297.

McKesson acknowledged in the 2017 settlement that “at various times during the

Covered Time Period, it did not identify or report to DEA certain orders placed by certain
pharmacies which should have been detected by McKesson as suspicious based on the guidance
contained in the DEA Letters about the requirements set forth in 21 C.F.R. §1301.74(b) and 21
U.S.C. § 842(a)(5).”153
298.

McKesson also acknowledged in the 2017 settlement that “at various times during

the Covered Time Period, [McKesson] did not identify or report to DEA certain orders placed by
certain pharmacies, which should have been detected by McKesson as suspicious in a manner
fully consistent with the requirements set forth in the 2008 MOA.”154
299.

In 2008, Cardinal Health agreed to pay $34 million to settle claims that it failed to

report suspicious sales of abused controlled substances.155 As stated in the DOJ’s 2008 Press
Release, “Cardinal’s conduct allowed the “diversion” of millions of dosage units of hydrocodone
from legitimate to non-legitimate channels. “DEA regulations require all manufacturers and
distributors to report suspicious orders of controlled substances and, more specifically, to
‘design and operate a system to disclose to the registrant suspicious orders of controlled
substances.’ Registrants are required to inform DEA of suspicious orders upon discovery.”156
300.

DEA Acting Administrator Michele M. Leonhart stated at the time:

153

Id., at p. 5.

154

Id.

155

Press Release, “Cardinal Health Inc., Agrees to Pay $34 Million to Settle Claims that
it failed to Report Suspicious Sales of Widely-Abused Controlled Substances,” The Colorado
U.S. Attorney’s Office, 2 Oct. 2008. Web. 2 Oct. 2017.
156

Id. (emphasis original).

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Despite DEA’s repeated attempts to educate Cardinal Health on diversion
awareness and prevention, Cardinal engaged in a pattern of failing to report
blatantly suspicious orders for controlled substances filled by its distribution
facilities located throughout the United States,” . . . “Cardinal’s negligent conduct
contributed to our nation’s serious pharmaceutical abuse problem. This substantial
civil penalty underscores DEA’s determination to prevent pharmaceutical
diversion and protect the public health and safety by continuing to hold
companies responsible if they fail to fulfill their obligations under the Controlled
Substance Act.”157
301.

Cardinal Health entered into an Administrative Memorandum of Agreement

(“2008 MOA”) with the DEA as well. The 2008 MOA required Cardinal Health “to maintain a
compliance program designed to detect and prevent diversion of controlled substances as
required under the Controlled Substances Act and applicable DEA regulations.”158
302.

In 2012, Cardinal Health reached a settlement with the DEA to resolve allegations

that a Florida distribution center “failed to maintain effective controls against the diversion of
controlled substances, specifically oxycodone.”159
303.

Cardinal Health entered in an Administrative Memorandum of Agreement with

the DOJ and DEA (the “2012 MOA”), which noted that “[o]n February 2, 2012, the DEA, by its
Administrator, Michele M. Leonhart, issued an Order to Show Cause and Immediate Suspension
of Registration to Cardinal Lakeland.”160 The Order to Show Cause alleged:
“Despite the 2008 MOA, Cardinal Lakeland failed to maintain effective
controls against diversion of particular controlled substances into other

a.

157

Id.

158

Press Release, “DEA Suspends for Two Years Pharmaceutical Wholesale
Distributor’s Ability to Sell Controlled Substances from Lakeland, Florida Facility,” Drug
Enforcement Administration, 15 May 2012. Web. 16 Sept. 2017.
159

Id.

160

2012 Cardinal Health Administrative Memorandum of Agreement, p. 1.

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than legitimate medical, scientific, and industrial channels as evidenced by
sales to certain customers of Cardinal;
b.

Cardinal Lakeland failed to report suspicious orders of controlled
substances as required by 21 C.F.R. § 1301.74(b); and

c.

Cardinal Lakeland failed to conduct meaningful due diligence of its retail
pharmacies, including its retail chain pharmacy customers to ensure that
controlled substances were not diverted into other than legitimate
channels.”161

304.

In the 2012 MOA, Cardinal Health agreed “to maintain a compliance program

designed to detect and prevent diversion of controlled substances as required under the CSA and
applicable DEA regulations” and Cardinal Health “shall inform DEA of suspicious orders as
required by 21 C.F.R. § 1301.74(b).”162
305.

In 2016, Cardinal Health agreed to pay $44 million in fines to resolve allegations

“that it violated the Controlled Substances Act (CSA) in Maryland, Florida and New York by
failing to report suspicious orders of controlled substances to pharmacies located in those
states.”163
C.

Distributor Defendants Misled the Public Concerning their Duties and
Compliance.

306.

In Masters Pharmaceutical, Inc. v. Drug Enforcement Administration (D.C. Cir),

the Healthcare Distribution Management Association (HDMA), a trade association run by the
Distributor Defendants, and National Association of Chain Drug Stores (NACDS) submitted

161

Id.

162

Id. at 3–4.

163

Press Release, “Cardinal Health Agrees to $44 Million Settlement for Alleged
Violations of Controlled Substances Act,” U.S. Dept. of Justice, The U.S. Attorney’s Office,
District of Maryland, 23 Dec. 2016. Web. 23 Sept. 2017.

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briefs regarding the legal duty of wholesale distributors.164 Inaccurately denying the legal duties
that Distributor Defendants have failed to fulfill, they argued that:


The Associations complained that the “DEA has required distributors not only
to report suspicious orders, but to investigate orders (e.g., by interrogating
pharmacies and physicians) and take action to halt suspicious orders before
they are filled.”165



The Associations argued that, “DEA now appears to have changed its position
to require that distributors not only report suspicious orders, but investigate
and halt suspicious orders. 80 Fed. Reg. at 55,421, 55,475-77, 55,479. Such a
change in agency position must be accompanied by an acknowledgement of
the change and a reasoned explanation for it. In other words, an agency must
“display awareness that it is changing position” and “show that that there are
good reasons for the new policy.” Fox Television Stations, Inc., 556 U.S. at
515. This is especially important here, because imposing intrusive obligations
on distributors threatens to disrupt patient access to needed prescription
medications.”166



The Associations alleged “Section 1301.71 by its terms restricts DEA’s
authority to delineate the requirements for “effective controls”—stating that, in
evaluating a control system, the Administrator “shall use the security
requirements set forth in §§ 1301.72-1301.76.” 21 C.F.R. § 1301.71(a)
(emphasis added). Nothing in Sections 1301.72-1301.76 requires distributors
to investigate the legitimacy of orders, or to halt shipment of any orders
deemed to be suspicious.”167

164

The Healthcare Distribution Management Association (HDMA)—now known as the
Healthcare Distribution Alliance (HDA)—is a national, not-for-profit trade association that
represents the nation’s primary, full-service healthcare distributors whose membership includes,
among others: AmerisourceBergen Drug Corporation, Cardinal Health, Inc., and McKesson
Corporation. See generally HDA, About, https://www.healthcaredistribution.org/about. Web. 6
Oct. 2017. The National Association of Chain Drug Stores (NACDS) is a national, not-for-profit
trade association that represents traditional drug stores and supermarkets and mass merchants
with pharmacies whose membership includes, among others: Walgreen Company, CVS Health,
Rite Aid Corporation and Walmart. See generally NACDS, Mission, https://www.nacds.org/
about/mission/. Web. 6 Oct. 2017.
165

Brief for HDMA and NACDS filed in Masters Pharm., Inc. v. Drug Enf't Admin.,
USCA Case #15-1335, Doc. No. 1607110, pp. 4–5 (D.C. Cir. Apr. 4, 2016).
166

Id., at p. 8.

167

Id., at p.14.

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

The Associations complained that the purported “practical infeasibility of
requiring distributors to investigate and halt suspicious orders (as well as report
them) underscores the importance of ensuring that DEA has complied with the
APA before attempting to impose such duties.”168



The Associations alleged (inaccurately) that “DEA’s regulations had sensibly
imposed a duty on distributors simply to report suspicious orders, but left it to
DEA and its agents to investigate and halt suspicious orders.”169



Also inaccurately, the Associations argued that, “[i]mposing a duty on
distributors—which lack the patient information and the necessary medical
expertise—to investigate and halt orders may force distributors to take a shotin-the-dark approach to complying with DEA’s demands.”170

307.

Rejecting the Associations’ contentions, the United States Court of Appeals for

the District of Columbia issued an opinion stating that “[o]nce a distributor has reported a
suspicious order, it must make one of two choices: decline to ship the order, or conduct some
“due diligence” and—if it is able to determine that the order is not likely to be diverted into
illegal channels—ship the order (the Shipping Requirement).”171
308.

The Distributor Defendants have also undertaken to fraudulently convince the

public that they were complying with their legal obligations, including those imposed by
licensing regulations. Through such statements, the Distributor Defendants attempted to assure
the public they were working to curb the opioid epidemic.
309.

For example, a Cardinal Health executive said the company “deploys ‘advanced

analytics, technology, and teams of anti-diversion specialists and investigators who are

168

Id., at p. 22.

169

Id., at p. 24–25.

170

Id., at p. 26.

171

Masters Pharm., Inc., 861 F.3d at 212–13.

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embedded in our supply chain. This ensures that we are as effective and efficient as possible in
constantly monitoring, identifying, and eliminating any outside criminal activity.’” 172
310.

Given the sales volumes and the company’s history of violations, this executive

was either not telling the truth, or Cardinal Health had such a system, but it ignored the results.
311.

Similarly, McKesson publicly stated that it has “put significant resources towards

building a best-in-class controlled substance monitoring program to help identify suspicious
orders and prevent prescription drug diversion in the supply chain,” and “[o]ur team is deeply
passionate about curbing the opioid epidemic in our country.”173
312.

Given McKesson’s past conduct, this statement is either false, or the company

ignored the results of its monitoring program.
313.

Rather than abide by their duties, the Distributor Defendants and their association,

the Healthcare Distribution Alliance, spent $13 million to lobby House and Senate members and
their staff in favor of legislation called “Ensuring Patient Access and Effective Drug
Enforcement Act” which, as one article described, “raises the standard for the diversion office to
obtain an immediate suspension order. Now the DEA must show an “immediate” rather than an
“imminent” threat to the public, a nearly impossible burden to meet against distributors,
according to former DEA supervisors and other critics. They said the new law gives the industry
something it has desperately sought: protection from having its drugs locked up with little

172

Bernstein, Lenny et al., “How Drugs Intended for Patients Ended Up in the Hands of
Illegal Users: ‘No one was doing their job,’” The Washington Post, 22 Oct. 2016. Web. 6 Oct.
2017.
173

Higham, Scott et al., “Drug Industry Hired Dozens of Officials from the DEA as the
Agency tried to Curb Opioid Abuse,” The Washington Post, 22 Dec. 2016. Web. 6 Oct. 2017.

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notice.”174 After an explosive media report on the Distributor Defendants’ lobbying effort, the
Congressman who sponsored the bill and who was slated to be the President’s new Drug Czar,
withdrew his name from consideration.175
314.

By misleading the public about the effectiveness of their controlled substance

monitoring programs, the Distributor Defendants successfully concealed the facts giving rise to
the claims that Indianapolis and Marion County now assert.
315.

In September 2017, 41 state Attorneys General served opioid manufacturers and

distributors with subpoenas and document requests seeking information concerning how the
companies marketed and distributed opioids.176
316.

Meanwhile, the opioid epidemic ravages Indianapolis and Marion County because

the fines and suspensions imposed by the DEA did not change the conduct of Distributor
Defendants. The Distributor Defendants simply pay fines as a cost of doing business in their
industry that generates billions of dollars in annual revenue. They hold multiple DEA registration
numbers and when one facility is suspended, they simply ship from another facility.
317.

The Distributor Defendants have abandoned their duties imposed under federal

and state law, taken advantage of a lack of DEA law enforcement, and allowed diversion in
Indiana, Indianapolis, and Marion County for their economic benefit.

174

Bernstein, Lenny et al, “Investigation: The DEA Slowed Enforcement While the
Opioid Epidemic Grew Out of Control,” The Washington Post, 22 Oct. 2016. Web. 6 Oct. 2017.
175

Chappell, Bill, “Tom Marino, Trump’s Pick As Drug Czar, Withdraws After
Damaging Opioid Report,” NPR.Org, 17 Oct. 2017. Web. 25 Oct. 2017.
176

Press Release, “A.G. Schneiderman, Bipartisan Coalition Of AGs Expand Multistate
Investigation Into Opioid Crisis,” New York State Office of the Attorney General, 19 Sept. 2017.
Web. 6 Oct. 2017.

85

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D.

Distributor Defendants Breached their Duties.

318.

“Because distributors handle such large volumes of controlled substances, and are

the first major line of defense in the movement of legal pharmaceutical controlled substances . . .
from legitimate channels into the illicit market, it is incumbent on distributors to maintain
effective controls to prevent diversion of controlled substances. Should a distributor deviate from
these checks and balances, the closed system created by the CSA collapses.”177
319.

The sheer volume of prescription opioids distributed to pharmacies in

Indianapolis and Marion County and/or to pharmacies from which the Distributor Defendants
knew the opioids were likely to be diverted into Indianapolis and Marion County, is excessive
for the medical need of the community and facially suspicious. Some red flags are so obvious
that no one who engages in the legitimate distribution of controlled substances can reasonably
claim ignorance of them.
320.

The Distributor Defendants failed to report suspicious orders originating from

Indianapolis and Marion County or which the Distributor Defendants knew were likely to be
diverted to Indianapolis and Marion County, to the federal and state authorities, including the
DEA and the Indiana Board of Pharmacy.
321.

The Distributor Defendants unlawfully filled suspicious orders of unusual size,

orders deviating substantially from a normal pattern and/or orders of unusual frequency in
Indianapolis and Marion County, and/or orders which Defendants knew or should have known
were likely to be delivered and/or diverted into Indianapolis and Marion County.

177

Declaration of Joseph Rannazzisi, ¶ 10 (filed in Cardinal Health, Inc. v. Holder, No.
1:12-cv-00185-RBW, Doc. 14-2 (D.D.C. February 10, 2012).

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322.

The Distributor Defendants breached their duty to monitor, detect, investigate,

refuse and report suspicious orders of prescription opioids originating from Indianapolis and
Marion County, and/or in areas from which the Distributor Defendants knew opioids were likely
to be diverted to Indianapolis and Marion County.
323.

The Distributor Defendants breached their duty to maintain effective controls

against diversion of prescription opioids into other than legitimate medical, scientific, and
industrial channels.
324.

The Distributor Defendants breached their duty to design and operate a system to

disclose suspicious orders of controlled substances and failed to inform state and federal
authorities of suspicious orders when discovered, in violation of their duties under federal and
state law.
325.

The Distributor Defendants breached their duty to exercise due diligence to avoid

filling suspicious orders that might be diverted into channels other than legitimate medical,
scientific and industrial channels.
326.

The unlawful conduct by the Distributor Defendants is purposeful and intentional.

The Distributor Defendants violated the duties imposed by federal and state law.
327.

The Distributor Defendants acted with actual malice in breaching their duties, i.e.,

they have acted with a conscious disregard for the rights and safety of other persons, and their
actions had and continue to have a great probability of causing substantial harm.
328.

The Distributor Defendants’ repeated shipments of suspicious orders, over an

extended period of time, in violation of public safety statutes, and without reporting the
suspicious orders to the relevant authorities demonstrates wanton, willful, or reckless conduct or

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criminal indifference to civil obligations affecting the rights of others and justifies an award of
punitive damages.
XII.

The Manufacturer Defendants Also Fail to Prevent Diversion and Monitor, Report,
and Stop Suspicious Orders.
329.

The Manufacturer Defendants are under the same federal law duties as the

Distributor Defendants to prevent diversion, and to monitor, report, and prevent suspicious
orders of prescription opioids.
330.

Like the Distributor Defendants, the Manufacturer Defendants were required to

register with the DEA to manufacture schedule II controlled substances, like prescription
opioids.178 A requirement of such registration is the:
maintenance of effective controls against diversion of particular controlled
substances and any controlled substance in schedule I or II compounded
therefrom into other than legitimate medical, scientific, research, or industrial
channels, by limiting the importation and bulk manufacture of such controlled
substances to a number of establishments which can produce an adequate and
uninterrupted supply of these substances under adequately competitive conditions
for legitimate medical, scientific, research, and industrial purposes.179
331.

Additionally, as registrants under Section 823, the Manufacturer Defendants were

also required to monitor, report, and prevent suspicious orders of controlled substances:
The registrant shall design and operate a system to disclose to the
registrant suspicious orders of controlled substances. The registrant shall inform
the Field Division Office of the Administration in his area of suspicious orders
when discovered by the registrant. Suspicious orders include orders of unusual
size, orders deviating substantially from a normal pattern, and orders of unusual
frequency.180

178

See 21 U.S.C. § 823(a).

179

21 U.S.C. § 823(a)(1).

180

21 C.F.R. § 1301.74(b). See also 21 C.F.R. § 1301.02 (“Any term used in this part
shall have the definition set forth in section 102 of the Act (21 U.S.C. 802) or part 1300 of this
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332.

Like the Distributor Defendants, the Manufacturer Defendants “must obtain

biennially a registration issued by the board [Indiana state board of pharmacy] in accordance
with the board's rules.”181
333.

Like the Distributor Defendants, the Manufacturer Defendants must “obtain

annually a registration unless exempted by law”182 and must “design and operate a system to
disclose to the registrant suspicious orders of controlled substances. . . . [and] shall inform the
Indiana Board of Pharmacy of suspicious orders when discovered by the registrant.”183
334.

The Manufacturer Defendants had access to and possession of the information

necessary to monitor, report, and prevent suspicious orders and to prevent diversion. The
Manufacturer Defendants paid “chargebacks” to the Distributor Defendants. A chargeback is a
payment made by a manufacturer to a distributor after the distributor sells the manufacturer’s
product at a price below a specified rate. After a distributor sells a manufacturer’s product to a
pharmacy, for example, the distributor requests a chargeback from the manufacturer and, in
exchange for the payment, the distributor identifies to the manufacturer the product, volume and
the pharmacy to which it sold the product. Thus, the Manufacturer Defendants knew – just as the
Distributor Defendants knew – the volume, frequency, and pattern of opioid orders being placed

chapter.”); 21 C.F.R. § 1300.01 (“Registrant means any person who is registered pursuant to
either section 303 or section 1008 of the Act (21 U.S.C. 823 or 958).”
181

Ind. Code § 35-48-3-3(a). See also Ind. Code § 35-48-1-6 (““Board” refers to the
Indiana state board of pharmacy.”)
182

856 Ind. Admin. Code 2-3-2.

183

856 Ind. Admin. Code 2-3-33(b) (emphasis added). See also Ind. Code § 35-48-3-7
(“Persons registered to manufacture, distribute, or dispense controlled substances under this
article shall keep records and maintain inventories in conformance with the record-keeping and
inventory requirements of federal law and with any additional rules the board issues.”).

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and filled. The Manufacturer Defendants built receipt of this information into the payment
structure for the opioids provided to the Distributor Defendants.
335.

Federal statutes and regulations are clear: just like the Distributor Defendants, the

Manufacturer Defendants are required to “design and operate a system to disclose . . . suspicious
orders of controlled substances” and to maintain “effective controls against diversion.”184
336.

In 2017, the DOJ fined Defendant Mallinckrodt $35 million for failure to report

suspicious orders of controlled substances, including opioids, and for violating recordkeeping
requirements.185 As described by the DOJ:
The government alleged that Mallinckrodt failed to design and implement
an effective system to detect and report “suspicious orders” for controlled
substances – orders that are unusual in their frequency, size, or other patterns.
From 2008 until 2011, the U.S. alleged, Mallinckrodt supplied distributors, and
the distributors then supplied various U.S. pharmacies and pain clinics, an
increasingly excessive quantity of oxycodone pills without notifying DEA of
these suspicious orders. Through its investigation, the government learned
that manufacturers of pharmaceuticals offer discounts, known as
“chargebacks,” based on sales to certain downstream customers. Distributors
provide information on the downstream customer purchases to obtain the
discount. The groundbreaking nature of the settlement involves requiring a
manufacturer to utilize chargeback and similar data to monitor and report to DEA
suspicious sales of its oxycodone at the next level in the supply chain, typically
sales from distributors to independent and small chain pharmacy and pain clinic
customers.186
337.

The Memorandum of Agreement entered into by Mallinckrodt in 2017 confirms

that “[a]s a registrant under the CSA, Mallinckrodt had a responsibility to maintain effective

184

21 C.F.R. § 1301.74; 21 U.S.C. § 823(a)(1).

185

Press Release, “Mallinckrodt Agrees to Pay Record $35 Million Settlement for Failure
to Report Suspicious Orders of Pharmaceutical Drugs and for Recordkeeping Violations,” U.S.
Dept. of Justice, 11 July 2017. Web. 16 Sept. 2017.
186

Id. (emphasis added).

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controls against diversion, including a requirement that it review and monitor these sales and
report suspicious orders to DEA.”187
338.

The 2017 Memorandum of Agreement further details the DEA’s allegations

regarding Mallinckrodt’s failures to fulfill its legal duties as an opioid manufacturer to prevent
diversion:
a. With respect to its distribution of oxycodone and hydrocodone products,
Mallinckrodt's alleged failure to distribute these controlled substances in a manner
authorized by its registration and Mallinckrodt's alleged failure to operate an
effective suspicious order monitoring system and to report suspicious orders to
the DEA when discovered as required by and in violation of 21 C.F.R. §
1301.74(b). The above includes, but is not limited to Mallinckrodt's alleged
failure to:
i. conduct adequate due diligence of its customers;
ii. detect and report to the DEA orders of unusual size and frequency;
iii. detect and report to the DEA orders deviating substantially from
normal patterns including, but not limited to, those identified in letters
from the DEA Deputy Assistant Administrator, Office of Diversion
Control, to registrants dated September 27, 2006 and December 27, 2007:
1. orders that resulted in a disproportionate amount of a substance
which is most often abused going to a particular geographic region
where there was known diversion,
2. orders that purchased a disproportionate amount of a substance
which is most often abused compared to other products, and
3. orders from downstream customers to distributors who were
purchasing from multiple different distributors, of which Mallinckrodt
was aware;
iv. use "chargeback" information from its distributors to evaluate
suspicious orders. Chargebacks include downstream purchasing
information tied to certain discounts, providing Mallinckrodt with data on
buying patterns for Mallinckrodt products; and
187

Administrative Memorandum of Agreement between the United States Department of
Justice, the Drug Enforcement Agency, and Mallinckrodt, plc. and its subsidiary Mallinckrodt,
LLC, Justice.gov, U.S. Dept. of Justice, July 2017, p. 1. Web. 25 Oct. 2017.

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v.
take sufficient action to prevent recurrence of diversion by
downstream customers after receiving concrete information of diversion of
Mallinckrodt product by those downstream customers.188
339.

Defendant Mallinckrodt agreed that “certain aspects of Mallinckrodt’s system to

monitor and detect suspicious orders did not meet the standards outlined in letters from the DEA
Deputy Administrator, Office of Diversion Control, to registrants dated September 27, 2006 and
December 27, 2007.”189
340.

Defendant Mallinckrodt further agreed that:

Mallinckrodt acknowledges and agrees that the obligations undertaken in this
Program do not fulfill the totality of its obligations to maintain effective controls
against the diversion of controlled substances or to detect and report to DEA
suspicious orders for controlled substances. Mallinckrodt recognizes the
importance of the prevention of diversion of the controlled substances they
manufacture. Mallinckrodt will design and operate a system that meets the
requirements of 21 CFR 1301.74(b). Mallinckrodt's suspicious order system will
be designed to utilize all available transaction information to identify suspicious
orders of any Mallinckrodt product. Further, Mallinckrodt agrees to notify DEA
of any diversion and/or suspicious circumstances involving any Mallinckrodt
controlled substances that Mallinckrodt discovers.190
341.

The 2017 Agreement also contained the following:

Chargeback Data Monitoring. As part of their business model Mallinckrodt
collects transaction information, referred to as chargeback data, from their direct
customers (distributors). The transaction information contains data relating to the
direct customer sales of controlled substances to "downstream" registrants.
Mallinckrodt receives this type of data only after it is submitted to Mallinckrodt
by the direct customer, which is after the controlled substance has already been
distributed. Mallinckrodt will report to the DEA when Mallinckrodt concludes
that the chargeback data or other information indicates that a downstream
registrant poses a risk of diversion.191
188

Id., at pp. 2-3.

189

Id., at p. 4.

190

Id.

191

Id., at p. 5.

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342.

The same business practices utilized by Mallinckrodt regarding “charge backs”

and receipt and review of data from opioid distributors regarding orders of opioids were utilized
industry-wide among the Manufacturer and Distributor Defendants.
343.

Through the charge back data, the Manufacturer Defendants could monitor

suspicious orders of opioids.
344.

The Manufacturer Defendants failed to monitor, report, and halt suspicious orders

of opioids as required by federal law.
345.

The Manufacturer Defendants’ failures to monitor, report, and halt suspicious

orders of opioids were intentional and unlawful.
346.

The Manufacturer Defendants have misrepresented their compliance with federal

347.

The wrongful actions and omissions of the Manufacturer Defendants have caused

law.

the diversion of opioids and have been a substantial contributing factor to and proximate cause of
the opioid crisis ravaging Indianapolis and Marion County.
348.

The Manufacturer Defendants’ actions and omissions in failing to effectively

prevent diversion and failing to monitor, report, and prevent suspicious orders have enabled the
unlawful diversion of opioids into Indianapolis and Marion County.
XIII. Defendants’ Conduct and Breaches of Duties Caused the Plaintiffs’ Harm.
349.

As the Manufacturer Defendants’ efforts to expand the market for opioids

increased so have the rates of prescription and sale of their products—and the rates of opioid
related substance abuse, hospitalization, and death among the people of the State and
Indianapolis and Marion County. The Distributor Defendants have continued to unlawfully ship
these massive quantities of opioids into Indianapolis and Marion County, fueling the opioid
epidemic.
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350.

There is “a parallel relationship between the availability of prescription opioid

analgesics through legitimate pharmacy channels and the diversion and abuse of these drugs and
associated adverse outcomes.”192
351.

“[O]pioid analgesics are widely diverted and improperly used, and the widespread

use of the drugs has resulted in a national epidemic of opioid overdose deaths and addictions.”193
352.

The epidemic is “directly related to the increasingly widespread misuse of

powerful opioid pain medications.”194
353.

The increased abuse of prescription painkillers along with growing sales has

contributed to a large number of overdoses and deaths.195
354.

The opioid epidemic has escalated in Indianapolis and Marion County with

devastating effects. Substantial opioid-related substance abuse, hospitalization and death mirrors
Defendants’ increased distribution of opioids in this community.
355.

Because of the well-established relationship between the use of prescription

opioids and the use of non-prescription opioids, like heroin, the massive distribution of opioids to
Indianapolis and Marion County and areas from which such opioids are being diverted into

192

See Dart, Richard C. et al., “Trends in Opioid Analgesic Abuse and Mortality in the
United States,” New Engl. J. Med. 2015; 372:241-248 (Jan. 15, 2015).
193

Volkow, Nora D. et al., “Opioid Abuse in Chronic Pain—Misconceptions and
Mitigation Strategies,” New Engl. J. Med. 2016; 374:1253-1263 (Mar. 31, 2016).
194

See Califf, Robert M. et al., “A Proactive Response to Prescription Opioid Abuse,”
New Engl. J. Med. 2016; 374:1480-1485 (Apr. 14, 2016).
195

See Press Release, “Prescription Painkiller Overdoses at Epidemic Levels,” U.S. Det.
of Health and Human Services, Centers for Disease Control and Prevention, 1 Nov. 2011. Web.
6 Oct. 2017.

94

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Indianapolis and Marion County has caused the Defendants-caused opioid epidemic to include
heroin addiction, abuse, and death.
356.

Prescription opioid abuse, addiction, morbidity, and mortality are hazards to

public health and safety in the State and in Indianapolis and Marion County.
357.

Heroin abuse, addiction, morbidity, and mortality are hazards to public health and

safety in the State and in Indianapolis and Marion County.
358.

Defendants repeatedly and purposefully breached their duties under state and

federal law, and such breaches are direct and proximate causes of, and/or substantial factors
leading to, the widespread diversion of prescription opioids for nonmedical purposes into
Indianapolis and Marion County.
359.

The unlawful diversion of prescription opioids is a direct and proximate cause of,

and/or substantial factor leading to, the opioid epidemic, prescription opioid abuse, addiction,
morbidity and mortality in the State and Indianapolis and Marion County. This diversion and the
epidemic are direct causes of foreseeable harms suffered by the Plaintiffs. Defendants’
intentional and unlawful conduct resulted in direct and foreseeable, past and continuing,
economic damages to Plaintiffs for which Plaintiffs are entitled to means to abate the ongoing
epidemic created by Defendants’ wrongful and unlawful conduct.
360.

Plaintiffs’ economic damages include reimbursement for the costs associated with

past efforts to eliminate, control, and deal with the hazards to public health and safety.
361.

Plaintiffs’ abatement damages include the costs to permanently eliminate the

hazards to public health and safety and abate the ongoing public nuisance.

95

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362.

To eliminate the hazard to public health and safety, and abate the public nuisance,

a “multifaceted, collaborative public health and law enforcement approach is urgently
needed.”196
363.

“A comprehensive response to this crisis must focus on preventing new cases of

opioid addiction, identifying early opioid-addicted individuals, and ensuring access to effective
opioid addiction treatment while safely meeting the needs of patients experiencing pain.”197
364.

These community-based problems require community-based solutions that have

been limited by “budgetary constraints at the state and Federal levels.”198
365.

Defendants’ breach of their duties caused the skyrocketing in opioid addiction in

Indianapolis and Marion County—an epidemic that threatens the safety and wellbeing of
Indianapolis and Marion County and places added strain on the capacity of local public safety
agencies and emergency medical departments. Having profited enormously through the
aggressive sale, misleading promotion, and irresponsible distribution of opioids, Defendants are
responsible for the financial burdens their conduct has inflicted upon the Plaintiffs.
XIV. Defendants’ Opioid Marketing and Diversion in Indiana.
366.

Manufacturer Defendants have spent enormous amounts of money to infiltrate

and influence the Indianapolis and Marion County market, including paying Indiana physicians
for speaking engagements and other means of promoting their opioid drugs.199
196

See Rudd, Rose A. et al., “Increases in Drug and Opioid-Involved Overdose Deaths—
United States, 2010–2015,” MMWR Morb. Mortal Wkly. Rep. 2016 Dec 30; 65(5051):14451452.
197

“The Prescription Opioid Epidemic: An Evidence-Based Approach,” Johns Hopkins
Bloomberg School of Public Health, p. 9 (Nov. 2015).
198

See “Epidemic: Responding to America’s Prescription Drug Abuse Crisis,” Executive
Office of the President of the United States, p. 1 (2011).

96

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367.

In a first-of-its-kind study, researchers at Boston Medical Center found that 1 in

12 doctors has received money from drug companies marketing prescription opioid
medications.200 The researchers found that from 2013 to 2015, doctors received more than $46
million in payments from drug companies pushing opioids. About two-thirds of the payments
came from speaking fees.
368.

Indiana recorded some of the most payments to doctors from drug companies

pushing opioids:

199

See “Dollars for Docs,” https://projects.propublica.org/docdollars/, ProPublica. Web.
13 Oct. 2017.
200

Hadland, S.E. et al., “Industry Payments to Physicians for Opioid Products, 20132015,” 2017 Sep;107(9):1493-1495.

97

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369.

The Southern Indiana Drug Task Force reports that pharmaceutical company

representatives began making frequent trips to Indiana in the late 1990s to promote new opioid
painkillers – including Defendant Purdue’s OxyContin.201
370.

Sales of OxyContin rose 584% across the State of Indiana during the nine-year

period between 1997 and 2005. Some areas of the state saw sales of OxyContin rise 1,234%.202
During that same time period, statewide, hydrocodone sales grew 149%, from 287,238 grams
sold in 1997 to 716,392 grams in 2005.203
371.

When OxyContin was changed in late 2010 to purportedly be more difficult to

snort or inject for a heroin-like high, Indiana law enforcement officials saw a rise in abuse of
Defendant Endo’s Opana.204 Opana abuse is deadly because it is more potent, per milligram, than
OxyContin. An Indiana State Police Sergeant reported that “This Opana pill has really kicked us
in the rear” and that “[w]e’ve never seen an addiction like this.”205
372.

The FDA agreed and, shortly after pulled those products from the market.

373.

The Manufacturer Defendants also purchased IMS Health data that informed the

Manufacturers what the Distributors already knew from the data they provided to ARCOS and
what the Manufacturers already knew from what they obtained in paying the Distributors
chargebacks—that prescription opioids were flooding Indiana, Indianapolis, and Marion County.
201

Castleman, Aaron, “DEA Data: OxyContin Sales Soared in Southern Indiana from ’97
to ’05, WTHR.com, 18 Aug. 2007, updated 15 Apr. 2016. Web. 25 Oct. 2017.
202

Id.

203

Id.

204

Wisniewski, Mary, “Painkiller Opana, New Scourge of Rural America,” Reuters, 27
Mar. 2012. Web. 25 Oct. 2017.
205

Id.

98

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374.

Not surprisingly, several “pill mills” have been identified in Indiana, both in

Marion County and Indianapolis and in surrounding counties from which Marion County and
Indianapolis residents were affected.
375.

For example, a former employee of Dr. Tristan Stonger, who ran “pill mills” in

Bloomington, Greenwood, and Peru, Indiana, told DEA agents that Stonger would regularly see
80–150 patients per day, and only spend 2–5 minutes with them at a time.206 A pharmacist who
worked near one of Stonger’s clinics told investigators he filled more narcotics prescriptions at
that location than anywhere else he’d ever worked—up to 10 patients an hour from Stonger’s
office.207 Patients of Stonger’s complained that “the waiting room at Stonger’s office is full, and
they are ‘in and out’ of their visit with a prescription but no real patient care or exam.”208
Records show patients as far away as 63 miles from Stonger’s offices were receiving
prescriptions from him.209 On the busiest day, Stonger wrote prescriptions for 152 patients.210
376.

Purdue and other Defendants were aware of specific “pill mills” and over-

prescribers of their opioid drugs in Indiana, Marion County, and Indianapolis, yet failed to report
or halt suspicious orders to these entities, the foreseeable result of which was the diversion of
opioids and the consequent damage to Plaintiffs.

206

Fischer, Jordan, “55 New Felony Charges Filed Against Dr. Tristan Stonger for
Running Alleged Pill Mill, Theindychannel.com, RTV6, 27 Jan. 2017. Web. 25 Oct. 2017.
207

Id.

208

Id.

209

Id.

210

Id.

99

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THE RESULTS OF DEFENDANTS’ WRONGFUL CONDUCT
ON INDIANA AND PLAINTIFFS
I.

Indiana, Indianapolis, and Marion County are Flooded with Prescription Opioids as
a Result of Defendants’ Conduct.
377.

In 2012, Indiana was one of the highest opioid prescribing states with an average

of 112 opioid prescriptions for every 100 persons in the state. At that time, Marion County had
101 opioid prescriptions for every 100 persons in the county.211
378.

IU Richard M. Fairbanks School of Public Health at Indiana University-Purdue

University Indianapolis (IUPUI) discussing Indiana Scheduled Prescription Electronic Collection
and Tracking Program (INSPECT) data noted, “[o]pioids represented a total of 4,708,068
dispensations in 2011. The number of opioids dispensed in Indiana increased by nearly 933,000
dispensations in 2012 for a total of 5,640,749 dispensations.”212
379.

“In 2013, more than 10.5 million controlled substances (schedules II-V) were

dispensed in Indiana and nearly half of them (5 million) were opioids.”213
380.

Indiana reported the 9th highest rate of opioid prescriptions per capita in the

United States in 2012 and “the fifth highest rate of diversion in the country. In 2013, the
number of opioid prescriptions dispensed for Medicare beneficiaries was higher than the
national average in 80% of Indiana counties, and the number of opioid prescriptions for
Indiana Medicare beneficiaries exceeded the total county general population in 12 counties.

211

NextLevel Recovery Indiana. Web. 25 Oct. 2017. (“NextLevel Recovery Indiana”).

212

“The Indiana INSPECT Evaluation: Key Findings and Recommendations from a
Descriptive Analysis of INSPECT Data,” IU Richard M. Fairbanks School of Public Health at
Indiana University-Purdue University Indianapolis (IUPUI), Center for Health Policy (14-H58),
Sept. 2014, p. 6 (“IUPUI INSPECT Evaluation Rpt.”).
213

Id., at p. 14.

100

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These figures are likely to be considerably higher when including opioid prescriptions paid for
by private insurance and Medicaid.”214

215

II.

Opioids Are Killing Hoosiers.
A.

Prescription Opioid Abuse and its Effect on Indianapolis and Marion
County.

381.

“Drug dependence is the most common adverse outcome associated with

prescription drug use/misuse. Individuals can develop dependence on prescription opioids even

214

“Governor’s Task Force on Drug Enforcement, Treatment & Prevention Final
Report,” State of Indiana, Fall 2016, p. 8 (“Gov.’s Task Force Rpt.”).
215

“Report on the Toll of Opioid Use in Indiana and Marion County,” Indiana University
Purdue University Indianapolis Richard M. Fairbanks School of Public Health, Sept. 2016, p. 9
(“IU Rpt. on Opioid Use in Ind.”) (citing IMS, National Prescription Audit (NPATM), 2012).

101

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when they take them as directed by their provider, due to the drug’s ability to re-wire the
brain.”216
382.

A 2009 national survey found that of the 45 million chronic pain patients with

mental illness, 8.9 million (or almost 20%) met criteria for substance abuse or dependency. “This
national data reflects Indiana’s experience.”217
383.

“In Indiana, 53% of people who are incarcerated are diagnosed with a substance

use disorder. Of people who return to prison, 75% have a substance abuse disorder.”218
384.

“Drug abuse presents workplace safety and productivity issues. A first of its kind

survey conducted by the National Safety Council and the Indiana Attorney General’s office
found that 80% of Indiana’s employers have observed prescription drug misuse in their
employees.”219
385.

“The cost of prescription opioid abuse nationally was estimated at $55.7 billion in

2007, with 46% of this amount attributable to workplace costs (e.g., lost productivity), 45% to
healthcare costs (e.g., opioid abuse treatment), and 9% to costs in the criminal justice system.”220
386.

In her 2016 State of the Judiciary Address, Chief Justice Loretta Rush of the

Indiana Supreme Court stated that, “This past year, my Supreme Court colleagues and I traveled
the state to hear from our trial court judges from all 92 counties. They shared with us what
216

IU Rpt. on Opioid Use in Ind., at p. 23.

217

“First Do No Harm: The Indiana Healthcare Providers Guide to the Safe, Effective
Management of Chronic Non-Terminal Pain,” Indiana Prescription Drug Abuse Task Force,
Version 1.0, p. 16 (“First Do No Harm”).
218

IU Rpt. on Opioid Use in Ind., at p. 7.

219

Id.

220

Id., at p. 10.

102

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became a recurring theme: the drug crisis . . . crippling their communities and flooding their
courts.”221
387.

People who are addicted to prescription opioids are 40 times more likely to also

be addicted to heroin.222 “Indiana saw a more than 300 percent increase in the number of
overdose deaths from heroin between 2010 and 2015, climbing from 54 to 239.”223
388.

“HIV and Hepatitis B and C are adverse health outcomes associated with injection

drug use. Both are spread by the exchange of body fluids with an infected person, and are easily
spread through needle sharing.”224 “Rates of acute hepatitis C virus infection among young
suburban and rural persons who inject drugs have been increasing across much of the Midwest
and Appalachia.”225

221

Id., at p. 45.

222

“Today’s Heroin Epidemic,” Centers for Disease Control and Prevention. Web. 25

Oct. 2017.
223

Associated Press, “Indiana Posts Requests for Bids to Buy Thousands of Doses of
Naloxone,” Fox59.com, 29 May 2017. Web. 11 Oct. 2017.
224

IU Rpt. on Opioid Use in Ind., at p. 33.

225

Id.

103

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389.

“Trend data for 2000-2012 illustrates how reports of opioid abuse at treatment

admission have substantially increased over time. U.S. trends for individuals seeking treatment
for opioid dependence began to level off in 2012, but Indiana’s did not.”226
390.

“People who use heroin are at risk for serious health consequences, such as drug

dependence, spontaneous abortions, and chronic infection. If heroin is injected, the risks increase
for HIV, hepatitis C, infections in the heart lining and valves, abscesses, liver disease, and
pulmonary system problems. Heroin may contain other toxic substances that don’t dissolve and
may clog blood vessels leading to such vital organs as the brain, heart, liver, lungs or kidneys,
causing patches of organ cells to die and negatively affecting their function. By far the most
serious health consequence is death by overdose.”227

226

Id., at p. 23.

227

Id., at p. 30.

104

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391.

“[R]ates of [heroin] dependence reported by people seeking treatment in Indiana

have been on the rise, from 1.8% in 2001 to 7.9% in 2012.”228
392.

In 2013, Indiana’s forensics labs saw 27 cases of seized fentanyl, an opioid that is

much more potent and deadly than heroin. In 2016, it was more than 600 cases.229
B.

Impact on Services Offered by Indiana, Indianapolis, and Marion County.

393.

It is estimated that Indiana’s total health care costs from opioids in 2007 was $650

million, 12th highest among the states, and 8th among the states in per capita costs at $99.230
394.

The Indiana State Department of Health said “it saw a 60-percent increase in

reports of non-fatal emergency room visits due to opioid overdoses from 2011-2015. At the same
time, opioid-related deaths increased by an average of 3.5 percent each year.”231
395.

“There has been an increase in hospital Emergency Department (ED) visits

resulting from abuse of opioids and heroin. In 2010 alone there were 641,940 visits to Indiana
EDs due to non-fatal poisonings (90% of those poisonings were due to drug abuse). Not only do
those visits have a dollar amount attached to them, but they also impact the ability of hospitals to
deliver timely care.”232
396.

“The largest share of criminal justice costs ($5.1 billion) were attributable to

incarceration ($2.3 billion or 44.1%). Police protection accounted for $1.5 billion (29.7%),
228

Id., at p. 30.

229

Lapowsky, Issie, “Indiana, Reeling from Opioid Crisis, Arms Officials with Data,”
Wired.com, 14 Sept. 2017. Web. 10 Oct. 2017.
230

IU Rpt. on Opioid Use in Ind., at p. 38.

231

Fisher, Jordan, “New Map Shows Scope of Indiana Opioid Epidemic,”
Theindychannel.com, RTV6, 15 May 2017. Web. 4 Oct. 2017.
232

IU Rpt. on Opioid Use in Ind., at p. 6–7.

105

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legal/adjudication costs equaled $726 million (14.1%), and the remainder, $625 million (12.2%),
resulted from property damage from crimes committed.”233
397.

“For Indiana, the estimated lifetime medical and work loss costs of drug overdose

fatalities occurring in 2014 were $1.408 billion; costs incurred for non-fatal drug overdose
emergency room visits were $31.9 million (2014). The lifetime medical and work loss costs of
hospitalizations for all non-fatal poisonings over a four-year period (2007-2010) totaled $350
million. These estimates do not include costs of drug treatment and rehabilitation, costs to the
criminal justice system, or other related costs.”234 The estimates also do not include “the
burgeoning costs of hospitalizing infants with Neonatal Abstinence Syndrome, or costs to the
child welfare system.”235
398.

The costs are continuing to escalate because “[p]reliminary data for 2015 indicate

a 75% increase in the reported number of individuals treated for drug overdose in [Indiana’s]
emergency departments, and 84 more reported overdose deaths than in 2014.”236
399.

“Between 2013 and 2016, there were total of 14,831 incidents where naloxone

was administered by first responders in Indiana.”237

233

Id., at p. 37.

234

Id., at p. 38.

235

Id.

236

Id.

237

Gov.’s Task Force Rpt., at p. 41.

106

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400.

IEMS is on pace to surpass 2016’s record-high number of administrations of

naloxone.
401.

Marion County has led the state – which has led the country – in pharmacy

robberies.238 This is more pharmacy robberies than the entire state of California, which has six
times the population of Indiana. Of the total pharmacy robberies in Indiana, three quarters
occurred in Marion County alone, with 17 pharmacies robbed three times, three pharmacies
robbed four times, and four pharmacies robbed five times.239

238

Rudavsky, Shari, “Indiana Leads U.S. Again in Pharmacy Robberies,” The
Indianapolis Star, 27 July 2016. Web. 10 Oct. 2017.
239

Gov.’s Task Force Rpt., at p. 8.

107

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402.

Marion County also had the highest number of non-fatal emergency department

visits due to opioid overdose, 687 in 2014.240

403.

Additional emergency and public safety personnel are needed to respond to the

increase in overdose calls that have occurred over the past five years. IEMS reported a 117%
increase in the number of calls between 2011 and 2015. The Indianapolis Metropolitan Police
Department experienced an increase of 306% in calls about narcotics during the same period.241
404.

“According to Carl Rochelle with [IEMS], additional emergency personnel have

been needed to respond to the increase number of calls. . . . Of those calls, 93% were for people

240

IU Rpt. on Opioid Use in Ind., at p. 49.

241

Id., at p. 6.

108

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IEMS had not previously treated for an overdose; 7% had been treated for overdose on one or
more occasions.”242
405.

“The volume of [drug] complaints has grown at an unanticipated rate, from 588 in

2011 to 2,390 in 2014” in Indianapolis. “[P]ublic safety officials attribute the rise in competition
among drug trafficking and heroin use as significant contributing factors” to homicides in the
City.243
406.

The Indianapolis City-County Council recently approved a $1.1 billion spending

plan for 2018, which includes funding for 86 new police officers and 40 new firefighters.244 Fire
fighters are first responders to overdose calls in Marion County and additional firefighters are
needed to respond to the opioid crisis.
407.

Plans are also moving forward on Indianapolis’s proposal for a new criminal

justice center that would include a jail and assessment center to treat people with opioid
addictions. The Indianapolis City-Counsel approved $20 million for planning and design work
on a project that could cost up to $575 million.
C.

Impact on Children.

408.

“Rising rates of drug use affect not only the users, but also their families. Marion

County Juvenile Court, presided over by Judge Marilyn Moores, has seen a sharp increase in the
number of children taken from their homes because of parents’ addiction. In 2013, nearly 2,300
children were placed in protective custody, but by 2015 the number was 3,776 cases - a record

242

Id., at p. 60.

243

Id., at p. 61.

244

Colombo, Hayleigh, “Hogsett’s Budget Plan Passes With Wide Support Despite
Underfunding Concerns,” Indianapolis Business Journal, 9 Oct. 2017. Web. 10 Oct. 2017.

109

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number. The number of cases where the court terminated parental rights also grew by 31%, and
Moores believes things will get worse.”245
409.

“[N]ational research indicates that 61% of infants and 41% of older children in

out-of-home care are from families with some form of active SUD [(substance use disorder)].
These figures are increasing in Indiana where the percentage of children removed from homes
due to parental SUD increased from 48% (5,101 children) in State Fiscal Year 2015, to 52.2%
(6,223 children) in State Fiscal Year 2016.”246
410.

“Infants exposed to opioids in utero are often born with Neonatal Abstinence

Syndrome (NAS), a condition that can result in increased irritability, hypertonia (spasticity),
tremors, difficulty eating, vomiting, watery stools, seizures and respiratory distress.”247
411.

“In Indiana, NAS was diagnosed and reported in 657 infants born in 2014. The

average length of hospital stay for these infants was 17.88 days, compared to infants without
NAS, who stayed 2.24 days. The average hospital cost for an infant diagnosed with NAS was
$97,555 compared to $4,167 for infants without NAS. The total hospital costs for 657 babies
with NAS in Indiana was $64 million in 2014.”248
412.

“In 2014, the rate of infants diagnosed with NAS in Marion County was 1.283%. .

. . With 14,573 infants born in Marion County in 2014, the county’s rate equates to 187 infants

245

IU Rpt. on Opioid Use in Ind., at p. 62.

246

Gov.’s Task Force Rpt., at p. 17.

247

IU Rpt. on Opioid Use in Ind., at p. 6.

248

Id., at p. 43.

110

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born with NAS, . . . Hospitalization costs for infants with NAS, based on the state average of
$97,555, is estimated at $18,242,785 for Marion County.”249
D.

Overdose Deaths.

413.

“In 2016, more people died from drug overdoses in the U.S. than the total number

of Americans killed in the Vietnam War. In Indiana, opioid overdose deaths rose 52 percent
between 2015 and 2016 and have more than doubled in the last three years. Over the same
period, . . . drug-related arrests by Indiana State Police increase[d] by more than 40 percent.”250
414.

Indiana is one of four states where the fatal drug overdose rate has more than

quadrupled since 1999, with a total cost of drug overdoses in Indiana exceeding $1 billion a year
in medical expenses and lost earnings.251
415.

Like the United States, “Indiana loses more citizens to prescription opioid

overdoses annually than to cocaine and heroin combined. The Centers for Disease Control and
Prevention estimates that for every person who died due to opioid overdose in 2010, there were
15 abuse treatment admissions, 26 emergency department visits, 115 people who abuse or are
dependent on opioids, and 733 non-medical opioid users.”252
416.

“In 2011, at least 718 Hoosiers died from unintentional drug poisoning, the

majority of which involved opioids.”253
249

Id., at p. 62.

250

Holcomb, Gov. Eric, “Gov. Eric Holcomb: Why I am focusing on the opioid crisis,”
The Indianapolis Star, 30 Sept. 2017. Web. 4 Oct. 2017.
251

Russell, John, “IU Announces $50M Plan to Tackle Growing Opioid Epidemic,”
Indiana Business Journal, 10 Oct. 2017. Web. 10 Oct. 2017.
252

First Do No Harm, at p. 3.

253

Id.

111

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417.

Nearly six times as many Hoosiers died from drug overdose in 2014 as did in

2000 (twice the national rate), making Indiana residents more likely to die from a drug overdose
than an automobile accident.254
418.

As seen on the following chart, “nearly six times as many Hoosiers died from

drug overdose in 2014 as did in 2000.”255

419.

Another chart shows that “[w]ith 1152 overdose deaths in 2014, Indiana ranks

15th in the nation. The number of deaths from drug overdoses has increased dramatically in the
state since 1999, more than 500%.256 Many of these deaths were caused by opioid overdose:257

254

Gov.’s Task Force Rpt., at p. 6.

255

Id., at p. 7.

256

IU Rpt. on Opioid Use in Ind., at p. 6.

112

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Many overdose deaths are categorized as “Other & Unspecified Drugs” but “[i]n reality,
many of these deaths were likely related to opioid overdose, resulting in an understatement in the
number of deaths from opioid pain relievers and heroin.”258
420.

On a whole, “[o]pioid-related death rates have risen from 4.5 per 100,000

population in 2008, to 11.7 per 100,000 in 2016. Drug deaths related to heroin have increased
sharply beginning in 2011, and for synthetic opioids beginning in 2015.”259
421.

From 2008-2016, opioid poisoning deaths in Indiana per 100,000 residents were

as follows:

257

Id., at pp. 14–15.

258

Id., at p. 15.

259

NextLevel Recovery Indiana.

113

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a.

2008: 291 opioid deaths in Indiana; 4.5 opioid deaths in Indiana per
100,000 residents.

b.

2009: 322 opioid deaths in Indiana; 5.0 opioid deaths in Indiana per
100,000 residents.

c.

2010: 279 opioid deaths in Indiana; 4.3 opioid deaths in Indiana per
100,000 residents.

d.

2011: 345 opioid deaths in Indiana; 5.3 opioid deaths in Indiana per
100,000 residents.

e.

2012: 369 opioid deaths in Indiana; 5.7 opioid deaths in Indiana per
100,000 residents.

f.

2013: 352 opioid deaths in Indiana; 5.4 opioid deaths in Indiana per
100,000 residents.

g.

2014: 437 opioid deaths in Indiana; 6.7 opioid deaths in Indiana per
100,000 residents.

h.

2015: 499 opioid deaths in Indiana; 7.7 opioid deaths in Indiana per
100,000 residents.

i.

2016: 757 opioid deaths in Indiana; 11.7 opioid deaths in Indiana per
100,000 residents.260

422.

Charts of opioid poisoning deaths show the following:261

260

Id.

261

Id.

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423.

In Marion County, opioid addiction took the lives of 345 residents in 2016, “more

than four times the number of traffic-related deaths.” 262 In 2014, Marion County led the state
with the highest number of deaths due to drug overdose as well as non-fatal emergency
department visits.”263
424.

“Marion County has the most overdose deaths and non-fatal emergency room

visits due to overdose of any county in the state. The number and rate of Marion County deaths
from drug overdose has increased steadily since 2000.”264
425.

“According to the Marion County Public Health Department, the number of fatal

drug overdoses among Marion County residents has steadily increased for more than a
decade.”265
426.

“Zip codes with the highest number of deaths were 46201, 46203 and 46222. Zip

codes 46226, 46227 and 46241 also had higher numbers of overdoses:266

262

Russell, John, “IU Announces $50M Plan to Tackle Growing Opioid Epidemic,”
Indiana Business Journal, 10 Oct. 2017. Web. 10 Oct. 2017.
263

Id.

264

IU Rpt. on Opioid Use in Ind., at p. 6.

265

Id., at p. 52.

266

Id., at pp. 57–58.

116

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427.

A chart showing drug overdose deaths in Marion County from 2010 through 2016

shows the following:267

267

Ray, Brad, “Fentanyl-Related Deaths Lead Another Record Year for Drug Overdoses
in Marion County,” Indiana University-Purdue University Indianapolis, Blog, 30 June 2017.
Web. 25 Oct. 2017.

117

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428.

This rise in drug overdose deaths has continued into 2017. As of May 1, 2017,

“there have been 130 drug overdose deaths. This is in contrast to the 98 deaths that were
recorded at the same time [in 2016].”268
TOLLING AND FRAUDULENT CONCEALMENT
429.

Plaintiffs continue to suffer harm from the unlawful actions by the Defendants.

430.

The continued tortious and unlawful conduct by the Defendants causes a repeated

or continuous injury. The damages have not occurred all at once but have continued to occur and
have increased as time progresses. The harm is not completed nor have all the damages been
incurred until the wrongdoing ceases. The wrongdoing and unlawful activity by Defendants has
not ceased. The public nuisance remains unabated.
431.

Defendants are equitably estopped from relying upon a statute of limitations

defense because they undertook efforts to purposefully conceal their unlawful conduct and
268

Ray, Brian et al, “Another Record Year for Opioid and Fentanyl-Related Deaths,” The
Indianapolis Star, 23 July 2017. Web. 6 Oct. 2017.

118

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fraudulently assure the public, including Indiana, Indianapolis, and Marion County, that they
were undertaking efforts to comply with their obligations under the state and federal controlled
substances laws, all with the goal of protecting their registered manufacturer or distributor status
in the State and to continue generating profits. The Defendants affirmatively assured the public,
including Indiana, Indianapolis, and Marion County, that they are working to curb the opioid
epidemic.
For example, a Cardinal Health executive said the company “deploys ‘advanced

432.

analytics, technology, and teams of anti-diversion specialists and investigators who are
embedded in our supply chain. This ensures that we are as effective and efficient as possible in
constantly monitoring, identifying, and eliminating any outside criminal activity.’” 269
433.

Moreover, in furtherance of their effort to affirmatively conceal their conduct and

avoid detection, the Distributor Defendants, through their trade associations, HDMA and
NACDS, filed a brief in Masters Pharmaceuticals, which made the following statements:


“HDMA and NACDS members not only have statutory and regulatory
responsibilities to guard against diversion of controlled prescription
drugs, but undertake such efforts as responsible members of society.”270



“DEA regulations that have been in place for more than 40 years require
distributors to report suspicious orders of controlled substances to DEA
based on information readily available to them (e.g., a pharmacy’s
placement of unusually frequent or large orders).”271

269

Bernstein, Lenny et al., “How Drugs Intended for Patients Ended Up in the Hands of
Illegal Users: ‘No one was doing their job,’ The Washington Post, 22 Oct. 2016. Web. 6 Oct.
2017.
270

Brief for HDMA and NACDS filed in Masters Pharm., Inc. v. Drug Enf't Admin.,
USCA Case #15-1335, Doc. No. 1607110, p. 3 (D.C. Cir. Apr. 4, 2016).
271

Id., at p. 4.

119

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

434.

“Distributors take seriously their duty to report suspicious orders,
utilizing both computer algorithms and human review to detect
suspicious orders based on the generalized information that is available to
them in the ordering process. A particular order or series of orders can
raise red flags because of its unusual size, frequency, or departure from
typical patterns with a given pharmacy. Distributors also monitor for and
report abnormal behavior by pharmacies placing orders, such as refusing
to provide business contact information or insisting on paying in cash.”272
Through the above statements made on their behalf by their trade associations,

and other similar statements assuring their continued compliance with their legal obligations, the
Distributor Defendants not only acknowledged that they understood their obligations under the
law, but they further publicly affirmed that their conduct was in compliance with those
obligations.
435.

The Distributor Defendants have also concealed and prevented discovery of

information, including data from the ARCOS database, that will confirm the extent of their
wrongful and illegal activities.
436.

The Manufacturer Defendants distorted the meaning or import of studies they

cited and offered them as evidence for propositions the studies did not support. The
Manufacturer Defendants invented the term “pseudoaddiction” and promoted it to an
unsuspecting medical community. Manufacturer Defendants provided the medical community
with false and misleading information about ineffectual medical strategies to avoid or control
opioid addiction. Manufacturer Defendants recommended to the medical community that
dosages be increased, without disclosing the risks. Manufacturer Defendants spent millions of
dollars over a period of years on a misinformation campaign aimed at highlighting opioids’
alleged benefits, disguising the risks, and promoting sales. The medical community, consumers,
272

Id., at p. 25.

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Indianapolis, and Marion County were duped by the Manufacturer Defendants’ campaign to
misrepresent and conceal the truth about the opioid drugs that they were aggressively pushing in
the State and in Indianapolis and Marion County.
437.

The Plaintiffs reasonably relied on Defendants’ affirmative statements regarding

their purported compliance with their obligations under the law and consent orders.
438.

The Plaintiffs’ claims are equitably tolled because Defendants knowingly and

fraudulently concealed the facts and their wrongful acts, and the material information pertinent to
their discovery, which Defendants concealed them from the Plaintiffs. The Plaintiffs did not
know, or could not have known through the exercise of reasonable diligence, of their claims, as a
result of Defendants’ conduct.
439.

The purposes of the statutes of limitations period are satisfied because Defendants

cannot claim prejudice due to a late filing where the Plaintiffs filed suit promptly upon
discovering the facts essential to its claims, described herein, which Defendants knowingly
concealed.
440.

In light of their statements to the media, in legal filings, and settlements,

Defendants had actual and constructive knowledge that their conduct was deceptive, in that they
consciously concealed the schemes set forth herein.
441.

Defendants continually and secretly engaged in their scheme to avoid compliance

with their legal obligations. Only Defendants and their agents knew or could have known about
Defendants’ unlawful actions because Defendants made deliberate efforts to conceal their
conduct. As a result of the above, Plaintiffs were unable to obtain vital information bearing on
their claims absent any fault or lack of diligence on their part.

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442.

COUNT I:
PUBLIC NUISANCE
(AGAINST ALL DEFENDANTS)
Plaintiffs incorporate and re-allege each preceding paragraph of this Complaint as

if fully set forth below.
443.

“[T]he law of public nuisance is best viewed as shifting the resulting cost [of a

public nuisance] from the general public to the party who creates it. If the marketplace values the
product sufficiently to accept that cost, the manufacturer can price it into the product. If the
manufacturers and users of the offending activity conclude that the activity is not worthwhile
after absorbing these costs, that is their choice. In either case, there is no injustice in requiring the
activity to tailor itself to accept the costs imposed on others or cease generating them.” City of
Gary ex rel. King v. Smith & Wesson Corp., 801 N.E.2d 1222, 1234 (Ind. 2003).
444.

“The essence of a nuisance claim is the foreseeable harm unreasonably created

by the defendants’ conduct.” Id.
445.

Indiana Code § 32-30-6-6 provides that “[w]hatever is (1) injurious to health; (2)

indecent; (3) offensive to the senses; or (4) an obstruction to the free use of property; so as
essentially to interfere with the comfortable enjoyment of life or property, is a nuisance, and the
subject of an action.”
446.

Indiana Code § 32-30-6-7(b) provides that “[a] civil action to abate or enjoin a

nuisance may . . . be brought by: (a) the attorney representing the county in which a nuisance
exists; or (b) the attorney of any city or town in which a nuisance exists.” In addition, Indiana
Code § 32-30-6-8 provides that “[i]f a proper case is made, the nuisance may be enjoined or
abated and damages recovered for the nuisance.” Finally, Indiana Code § 32-30-6-7(c) provides
that “[a] county, city, or town that brings a successful action under this section to abate or enjoin
a nuisance is entitled to recover reasonable attorney’s fees incurred in bringing the action.”
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447.

Defendants’ activities have been, and continue to be, (1) injurious to health; (2)

indecent; (3) offensive to the senses; or (4) an obstruction to the free use of property; so as
essentially to interfere with the comfortable enjoyment of life and property, and constitute a
nuisance.
448.

Additionally, Defendants have created a public nuisance by creating an

unreasonable interference with rights common to the general public in that:
a.

Defendants’ conduct involves a significant interference with the public health, the
public safety, the public peace, the public comfort, and the public convenience;

b.

Defendants’ conduct is proscribed by statutes, ordinances, and administrative
regulations; and

c.

Defendants’ conduct is of a continuing nature and has produced a permanent and
long-lasting effect, and Defendants know, and have reason to know, that their
conduct has a significant effect upon public rights.

449.

All Defendants are subject to liability because each Defendant has participated to

a substantial extent in carrying out the activities that are the public nuisance.
COUNT II:
RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT,
18 U.S.C. § 1961, ET SEQ.
(AGAINST ALL DEFENDANTS)
450.

Plaintiffs incorporate and re-allege each preceding paragraph of this Complaint as

if fully set forth below.
451.

Plaintiffs bring this Count against all Defendants.

452.

The Defendants conducted and continue to conduct their business through

legitimate and illegitimate means in the form of an association-in-fact enterprise or a legal entity
enterprise. At all relevant times, the Defendants were “persons” under 18 U.S.C. § 1961(3)
because they are entities capable of holding, and do hold, “a legal or beneficial interest in
property.”
123

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453.

Section 1962(c) of RICO makes it unlawful “for any person employed by or

associated with any enterprise engaged in, or the activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s
affairs through a pattern of racketeering activity or collection of unlawful debt.” 18 U.S.C. §
1962(c); United State v. Turkette, 452 U.S. 576, 580 (1981).
454.

The term “enterprise” includes “any individual, partnership, corporation,

association, or other legal entity, and any union or group of individuals associated in fact
although not a legal entity.” 18 U.S.C. § 1961(4); Turkette, 452 U.S. at 580; Boyle v. United
States, 556 U.S. 938, 944 (2009); United Food & Commercial Workers Unions & Employers
Midwest Health Benefits Fund v. Walgreen Co., 719 F.3d 849, 853 (7th Cir. 2013). The
definition of “enterprise” in Section 1961(4) includes both legitimate and illegitimate enterprises.
Specifically, the section “describes two separate categories of associations that come within the
purview of an ‘enterprise’—the first encompassing organizations such as corporations,
partnerships, and other ‘legal entities,’ and the second covering ‘any union or group of
individuals associated in fact although not a legal entity.’” Turkette, 452 U.S. at 577. The second
category is not a more generalized description of the first. Id.
455.

For over a decade, the Defendants aggressively sought to bolster their revenue,

increase profit, and grow their share of the prescription painkiller market by unlawfully and
surreptitiously increasing the volume of opioids they sold. However, the Defendants are not
permitted to engage in a limitless expansion of their market through the unlawful sales of
regulated painkillers. As “registrants,” the Defendants operated and continue to operate within
the “closed-system” created under the Controlled Substances Act, 21 U.S.C. § 821, et seq. (the
“CSA”). The CSA restricts the Defendants’ ability to manufacture or distribute Schedule II

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substances like opioids by requiring them to: (1) register to manufacture or distribute opioids; (2)
maintain effective controls against diversion of the controlled substances that they manufacturer
or distribute; (3) design and operate a system to identify suspicious orders of controlled
substances, halt such unlawful sales, and report them to the DEA; and (4) make sales within a
limited quota set by the DEA for the overall production of Schedule II substances like opioids.
456.

The closed-system created by the CSA, including the establishment of quotas,

was specifically intended to reduce or eliminate the diversion of Schedule II substances like
opioids from “legitimate channels of trade” to the illicit market “by controlling the quantities of
the basic ingredients needed for the manufacture of [controlled substances].”273
457.

Finding it impossible to legally achieve their ever-increasing sales ambitions,

members of the Opioid Diversion Enterprise (as defined below) systematically and fraudulently
violated their statutory duty to maintain effective controls against diversion of their drugs, to
design and operate a system to identify suspicious orders of their drugs, to halt unlawful sales of
suspicious orders, and to notify the DEA of suspicious orders.274 As discussed in detail below,
through the Defendants’ scheme, members of the Opioid Diversion Enterprise repeatedly
engaged in unlawful sales of painkillers which, in turn, artificially and illegally increased the
annual production quotas for opioids allowed by the DEA.275 In doing so, the Defendants

273

1970 U.S.C.C.A.N. 4566 at 5490; see also Testimony of Joseph T. Rannazzisi,
Deputy Assistant Administrator, Office of Diversion Control, Drugcaucus.senate.gov, U.S. Dept.
of Justice, Drug Enforcement Administration, Before the Caucus on International Narcotics
Control, United States Senate, 5 May 2015 (“Rannazzisi May 5, 2015 Testimony”). Web. 25
Oct. 2017.
274

21 U.S.C. § 823(a)(1), (b)(1); 21 C.F.R. § 1301.74(b)-(c).

275

21 C.F.R. § 1303.11(b); 21 C.F.R. § 1303.23.
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allowed hundreds of millions of pills to enter the illicit market which allowed them to generate
enormous profits.
458.

Defendants’ illegal scheme was implemented by an association-in-fact enterprise

between the Manufacturer Defendants and the Distributor Defendants, and executed by each of
them. In particular, each of the Defendants was associated with, and conducted or participated in,
the affairs of the RICO enterprise, whose purpose was to engage in the unlawful sales of opioids,
deceive the public and federal and state regulators into believing that the Defendants were
faithfully fulfilling their statutory obligations. The Defendants’ scheme allowed them to make
billions in unlawful sales of opioids and, in turn, increase and maintain high production quotas
with the purpose of ensuring unlawfully increasing revenues, profits, and market share. As a
direct result of the Defendants’ fraudulent scheme, course of conduct, and pattern of racketeering
activity, they were able to extract billions of dollars of revenue, while Indianapolis and Marion
County suffered injury caused by the reasonably foreseeable consequences of the opioid
epidemic. As explained in detail below, the Defendants’ misconduct violated Section 1962(c)
and Plaintiffs are entitled to treble damages for their injuries under 18 U.S.C. § 1964(c).
459.

Alternatively, the Defendants were members of a legal entity enterprise within the

meaning of 18 U.S.C. § 1961(4), through which the Defendants conducted their pattern of
racketeering activity in this jurisdiction and throughout the United States. Specifically, the
Healthcare Distribution Alliance (the “HDA”)276 is a distinct legal entity that satisfies the
definition of a RICO enterprise. The HDA is a non-profit corporation formed under the laws of
the District of Columbia and doing business in Virginia. As a non-profit corporation, HDA
276

Health Distribution Alliance, History, Health Distribution Alliance,
https://www.healthcaredistribution.org/about/hda-history. Web. 11 Oct. 2017.

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qualifies as an “enterprise” within the definition set out in 18 U.S.C. § 1961(4) because it is a
corporation and a legal entity.
460.

The Defendants are members, participants, and/or sponsors of the HDA and

utilized the HDA to conduct the Opioid Diversion Enterprise and to engage in the pattern of
racketeering activity that gives rise to the Count.
461.

Each of the Defendants is a legal entity separate and distinct from the HDA. And,

the HDA serves the interests of distributors and manufacturers beyond the Defendants.
Therefore, the HDA exists separately from the Opioid Diversion Enterprise, and each of the
Defendants exists separately from the HDA. Therefore, the HDA itself serves as a RICO
enterprise.
462.

The legal and association-in-fact enterprises were each used by the Defendants to

conduct the Opioid Diversion Enterprise by engaging in a pattern of racketeering activity.
Therefore, the legal and association-in-fact enterprises are pleaded in the alternative and are
collectively referred to as the “Opioid Diversion Enterprise.”
I.

The Opioid Diversion Enterprise
463.

In 2006 and 2007, the DEA issued multiple letters to the Distributor Defendants

reminding them of their obligation to maintain effective controls against diversion of particular
controlled substances, to design and operate a system to disclose suspicious orders, and to inform
the DEA of any suspicious orders.277 The DEA also published suggested questions that a

277

Joseph T. Rannazzisi, In Reference to Registration # RC0183080 (Sept. 27, 2006);
Joseph T. Rannazzisi, In Reference to Registration # RC0183080 (Dec. 27, 2007).

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distributor should ask prior to shipping controlled substances, in order to know their
customers.278
464.

Central to the closed-system created by the CSA was the directive that the DEA

determine quotas of each basic class of Schedule I and II controlled substances each year. The
quota system was intended to reduce or eliminate diversion from “legitimate channels of trade”
by controlling the “quantities of the basic ingredients needed for the manufacture of [controlled
substances], and the requirement of order forms for all transfers of these drugs.”279 When
evaluating production quotas, the DEA was instructed to consider the following information:
a.

Information provided by the Department of Health and Human Services;

b.

Total net disposal of the basic class by all manufacturers;

c.

Trends in the national rate of disposal of the basic class;

d.

An applicant’s production cycle and current inventory position;

e.

Total actual or estimated inventories of the class and of all substances
manufactured from the class and trends in inventory accumulation; and

f.

Other factors such as: changes in the currently accepted medical use of substances
manufactured for a basic class; the economic and physical availability of raw
materials; yield and sustainability issues; potential disruptions to production; and
unforeseen emergencies.280

278

See “Suggested Questions a Distributor should ask prior to Shipping Controlled
Substances, Deadiversion.usdoj.gov/, U.S. Dept. of Justice, Drug Enforcement Administration.
Web. 11 Oct. 2017.
279

1970 U.S.C.C.A.N. 4566 at 5490; see also Rannazzisi May 5, 2015 Testimony.

280

Rannazzisi May 5, 2015 Testimony, at p. 3.

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465.

It is unlawful for a registrant to manufacture a controlled substance in Schedule II,

like prescription opioids, that is (1) not expressly authorized by its registration and by a quota
assigned to it by DEA, or (2) in excess of a quota assigned to it by the DEA.281
466.

At all relevant times, the Defendants operated as an association-in-fact enterprise

formed for the purpose of unlawfully increasing sales, revenues, and profits by disregarding their
statutory duty to identify, investigate, halt, and report suspicious orders of opioids and diversion
of their drugs into the illicit market, in order to unlawfully increase the quotas set by the DEA
and allow them to collectively benefit from the unlawful formation of a greater pool of
prescription opioids from which to profit. The Defendants conducted their pattern of racketeering
activity in this jurisdiction and throughout the United States through this enterprise.
467.

At all relevant times, the Opioid Diversion Enterprise: (a) had an existence

separate and distinct from each Defendant; (b) was separate and distinct from the pattern of
racketeering in which the Defendants engaged; (c) was an ongoing and continuing organization
consisting of legal entities, including each of the Defendants; (d) characterized by interpersonal
relationships among the Defendants; (e) had sufficient longevity for the enterprise to pursue its
purpose; and (f) functioned as a continuing unit. Turkette, 452 U.S. at 580; Boyle, 556 U.S. at
944. Each member of the Opioid Diversion Enterprise participated in the conduct of the
enterprise, including patterns of racketeering activity, and shared in the astounding growth of
profits supplied by fraudulently inflating opioid sales generated as a result of the Opioid
Diversion Enterprise’s disregard for their duty to prevent diversion of their drugs into the illicit
market and then requesting the DEA increase production quotas, all so that the Defendants
would have a larger pool of prescription opioids from which to profit.
281

Id., at p. 4 (citing 21 U.S.C. 842(b)).

129

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468.

The Opioid Diversion Enterprise also engaged in efforts to lobby against the

DEA’s authority to hold the Defendants liable for disregarding their duty to prevent diversion.
Members of the Pain Care Forum (described in greater detail below) and the Healthcare
Distribution Alliance (“HDA”) lobbied for the passage of legislation to weaken the DEA’s
enforcement authority. The Ensuring Patient Access and Effective Drug Enforcement Act
significantly reduced the DEA’s ability to issue orders to show cause and to suspend and/or
revoke registrations.282 The HDA and other members of the Pain Care Forum contributed
substantial amounts of money to political campaigns for federal candidates, state candidates,
political action committees, and political parties. The Pain Care Forum and its members spent
significant funds on lobbying efforts while the HDA devoted over a million dollars a year to its
lobbying efforts between 2011 and 2016.
469.

The Opioid Diversion Enterprise functioned by selling prescription opioids. While

there are some legitimate uses and/or needs for prescription opioids, the Defendants, through
their illegal enterprise, engaged in a pattern of racketeering activity, that involves a fraudulent
scheme to increase revenue by violating State and Federal laws requiring the maintenance of
effective controls against diversion of prescription opioids, and the identification, investigation,
and reporting of suspicious orders of prescription opioids destined for the illicit drug market. The
goal of Defendants’ scheme was to increase profits from opioid sales. But, Defendants’ profits
282

See “HDMA is now the Healthcare Distribution Alliance,”
Pharmaceuticalcommerce.com, 13 June 2016, updated 6 July 2016. Web. 11 Oct. 2017;
Bernstein, Lenny et al, “Investigation: The DEA Slowed Enforcement While the Opioid
Epidemic Grew Out of Control,” The Washington Post, 22 Oct. 2016. Web. 6 Oct. 2017;
Higham, Scott et al., “U.S. Senator Calls for Investigation of DEA Enforcement Slowdown amid
Opioid Crisis,” The Washington Post, 6 Mar. 2017. Web. 11 Oct. 2017; Eyre, Eric, “DEA
Agent: ‘We Had no Leadership’ in West Virginia Amid Flood of Pain Pills,”
100daysinappalachia.com/. Web. 25 Oct. 2017.

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were limited by the production quotas set by the DEA, so the Defendants refused to identify,
investigate, and/or report suspicious orders of their prescription opioids being diverted into the
illicit drug market. The end result of this strategy was to increase and maintain artificially high
production quotas of opioids so that there was a larger pool of opioids for Defendants to
manufacture and distribute for public consumption.
470.

The Opioid Diversion Enterprise engaged in, and its activities affected, interstate

and foreign commerce because the enterprise involved commercial activities across states lines,
such as manufacture, sale, distribution, and shipment of prescription opioids throughout the
County and this jurisdiction, and the corresponding payment and/or receipt of money from the
sale of the same.
471.

Within the Opioid Diversion Enterprise, there were interpersonal relationships

and common communication by which the Defendants shared information on a regular basis.
These interpersonal relationships also formed the organization of the Opioid Diversion
Enterprise. The Opioid Diversion Enterprise used their interpersonal relationships and
communication network for the purpose of conducting the enterprise through a pattern of
racketeering activity.
472.

Each of the Defendants had a systematic link to each other through joint

participation in lobbying groups, trade industry organizations, contractual relationships, and
continuing coordination of activities. The Defendants participated in the operation and
management of the Opioid Diversion Enterprise by directing its affairs, as described herein.
While the Defendants participated in, and are members of, the enterprise, they each have a
separate existence from the enterprise, including distinct legal statuses, different offices and

131

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roles, bank accounts, officers, directors, employees, individual personhood, reporting
requirements, and financial statements.
473.

The Defendants exerted substantial control over the Opioid Diversion Enterprise

by their membership in the Pain Care Forum, the HDA, and through their contractual
relationships.
474.

The Pain Care Forum (“PCF”) has been described as a coalition of drugmakers,

trade groups, and dozens of non-profit organizations supported by industry funding. The PCF
recently became a national news story when it was discovered that lobbyists for members of the
PCF quietly shaped federal and state policies regarding the use of prescription opioids for more
than a decade.
475.

The Center for Public Integrity and the Associated Press obtained “internal

documents shed[ding] new light on how drugmakers and their allies shaped the national response
to the ongoing wave of prescription opioid abuse.”283 Specifically, PCF participants spent over
$740 million lobbying in the nation’s capital and in all 50 statehouses on an array of issues,
including opioid-related measures.284
476.

Not surprisingly, each of the Defendants who stood to profit from lobbying in

favor of prescription opioid use is a member of and/or participant in the PCF.285 In 2012,
membership and participating organizations included the HDA (of which all Defendants are
283

Perrone, Matthew, “Pro-Painkiller Echo Chamber Shaped Policy Amid Drug
Epidemic,” The Center for Public Integrity, 19 Sept. 2016, updated 15 Dec. 2016. Web. 25 Oct.
2017.
284

Id.

285

PAIN CARE FORUM 2012 Meetings Schedule,
https://assets.documentcloud.org/documents/3108982/PAIN-CARE-FORUM-Meetings-Scheduleamp.pdf, last updated Dec. 2011. Web. 11 Oct. 2017.

132

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members), Endo, Purdue, Johnson & Johnson, Actavis, and Teva.286 Each of the Manufacturer
Defendants worked together through the PCF to advance the interests of the enterprise. But, the
Manufacturer Defendants were not alone. The Distributor Defendants actively participated, and
continue to participate in the PCF, at a minimum, through their trade organization, the HDA.287
477.

The 2012 Meeting Schedule for the PCF is specific example of the Defendants’

interpersonal relationships. The meeting schedule indicates that meetings were held in the D.C.
office of Powers Pyles Sutter & Verville on a monthly basis, unless otherwise noted. Local
members were “encouraged to attend in person” at the monthly meetings. And, the meeting
schedule indicates that the quarterly and year-end meetings included a “Guest Speaker.”
478.

The 2012 PCF Meeting Schedule demonstrates that each of the Defendants

participated in meetings on a monthly basis, either directly or through their trade organization, in
a coalition of drugmakers and their allies whose sole purpose was to shape the national response
to the ongoing prescription opioid epidemic, including the concerted lobbying efforts that the
PCF undertook on behalf of its members.
479.

Second, the HDA led to the formation of interpersonal relationships and an

organization between the Defendants. Although the entire HDA membership directory is private,
the HDA website confirms that each of the Distributor Defendants and the Manufacturer

286

Id.

287

Id. The Executive Committee of the HDA (formerly the HDMA) currently includes
the Chief Executive Officer, Pharmaceutical Segment for Cardinal Health, Inc., the Group
President, Pharmaceutical Distribution and Strategic Global Source for AmerisourceBergen
Corporation, and the President, U.S. Pharmaceutical for McKesson Corporation. See “Executive
Committee, Healthcare Distribution Alliance,” Healthcaredistribution.org, Healthcare
Distribution Alliance. Web. 11 Oct. 2017.

133

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Defendants are members.288 And, the HDA and each of the Distributor Defendants sought the
active membership and participation of the Manufacturer Defendants by advocating that one of
the benefits of membership included the ability to develop direct relationships between
Manufacturers and Distributors at high executive levels.
480.

In fact, the HDA touted the benefits of membership to the Manufacturer

Defendants, advocating that membership included the ability to, among other things, “network
one on one with manufacturer executives at HDA’s members-only Business and Leadership
Conference,” “networking with HDA wholesale distributor members,” “opportunities to host and
sponsor HDA Board of Directors events,” “participate on HDA committees, task forces and
working groups with peers and trading partners,” and “make connections.”289 The HDA and the
Distributor Defendants used membership in the HDA as an opportunity to create interpersonal
and ongoing organizational relationships between the Manufacturer and Distributor Defendants.
481.

The application for manufacturer membership in the HDA further indicates the

level of connection that existed between the Defendants.290 The manufacturer membership
application must be signed by a “senior company executive,” and it requests that the
manufacturer applicant identify a key contact and any additional contacts from within its
company. The HDA application also requests that the manufacturer identify its current

288

“Manufacturer Membership,” Healthcaredistribution.org, Healthcare Distribution
Alliance, Web. 11 Oct. 2017.
289

“Manufacturer Membership Benefits,” Healthcaredistribution.org, Healthcare
Distribution Alliance. Web. 11 Oct. 2017.
290

“Manufacturer Membership Application Instructions,” Healthcaredistribution.org,
Healthcare Distribution Alliance. Web. 11 Oct. 2017.

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distribution information and its most recent year end net sales through any HDA distributors,
including but not limited to, Defendants AmerisourceBergen, Cardinal Health, and McKesson.291
482.

After becoming members, the Distributors and Manufacturers were eligible to

participate on councils, committees, task forces and working groups, which promoted the Opioid
Diversion Enterprise efforts, including lobbying and even development of chargebacks,
including:
a.

Industry Relations Council: “This council, composed of distributor and
manufacturer members, provides leadership on pharmaceutical distribution and
supply chain issues.”292

b.

Business Technology Committee: “This committee provides guidance to HDA
and its members through the development of collaborative e-commerce business
solutions. The committee’s major areas of focus within pharmaceutical
distribution include information systems, operational integration and the impact of
e-commerce.” Participation in this committee includes distributors and
manufacturer members.293

c.

Health, Beauty and Wellness Committee: “This committee conducts research, as
well as creates and exchanges industry knowledge to help shape the future of the
distribution for health, beauty and wellness/consumer products in the healthcare
supply chain.” Participation in this committee includes distributors and
manufacturer members.294

d.

Logistics Operation Committee: “This committee initiates projects designed to
help members enhance the productivity, efficiency and customer satisfaction
within the healthcare supply chain. Its major areas of focus include process
automation, information systems, operational integration, resource management
and quality improvement.” Participation in this committee includes distributors
and manufacturer members.295

291

Id.

292

“Councils and Committees,” Healthcaredistribution.org, Healthcare Distribution
Alliance. Web. 11 Oct. 2017.
293

Id.

294

Id.

295

Id.

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e.

Manufacturer Government Affairs Advisory Committee: “This committee
provides a forum for briefing HDA’s manufacturer members on federal and state
legislative and regulatory activity affecting the pharmaceutical distribution
channel. Topics discussed include such issues as prescription drug traceability,
distributor licensing, FDA and DEA regulation of distribution, importation and
Medicaid/Medicare reimbursement.” Participation in this committee includes
manufacturer members.296

f.

Bar Code Task Force: Participation includes Distributor, Manufacturer and
Service Provider Members.297

g.

eCommerce Task Force: Participation includes Distributor, Manufacturer and
Service Provider Members.298

h.

ASN Working Group: Participation includes Distributor, Manufacturer and
Service Provider Members.299

i.

Contracts and Chargebacks Working Group: “This working group explores how
the contract administration process can be streamlined through process
improvements or technical efficiencies. It also creates and exchanges industry
knowledge of interest to contract and chargeback professionals.” Participation
includes Distributor and Manufacturer Members.300

483.

The councils, committees, task forces and working groups provided the

Manufacturer and Distributor Defendants with the opportunity to work closely together in
shaping their common goals and forming the enterprise’s organization.
484.

The HDA also offers a multitude of conferences, including annual business and

leadership conferences. The HDA and the Distributor Defendants advertise these conferences to
the Manufacturer Defendants as an opportunity to “bring together high-level executives, thought
296

Id.

297

Id.

298

Id.

299

Id.

300

Id.

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leaders and influential managers . . . to hold strategic business discussions on the most pressing
industry issues.”301 The conferences also gave the Manufacturer and Distributor Defendants
“unmatched opportunities to network with [their] peers and trading partners at all levels of the
healthcare distribution industry.”302 The HDA and its conferences were significant opportunities
for the Manufacturer and Distributor Defendants to interact at a high-level of leadership. And, it
is clear that the Manufacturer Defendants embraced this opportunity by attending and sponsoring
these events.303
485.

Third, the Defendants maintained their interpersonal relationships by working

together and exchanging information and driving the unlawful sales of their opioids through their
contractual relationships, including chargebacks and vault security programs.
486.

The Manufacturer Defendants engaged in an industry-wide practice of paying

rebates and chargebacks to the Distributor Defendants for sales of prescription opioids.304 As
reported in the Washington Post, identified by Senator McCaskill, and acknowledged by the
HDA, there is an industry-wide practice whereby the Manufacturer Defendants paid the

301

“Business and Leadership Conference – Information for Manufacturers,”
Healthcaredistribution.org, Healthcare Distribution Alliance. Web. 11 Oct. 2017.
302

Id.

303

See “2015 Distribution Management Conference and Expo,” Healthcare Distribution
Alliance, Healthcaredistribution.org, Healthcare Distribution Alliance. Web. 11 Oct. 2017.
304

See Bernstein, Lenny et al., “The Government’s Struggle to Hold Opioid
Manufacturers Accountable,” The Washington Post, 2 Apr. 2017. Web. 12 Oct. 2017. See also
Letter from Sen. Claire McCaskill, https://www.mccaskill.senate.gov/imo/media/image/julyopioid-investigation-letter-manufacturers.png, 26 July 2017. Web. 12 Oct. 2017; “Behind an
Epidemic: Opioid Manufacturers Subject of New McCaskill Investigation, Mccaskill.senate.gov.
Web. 12 Oct. 2017; “Purdue Managed Markets,” Purduepharma.com, Purdue Pharma. Web. 12
Oct. 2017.

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Distributor Defendants rebates and/or chargebacks on their prescription opioid sales.305 These
contracts were negotiated at the highest levels, demonstrating ongoing relationships between the
Manufacturer and Distributor Defendants. In return for the rebates and chargebacks, the
Distributor Defendants provided the Manufacturer Defendants with detailed information
regarding their prescription opioid sales, including purchase orders, acknowledgements, ship
notices, and invoices.306 The Manufacturer Defendants used this information to gather high-level
data regarding overall distribution and direct the Distributor Defendants on how to most
effectively sell the prescription opioids.
487.

The contractual relationships among the Defendants also include vault security

programs. The Defendants are required to maintain certain security protocols and storage
facilities for the manufacture and distribution of their opioids. Manufacturers likely negotiated
agreements whereby the Manufacturers installed security vaults for Distributors in exchange for
agreements to maintain minimum sales performance thresholds. These agreements were used by
the Defendants as a tool to violate their reporting and anti-diversion duties.
488.

Taken together, the interaction and length of the relationships between and among

the Manufacturer and Distributor Defendants reflects a deep level of interaction and cooperation
between two groups in a tightly knit industry. The Manufacturer and Distributor Defendants
were not two separate groups operating in isolation or two groups forced to work together in a
closed system. The Defendants operated together as a united entity, working together on multiple

305

See id.

306

See “Webinar Leveraging EDI: Order-to-Cash Transactions CD Box Set,”
Healthcaredistribution.org, Healthcare Distribution Alliance. Web. 11 Oct. 2017.

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fronts, to engage in the unlawful sale of prescription opioids. The HDA and the PCF are but two
examples of the overlapping relationships and concerted joint efforts to accomplish common
goals and demonstrates that the leaders of each of the Defendants was in communication and
cooperation.
489.

According to articles published by the Center for Public Integrity and The

Associated Press, the PCF has been lobbying on behalf of the Manufacturer and Distributor
Defendants for “more than a decade.”307 And, from 2006 to 2016 the Distributor and
Manufacturer Defendants worked together through the PCF to spend over $740 million lobbying
in the nation’s capital and in all 50 statehouses on issues including opioid-related measures.308
Similarly, the HDA has continued its work on behalf of Defendants, without interruption, since
at least 2000, if not longer.309
490.

As described above, the Defendants began working together as early as 2006

through the Pain Care Forum and the HDA to promote the common purpose of their enterprise.
Defendants worked together as an ongoing and continuous organization throughout the existence
of their enterprise.
II.

Conduct of the Opioid Diversion Enterprise
491.

During the time period alleged in this Complaint, the Defendants exerted

control over, conducted and/or participated in the Opioid Diversion Enterprise by fraudulently

307

Perrone, Matthew, “Pro-Painkiller Echo Chamber Shaped Policy Amid Drug
Epidemic,” The Center for Public Integrity, 19 Sept. 2016, updated 15 Dec. 2016. Web. 25 Oct.
2017.
308

Id.

309

“History,” Healthcaredistribution.org, Healthcare Distribution Alliance. Web. 11

Oct. 2017.

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failing to comply with their Federal and State obligations to identify, investigate and report
suspicious orders of opioids in order to prevent diversion of those highly addictive substances
into the illicit market, to halt such unlawful sales and, in doing so, to increase production quotas
and generate unlawful profits, as follows:
492.

Defendants disseminated false and misleading statements to the public claiming

that they were complying with their obligations to maintain effective controls against diversion
of their prescription opioids.
493.

Defendants disseminated false and misleading statements to the public claiming

that they were complying with their obligations to design and operate a system to disclose to the
registrant suspicious orders of their prescription opioids.
494.

Defendants disseminated false and misleading statements to the public claiming

that they were complying with their obligation to notify the DEA of any suspicious orders or
diversion of their prescription opioids.
495.

Defendants paid nearly $800 million dollars to influence local, state, and federal

governments through joint lobbying efforts as part of the Pain Care Forum. The Defendants were
all members of the PCF either directly or indirectly through the HDA. The lobbying efforts of
the PCF and its members, included efforts to pass legislation making it more difficult for the
DEA to suspend and/or revoke the Manufacturers’ and Distributors’ registrations for failure to
report suspicious orders of opioids.
496.

The Defendants exercised control and influence over the distribution industry by

participating and maintaining membership in the HDA.
497.

The Defendants applied political and other pressure on the DOJ and DEA to halt

prosecutions for failure to report suspicious orders of prescription opioids and lobbied Congress

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to strip the DEA of its ability to immediately suspend registrations pending investigation by
passing the “Ensuring Patient Access and Effective Drug Enforcement Act.”310
498.

The Defendants engaged in an industry-wide practice of paying rebates and

chargebacks to incentivize unlawful opioid prescription sales. The Manufacturer Defendants
used the chargeback program to acquire detailed, high-level data regarding sales of the opioids
they manufactured. And the Manufacturer Defendants used this high-level information to direct
the Distributor Defendants’ sales efforts to regions where prescription opioids were selling in
larger volumes.
499.

The Manufacturer Defendants lobbied the DEA to increase Aggregate Production

Quotas, year after year by submitting net disposal information that the Manufacturer Defendants
knew included sales that were suspicious and involved the diversion of opioids that had not been
properly investigated or reported by the Defendants.
500.

The Distributor Defendants developed “know your customer” questionnaires and

files. This information, compiled pursuant to comments from the DEA in 2006 and 2007 was
intended to help the Defendants identify suspicious orders or customers who were likely to divert
prescription opioids.311 The “know your customer” questionnaires informed the Defendants of
310

See “HDMA is now the Healthcare Distribution Alliance,”
Pharmaceuticalcommerce.com, 13 June 2016, updated 6 July 2016. Web. 11 Oct. 2017;
Bernstein, Lenny et al, “Investigation: The DEA Slowed Enforcement While the Opioid
Epidemic Grew Out of Control,” The Washington Post, 22 Oct. 2016. Web. 6 Oct. 2017;
Higham, Scott et al., “U.S. Senator Calls for Investigation of DEA Enforcement Slowdown amid
Opioid Crisis,” The Washington Post, 6 Mar. 2017. Web. 11 Oct. 2017; Eyre, Eric, “DEA
Agent: ‘We Had no Leadership’ in West Virginia Amid Flood of Pain Pills,”
100daysinappalachia.com/. Web. 25 Oct. 2017.

311

See Widup, Richard et al., “Pharmaceutical Production Diversion: Beyond the
PDMA,” Mcguirewoods.com. Web. 12 Oct. 2017.
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the number of pills that the pharmacies sold, how many non-controlled substances are sold
compared to controlled substances, whether the pharmacy buys from other distributors, the types
of medical providers in the area, including pain clinics, general practitioners, hospice facilities,
cancer treatment facilities, and these questionnaires put the recipients on notice of suspicious
orders.
501.

The Defendants refused to identify, investigate and report suspicious orders to the

DEA when they became aware of them despite their actual knowledge of drug diversion rings.
The Defendants refused to identify suspicious orders and diverted drugs despite the DEA issuing
final decisions against the Distributor Defendants in 178 registrant actions between 2008 and
2012312 and 117 recommended decision in registrant actions from The Office of Administrative
Law Judges. These numbers include 76 actions involving orders to show cause and 41 actions
involving immediate suspension orders—all for failure to report suspicious orders.313
502.

Defendants’ scheme had decision-making structure that was driven by the

Manufacturer Defendants and corroborated by the Distributor Defendants. The Manufacturer
Defendants worked together to control the state and federal governments’ response to the
manufacture and distribution of prescription opioids by increasing production quotas through a
systematic refusal to maintain effective controls against diversion, and to identify and report
suspicious orders to the DEA.
503.

The Defendants worked together to control the flow of information and influence

state and federal governments and politicians to pass legislation that benefitted Defendants. The
312

“The Drug Enforcement Administration’s Adjudication of Registrant Actions,”
Oig.justice.gov, United States Department of Justice, Office of the Inspector General, Evaluation
and Inspections Divisions, I-2014-003, p. 6 (May 2014). Web. 25 Oct. 2017.
313

Id.

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Manufacturer and Distributor Defendants did this through their participation in the Pain Care
Forum and HDA.
504.

The Defendants also worked together to ensure that the Aggregate Production

Quotas, Individual Quotas, and Procurement Quotas allowed by the DEA stayed high and
ensured that suspicious orders were not reported to the DEA. By not reporting suspicious orders
or diversion of prescription opioids, the Defendants ensured that the DEA had no basis for
decreasing or refusing to increase the production quotas for prescription opioids due to diversion
of suspicious orders. The Defendants influenced the DEA production quotas in the following
ways:
a.

The Distributor Defendants assisted the enterprise and the Manufacturer
Defendants in their lobbying efforts through the Pain Care Forum;

b.

The Distributor Defendants invited the participation, oversight and control of the
Manufacturer Defendants by including them in the HDA, including on the
councils, committees, task forces, and working groups;

c.

The Distributor Defendants provided sales information to the Manufacturer
Defendants regarding their prescription opioids, including reports of all opioids
prescriptions filled by the Distributor Defendants;

d.

The Manufacturer Defendants used a chargeback program to ensure delivery of
the Distributor Defendants’ sales information;

e.

The Manufacturer Defendants obtained sales information from QuintilesIMS
(formerly IMS Health) that gave them a “stream of data showing how individual
doctors across the nation were prescribing [opioids].”314

f.

The Distributor Defendants accepted rebates and chargebacks for orders of
prescription opioids;

g.

The Manufacturer Defendants used the Distributor Defendants’ sales information
and the data from QuintilesIMS to instruct the Distributor Defendants to focus

314

Ryan, Harriet et al., “More than 1 Million OxyContin Pills Ended up in the Hands of
Criminals and Addicts. What the Drugmaker knew,” The Los Angeles Times, 10 July 2016.
Web. 25 Oct. 2017.

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their distribution efforts to specific areas where the purchase of prescription
opioids was most frequent;
h.

The Defendants identified suspicious orders of prescription opioids and then
continued filling those unlawful orders, without reporting them, knowing that they
were suspicious and/or being diverted into the illicit drug market;

i.

The Defendants refused to report suspicious orders of prescription opioids despite
repeated investigation and punishment of the Distributor Defendants by the DEA
for failure to report suspicious orders; and

j.

The Defendants withheld information regarding suspicious orders and illicit
diversion from the DEA because it would have revealed that the “medical need”
for and the net disposal of their drugs did not justify the production quotas set by
the DEA.

505.

The scheme devised and implemented by the Defendants amounted to a common

course of conduct characterized by a refusal to maintain effective controls against diversion, and
all designed and operated to ensure the continued unlawful sale of controlled substances.
III.

Pattern of Racketeering Activity
506.

The Defendants conducted and participated in the conduct of the Opioid

Diversion Enterprise through a pattern of racketeering activity as defined in 18 U.S.C. §
1961(B), including mail fraud (18 U.S.C. § 1341) and wire fraud (18 U.S.C. § 1343); and 18
U.S.C. § 1961(D) by the felonious manufacture, importation, receiving, concealment, buying
selling, or otherwise dealing in a controlled substance or listed chemical (as defined in section
102 of the Controlled Substance Act), punishable under any law of the United States.
A.

The RICO Defendants Engaged in Mail and Wire Fraud.

507.

The Defendants carried out, or attempted to carry out, a scheme to defraud federal

and state regulators, and the American public, including Indianapolis and Marion County, by
knowingly conducting or participating in the conduct of the Opioid Diversion Enterprise through
a pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(1) that employed the

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use of mail and wire facilities, in violation of 18 U.S.C. § 1341 (mail fraud) and § 1343 (wire
fraud).
508.

The Defendants committed, conspired to commit, and aided and abetted in the

commission of at least two predicate acts of racketeering activity (i.e. violations of 18 U.S.C. §§
1341 and 1343) within the past ten years. The multiple acts of racketeering activity that the
RICO Defendants committed, or aided and abetted in the commission of, were related to each
other, posed a threat of continued racketeering activity, and therefore constitute a “pattern of
racketeering activity.” The racketeering activity was made possible by the Defendants’ regular
use of the facilities, services, distribution channels, and employees of the Opioid Diversion
Enterprise. The Defendants participated in the scheme to defraud by using mail, telephone, and
the Internet to transmit mailings and wires in interstate or foreign commerce.
509.

The Defendants used, directed the use of, and caused to be used, thousands of

interstate mail and wire communications in service of their scheme through virtually uniform
misrepresentations, concealments, and material omissions regarding their compliance with their
mandatory reporting requirements and the actions necessary to carry out their unlawful goal of
selling prescription opioids without reporting suspicious orders or the diversion of opioids into
the illicit market.
510.

In devising and executing the illegal scheme, the Defendants devised and

knowingly carried out a material scheme and artifice to defraud by means of materially false or
fraudulent pretenses, representations, promises, or omissions of material facts. For the purpose of
executing the illegal scheme, the Defendants committed these racketeering acts, which number in
the thousands, intentionally and knowingly with the specific intent to advance the illegal scheme.

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511.

The Defendants’ predicate acts of racketeering (18 U.S.C. § 1961(1)) include, but

are not limited to:
a.

Mail Fraud: The Defendants violated 18 U.S.C. § 1341 by sending or receiving,
or by causing to be sent and received, materials via U.S. mail or commercial
interstate carriers for the purpose of executing the unlawful scheme to design,
manufacture, market, and sell the prescription opioids by means of false
pretenses, misrepresentations, promises, and omissions.
Wire Fraud: The Defendants violated 18 U.S.C. § 1343 by transmitting and/or
receiving, or by causing to be transmitted and/or received, materials by wire for
the purpose of executing the unlawful scheme to design, manufacture, market, and
sell the prescription opioids by means of false pretenses, misrepresentations,
promises, and omissions.

512.

The Defendants’ use of the mail and wires includes, but is not limited to, the

transmission, delivery, or shipment of the following by the Manufacturers, Distributors, or third
parties that were foreseeably caused to be sent as a result of the Defendants’ illegal scheme,
including but not limited to:
a.

The prescription opioids themselves;

b.

Documents and communications that facilitated the manufacture, purchase and
unlawful sale of prescription opioids;

c.

Defendants’ DEA registrations;

d.

Documents and communications that supported and facilitated Defendants’ DEA
registrations;

e.

Documents and communications that supported and facilitated the Defendants’
request for higher aggregate production quotas, individual production quotas, and
procurement quotas;

f.

Defendants’ records and reports that were required to be submitted to the DEA
pursuant to 21 U.S.C. § 827;

g.

Documents and communications related to the Defendants’ mandatory DEA
reports pursuant to 21 U.S.C. § 823 and 21 C.F.R. § 1301.74;

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h.

Documents intended to facilitate the manufacture and distribution of Defendants’
prescription opioids, including bills of lading, invoices, shipping records, reports,
and correspondence;

i.

Documents for processing and receiving payment for prescription opioids;

j.

Payments from the Distributors to the Manufacturers;

k.

Rebates and chargebacks from the Manufacturers to the Distributors;

l.

Payments to Defendants’ lobbyists through the Pain Care Forum;

m.

Payments to Defendants’ trade organizations, like the HDA, for memberships
and/or sponsorships;

n.

Deposits of proceeds from Defendants’ manufacture and distribution of
prescription opioids; and

o.

Other documents and things, including electronic communications.

513.

The Defendants, for the purpose of executing the illegal scheme, sent and/or

received (or caused to be sent and/or received) by mail or by private or interstate carrier,
shipments of prescription opioids and related documents by mail or by private carrier affecting
interstate commerce, including the following:
a.

Purdue manufactures multiple forms of prescription opioids, including but not
limited to: OxyContin, MS Contin, Dilaudid/Dilaudid HP, Butrans, Hysingla ER,
and Targiniq ER. Purdue manufactured and shipped these prescription opioids to
the Distributor Defendants in this jurisdiction. The Distributor Defendants
shipped Purdue’s prescription opioids throughout this jurisdiction.

b.

Cephalon manufactures multiple forms of prescription opioids, including but not
limited to: Actiq and Fentora. Cephalon manufactured and shipped these
prescription opioids to the Distributor Defendants in this jurisdiction. The
Distributor Defendants shipped Teva’s prescription opioids throughout this
jurisdiction.

c.

Janssen manufactures prescription opioids known as Duragesic. Janssen
manufactured and shipped its prescription opioids to the Distributor Defendants in
this jurisdiction. The Distributor Defendants shipped Janssen’s prescription
opioids throughout this jurisdiction.

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d.

Endo manufactures multiple forms of prescription opioids, including but not
limited to: Opana/Opana ER, Percodan, Percocet, and Zydone. Endo
manufactured and shipped its prescription opioids to the Distributor Defendants in
Ohio. The Distributor Defendants shipped Janssen’s prescription opioids
throughout this jurisdiction.

e.

Actavis manufactures multiple forms of prescription opioids, including but not
limited to: Kadin and Norco, as well as generic versions of the drugs known as
Kadian, Duragesic, and Opana. Actavis manufactured and shipped its prescription
opioids to the Distributor Defendants in this jurisdiction. The Distributor
Defendants shipped Actavis’s prescription opioids throughout this jurisdiction.

f.

Mallinckrodt manufactures multiple forms of prescription opioids, including but
not limited to: Exalgo and Roxicodone. The Distributor Defendants shipped
Mallinckrodt’s prescription opioids throughout this jurisdiction.

514.

The Defendants also used the internet and other electronic facilities to carry out

their scheme and conceal the ongoing fraudulent activities. Specifically, the Defendants made
misrepresentations about their compliance with Federal and State laws requiring them to
identify, investigate, and report suspicious orders of prescription opioids and/or diversion of the
same into the illicit market.
515.

At the same time, the Defendants misrepresented the superior safety features of

their order monitoring programs, ability to detect suspicious orders, commitment to preventing
diversion of prescription opioids, and that they complied with all state and federal regulations
regarding the identification and reporting of suspicious orders of prescription opioids.
516.

Defendants also utilized the internet and other electronic resources to exchange

communications, to exchange information regarding prescription opioid sales, and to transmit
payments and rebates/chargebacks.
517.

The Defendants also communicated by U.S. Mail, by interstate facsimile, and by

interstate electronic mail and with various other affiliates, regional offices, regulators,
distributors, and other third-party entities in furtherance of the scheme.

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518.

Several Defendants also entered into various Corporate Integrity Agreements with

various entities, including the Office of Inspector General and the United States Department of
Health and Human Services, that required the Defendants annually to certify in writing that the
Defendants had implemented effective compliance programs and were otherwise in compliance
with laws and regulations regarding, among other things, the manufacture and distribution of
opioids. Defendants submitted through the mail and wires certifications that were false and
misleading, in furtherance of the Opioid Diversion Enterprise’s operation and goals, including
false and misleading certifications required annually under the following:
a.

Section V.j of the Deferred Prosecution Agreement entered in United States of
America v. Endo Pharmaceuticals, Inc., No. 1:14-CR-00066-MAD, ECF No. 2
(N.D.N.Y. Feb. 21, 2014);

b.

Section III of the Corporate Integrity Agreement Between the Office of Inspector
General of the Department of Health and Human Services and Endo
Pharmaceuticals, Inc. (fully executed on Feb. 21, 2014);

c.

Section III of the Corporate Integrity Agreement Between the Office of Inspector
General of the Department of Health and Human Services and Johnson & Johnson
(fully executed on Oct. 31, 2013); and

d.

Section III of the Corporate Integrity Agreement Between the Office of Inspector
General of the Department of Health and Human Services and Purdue Pharma,
L.P. (fully executed on May 8, 2007).

519.

The mail and wire transmissions described herein were made in furtherance of

Defendants’ scheme and common course of conduct to deceive regulators and the public that
Defendants were complying with their state and federal obligations to identify and report
suspicious orders of prescription opioids all while Defendants were knowingly allowing millions
of doses of prescription opioids to divert into the illicit drug market. The Defendants’ scheme
and common course of conduct was intended to increase or maintain high production quotas for
their prescription opioids from which they could profit.

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520.

Many of the precise dates of the fraudulent uses of the U.S. mail and interstate

wire facilities have been deliberately hidden, and cannot be alleged without access to
Defendants’ books and records. But, Plaintiffs have described the types of, and in some
instances, occasions on which the predicate acts of mail and/or wire fraud occurred. They include
thousands of communications to perpetuate and maintain the scheme, including the things and
documents described in the preceding paragraphs.
521.

The Defendants did not undertake the practices described herein in isolation, but

as part of a common scheme. These actions violate 18 U.S.C. § 1962(c). Various other persons,
firms, and corporations, including third-party entities and individuals not named as defendants in
this Complaint, may have contributed to and/or participated in the scheme with the Defendants in
these offenses and have performed acts in furtherance of the scheme to increase revenues,
increase market share, and /or minimize the losses for the Defendants.
522.

The Defendants aided and abetted others in the violations of the above laws,

thereby rendering them indictable as principals in the 18 U.S.C. §§ 1341 and 1343 offenses.
523.

The Defendants hid from the general public, and suppressed and ignored warnings

from third parties, whistleblowers and governmental entities, about the reality of the suspicious
orders that the Defendants were filling on a daily basis—leading to the diversion of tens of
millions of doses of prescriptions opioids into the illicit market.
524.

The Defendants, with knowledge and intent, agreed to the overall objective of

their fraudulent scheme and participated in the common course of conduct to commit acts of
fraud and indecency in manufacturing and distributing prescription opioids.

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525.

Indeed, for the Defendants’ fraudulent scheme to work, each of the Defendants

had to agree to implement similar tactics regarding marketing prescription opioids and refusing
to report suspicious orders.
526.

The Defendants engaged in a pattern of related and continuous predicate acts for

years. The predicate acts constituted a variety of unlawful activities, each conducted with the
common purpose of obtaining significant monies and revenues from the sale of their highly
addictive and dangerous drugs. The predicate acts also had the same or similar results,
participants, victims, and methods of commission. The predicate acts were related and not
isolated events.
527.

The predicate acts all had the purpose of generating significant revenue and

profits for the Defendants while Plaintiffs were left with substantial injury to their business
through the damage that the prescription opioid epidemic caused. The predicate acts were
committed or caused to be committed by the Defendants through their participation in the Opioid
Diversion Enterprise and in furtherance of its fraudulent scheme.
528.

The pattern of racketeering activity and the Opioid Diversion Enterprise are

separate and distinct from each other. Likewise, Defendants are distinct from the enterprise.
529.

The pattern of racketeering activity is continuing as of the date of this Complaint

and will continue into the future unless enjoined by this Court.
530.

Many of the precise dates of the Defendants’ criminal actions have been hidden

and cannot be alleged without access to Defendants’ books and records. Indeed, an essential part
of the successful operation of the Opioid Diversion Enterprise alleged herein depended upon
secrecy.

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531.

Each instance of racketeering activity was related, had similar purposes, involved

the same or similar participants and methods of commission, and had similar results affecting
similar victims, including consumers in this jurisdiction and the Plaintiffs. Defendants calculated
and intentionally crafted the Opioid Diversion Enterprise and their scheme to increase and
maintain their increased profits, without regard to the effect such behavior would have on
Plaintiffs, their residents, and their community. In designing and implementing the scheme, at all
times Defendants knew that those in the manufacturing and distribution chain rely on the
integrity of the pharmaceutical companies and ostensibly neutral third parties to provide
objective and reliable information regarding Defendants’ products and their manufacture and
distribution of those products. The Defendants were also aware that Plaintiffs and the citizens of
this jurisdiction rely on the Defendants to maintain a closed system and to protect against the
non-medical diversion and use of their dangerously addictive opioid drugs.
532.

By intentionally refusing to report and halt suspicious orders of their prescription

opioids, Defendants engaged in a fraudulent scheme and unlawful course of conduct constituting
a pattern of racketeering activity.
533.

It was foreseeable to Defendants that refusing to report and halt suspicious orders,

as required by the CSA and Code of Federal Regulations, would harm Plaintiffs by allowing the
flow of prescriptions opioids from appropriate medical channels into the illicit drug market.
534.

The last racketeering incident occurred within five years of the commission of a

prior incident of racketeering.
B.

The RICO Defendants Manufactured, Sold, and/or Dealt in Controlled
Substances and Their Crimes Are Punishable as Felonies.

535.

The Defendants conducted and participated in the conduct of the affairs of the

Opioid Diversion Enterprise through a pattern of racketeering activity as defined in 18 U.S.C. §
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1961(D) by the felonious manufacture, importation, receiving, concealment, buying, selling, or
otherwise dealing in a controlled substance or listed chemical (as defined in section 102 of the
Controlled Substance Act), punishable under any law of the United States.
536.

The Defendants committed crimes that are punishable as felonies under the laws

of the United States. Specifically, 21 U.S.C. § 483(a)(4) makes it unlawful for any person to
knowingly or intentionally furnish false or fraudulent information in, or omit any material
information from, any application, report, record, or other document required to be made, kept,
or filed under this subchapter. A violation of section 483(a)(4) is punishable by up to four years
in jail, making it a felony. 21 U.S.C. § 483(d)(1).
537.

Each of the Defendants qualifies as a registrant under the CSA. Their status as

registrants under the CSA requires that they maintain effective controls against diversion of
controlled substances in schedule I or II, design and operate a system to disclose to the registrant
suspicious orders of controlled substances, and inform the DEA of suspicious orders when
discovered by the registrant. 21 U.S.C. § 823; 21 C.F.R. § 1301.74(b).
538.

Pursuant to the CSA and the Code of Federal Regulations, the RICO Defendants

were required to make reports to the DEA of any suspicious orders identified through the design
and operation of their system to disclose suspicious orders.
539.

The Defendants knowingly and intentionally furnished false or fraudulent

information in their reports to the DEA about suspicious orders, and omitted material
information from reports, records, and other documents required to be filed with the DEA,
including the Manufacturer Defendants’ applications for production quotas. Specifically, the
Defendants were aware of suspicious orders of prescription opioids and the diversion of their

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prescription opioids into the illicit market, and failed to report this information to the DEA in
their mandatory reports and their applications for production quotas.
540.

For example, the DEA and DOJ began investigating McKesson in 2013 regarding

its monitoring and reporting of suspicious controlled substances orders. On April 23, 2015,
McKesson filed a Form-8-K announcing a settlement with the DEA and DOJ wherein it admitted
to violating the CSA and agreed to pay $150 million and have some of its DEA registrations
suspended on a staggered basis. The settlement was finalized on January 17, 2017.315
541.

Purdue’s experience in Los Angeles is another striking example of Defendants’

willful violation of the CSA and Code of Federal Regulations as it relates to reporting suspicious
orders of prescription opioids. In 2016, the Los Angeles Times reported that Purdue was aware
of a pill mill operating out of Los Angeles yet failed to alert the DEA.316 The LA Times
uncovered that Purdue began tracking a surge in prescriptions in Los Angeles, including one
prescriber in particular. A Purdue sales manager spoke with company officials in 2009 about the
prescriber, asking “Shouldn’t the DEA be contacted about this?” and adding that she felt “very
certain this is an organized drug ring.”317 Despite knowledge of the staggering amount of pills
being issued in Los Angeles, and internal discussion of the problem, “Purdue did not shut off the
supply of highly addictive OxyContin and did not tell authorities what it knew about Lake
Medical until several years later when the clinic was out of business and its leaders indicted. By
315

“McKesson Finalizes Settlement with U.S. Department of Justice and U.S. Drug
Enforcement Administration to Resolve Past Claims,” Mckesson.com, McKesson Corporation,
17 Jan. 2017. Web. 12 Oct. 2017.
316

Ryan, Harriet et al., “More than 1 Million OxyContin Pills Ended up in the Hands of
Criminals and Addicts. What the Drugmaker knew,” The Los Angeles Times, 10 July 2016.
Web. 25 Oct. 2017.
317

Id.

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that time, 1.1 million pills had spilled into the hands of Armenian mobsters, the Crips gang and
other criminals.”318
542.

Mallinckrodt also was recently the subject of a DEA and Senate investigation for

its opioid practices. Specifically, in 2011, the DEA targeted Mallinckrodt arguing that it ignored
its responsibility to report suspicious orders as 500 million of its pills ended up in Florida
between 2008 and 2012.319 After six years of DEA investigation, Mallinckrodt agreed to a
settlement involving a $35 million fine. Federal prosecutors summarized the case by saying that
Mallinckrodt’s response was that everyone knew what was going on in Florida but they had no
duty to report it.320
543.

These examples reflect the Defendants’ pattern and practice of willfully and

intentionally omitting information from their mandatory reports to the DEA as required by 21
C.F.R. § 1301.74. This conclusion is supported by the sheer volume of enforcement actions
available in the public record against the Distributor Defendants. For example:
a.

On April 24, 2007, the DEA issued an Order to Show Cause and Immediate
Suspension Order against the AmerisourceBergen Orlando, Florida distribution
center (“Orlando Facility”) alleging failure to maintain effective controls against
diversion of controlled substances. On June 22, 2007, AmerisourceBergen entered
into a settlement that resulted in the suspension of its DEA registration;

b.

On November 28, 2007, the DEA issued an Order to Show Cause and Immediate
Suspension Order against the Cardinal Health Auburn, Washington Distribution
Center (“Auburn Facility”) for failure to maintain effective controls against
diversion of hydrocodone;

318

Id.

319

Bernstein, Lenny et al., “The Government’s Struggle to Hold Opioid Manufacturers
Accountable,” The Washington Post, 2 Apr. 2017. Web. 12 Oct. 2017. This number accounted
for 66% of all oxycodone sold in the state of Florida during that time.
320

Id.

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c.

On December 5, 2007, the DEA issued an Order to Show Cause and Immediate
Suspension Order against the Cardinal Health Lakeland, Florida Distribution
Center (“Lakeland Facility”) for failure to maintain effective controls against
diversion of hydrocodone;

d.

On December 7, 2007, the DEA issued an Order to Show Cause and Immediate
Suspension Order against the Cardinal Health Swedesboro, New Jersey
Distribution Center (“Swedesboro Facility”) for failure to maintain effective
controls against diversion of hydrocodone;

e.

On January 30, 2008, the DEA issued an Order to Show Cause and Immediate
Suspension Order against the Cardinal Health Stafford, Texas Distribution Center
(“Stafford Facility”) for failure to maintain effective controls against diversion of
hydrocodone;

f.

On May 2, 2008, McKesson Corporation entered into an Administrative
Memorandum of Agreement (“2008 MOA”) with the DEA which provided that
McKesson would “maintain a compliance program designed to detect and prevent
the diversion of controlled substances, inform DEA of suspicious orders required
by 21 C.F.R. § 1301.74(b), and follow the procedures established by its
Controlled Substance Monitoring Program”;

g.

On September 30, 2008, Cardinal Health entered into a Settlement and Release
Agreement and Administrative Memorandum of Agreement with the DEA related
to its Auburn Facility, Lakeland Facility, Swedesboro Facility and Stafford
Facility. The document also referenced allegations by the DEA that Cardinal
failed to maintain effective controls against the diversion of controlled substances
at its distribution facilities located in McDonough, Georgia (“McDonough
Facility”), Valencia, California (“Valencia Facility”) and Denver, Colorado
(“Denver Facility”);

h.

On February 2, 2012, the DEA issued an Order to Show Cause and Immediate
Suspension Order against the Cardinal Health Lakeland, Florida Distribution
Center (“Lakeland Facility”) for failure to maintain effective controls against
diversion of oxycodone;

i.

On December 23, 2016, Cardinal Health agreed to pay a $44 million fine to the
DEA to resolve the civil penalty portion of the administrative action taken against
its Lakeland, Florida Distribution Center; and

j.

On January 5, 2017, McKesson Corporation entered into an Administrative
Memorandum Agreement with the DEA wherein it agreed to pay a $150,000,000
civil penalty for violation of the 2008 MOA as well as failure to identify and
report suspicious orders at its facilities in Aurora CO, Aurora IL, Delran NJ,
LaCrosse WI, Lakeland FL, Landover MD, La Vista NE, Livonia MI, Methuen

156

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MA, Santa Fe Springs CA, Washington Courthouse OH and West Sacramento
CA.
544.

These actions against the Distributor Defendants confirm that the Distributors

knew they had a duty to maintain effective controls against diversion, design and operate a
system to disclose suspicious orders, and to report suspicious orders to the DEA. These actions
also demonstrate that the Manufacturer Defendants were aware of the enforcement against their
Distributors and the diversion of the prescription opioids and a corresponding duty to report
suspicious orders.
545.

The pattern of racketeering activity is continuing as of the date of this Complaint

and will likely continue into the future unless enjoined by this Court.
546.

Many of the precise dates of Defendants’ criminal actions were hidden and cannot

be alleged without access to Defendants’ books and records. Indeed, an essential part of the
successful operation of the Opioid Diversion Enterprise depended upon the secrecy of the
participants in that enterprise.
547.

Each instance of racketeering activity alleged herein was related, had similar

purposes, involved the same or similar participants and methods of commission, and had similar
results affecting similar victims, including Plaintiffs, their residents, and their community.
Defendants calculated and intentionally crafted the diversion scheme to increase and maintain
profits from unlawful sales of opioids, without regard to the effect such behavior would have on
this jurisdiction, its citizens or the Plaintiffs. The Defendants were aware that Plaintiffs and the
citizens of this jurisdiction rely on the Defendants to maintain a closed system of manufacturing
and distribution to protect against the non-medical diversion and use of their dangerously
addictive opioid drugs.

157

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548.

By intentionally refusing to report and halt suspicious orders of their prescription

opioids, Defendants engaged in a fraudulent scheme and unlawful course of conduct constituting
a pattern of racketeering activity.
549.

It was foreseeable to Defendants that refusing to report and halt suspicious orders,

as required by the CSA and Code of Federal Regulations would harm Plaintiffs by allowing the
flow of prescriptions opioids from appropriate medical channels into the illicit drug market.
550.

The last racketeering incident occurred within five years of the commission of a

prior incident of racketeering.
IV.

Damages
551.

The Defendants’ violations of law and their pattern of racketeering activity

directly and proximately caused Plaintiffs’ injury in their business and property because
Plaintiffs paid for costs associated with the opioid epidemic.
552.

Plaintiffs’ injuries, and those of their residents and community, were proximately

caused by Defendants’ racketeering activities. But for the Defendants’ conduct, Plaintiffs would
not have paid the health services and law enforcement services and expenditures required as a
result of the plague of drug-addicted residents.
553.

Plaintiffs’ injuries and those of their residents and community were directly

caused by the Defendants’ racketeering activities.
554.

Plaintiffs were most directly harmed and there are no other Plaintiffs better suited

to seek a remedy for the economic harms at issue here.
555.

Plaintiffs seek all legal and equitable relief as allowed by law, including actual

damages, treble damages, equitable relief, forfeiture as deemed proper by the Court, attorney’s
fees and all costs and expenses of suit and pre- and post-judgment interest.

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COUNT III:
RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT,
18 U.S.C. § 1962(D), ET. SEQ.
(AGAINST ALL DEFENDANTS)
556.

Plaintiffs incorporate and re-allege each preceding paragraph of this Complaint as

if fully set forth below.
557.

Plaintiffs bring this claim on their own behalf against all Defendants. At all

relevant times, the Defendants were associated with the Opioid Diversion Enterprise and agreed
and conspired to violate 18 U.S.C. § 1962(c), that is, they agreed to conduct and participate,
directly and indirectly, in the conduct of the affairs of the Opioid Diversion Enterprise through a
pattern of racketeering activity in violation of 18 U.S.C. § 1962(d). Under Section 1962(d) it is
unlawful for “any person to conspire to violate” Section 1962(d), among other provisions. 18
U.S.C. § 1962(d).
558.

Defendants conspired to violate Section 1962(c), as alleged more fully above, by

conducting the affairs of the Opioid Diversion Enterprise through a pattern of racketeering
activity, as incorporated by reference below.
I.

The Opioid Diversion Enterprise
559.

Plaintiffs incorporate by reference Paragraphs 463 through 490 concerning the

Opioid Diversion Enterprise.
II.

Conduct of the Opioid Diversion Enterprise
560.

Plaintiffs incorporate by reference Paragraphs 491 through 505 concerning the

Opioid Diversion Enterprise.
III.

Pattern of Racketeering Activity
561.

Plaintiffs incorporate by reference Paragraphs 506 through 550 concerning the

Opioid Diversion Enterprise.

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IV.

Damages
562.

Plaintiffs incorporate by reference Paragraphs 551 through 555 concerning the

Opioid Diversion Enterprise.
COUNT IV:
ORDINANCE VIOLATION
(AGAINST ALL DEFENDANTS)
563.

Plaintiffs incorporate and re-allege each preceding paragraph of this Complaint as

if fully set forth below.
564.

The Revised Code of the Consolidated City and County of Indianapolis - Marion

County, Indiana (“City-County Ordinances”) forbid public nuisances.
565.

City-County Ordinances § 391-101 provides that “[i]n addition to what is

declared in this chapter and Code to be public nuisances, those offenses which are known to the
common law and the state statutes as public nuisances, in case any such nuisance exists within
the city, may be treated as such and be proceeded against as provided in this chapter, or in
accordance with any other provisions of law.”
566.

City-County Ordinances § 391-119 provides that “[a]ny person who creates and

maintains any nuisance defined in this chapter, or elsewhere in this Code, or by any other law or
ordinance of the city, and who fails or refuses to abate such nuisance when so ordered, shall be
guilty of an offense against the city and upon conviction thereof shall be punishable as provided
in section 103-3, unless some other penalty is prescribed in any other section of this Code for a
particular offense. The action against any person to enforce a penalty by the city shall constitute
a separate and additional legal remedy, and the fact that any proceedings by way of an
injunction, or for the abatement of any such nuisance, has been or may be instituted by the city
and be pending or concluded shall not affect this section or chapter, or be considered in any way
as a defense to such action for the penalty in this section.”
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567.

City-County Ordinances § 103-3 provides: “(a) Whenever in any chapter, article,

division or section of this Code, or of any ordinances amendatory thereof or supplemental
thereto: (1) The doing of any act, or the omission to do any act or to perform any duty, is
declared to be a violation of this Code, or of any such amendatory or supplemental ordinance, or
of any provision thereof, or is declared to be unlawful; and (2) If there shall be no fine or penalty
otherwise specifically prescribed or declared for any such violation, or for doing or for omitting
to do any such act or to perform any such duty; any person found to have committed any such
violation shall be fined, by way of a penalty therefor, an amount not exceeding any limitation
under IC 36-1-3-8 for each such violation, act or omission. (b) In addition to the foregoing
penalty, the city may enjoin or abate any violation of this Code by appropriate action.”
568.

Defendants’ activities as described in this complaint have been, and continue to

be violations of the foregoing provisions of the City-County Ordinances.
569.

Indiana Code § 36-1-3-8 allows for a governmental unit to prescribe a penalty of

up to $2,500 for a first violation of an ordinance and up to $7,500 for a second or subsequent
violation of an ordinance.
COUNT V:
NEGLIGENCE
(AGAINST ALL DEFENDANTS)
570.

Plaintiffs incorporate and re-allege each preceding paragraph of this Complaint as

if fully set forth below.
571.

Defendants had an obligation to use reasonable care in manufacturing, marketing,

selling, and distributing highly dangerous opioid drugs to Indianapolis and Marion County, and
the injuries alleged in this Complaint from the breach of that duty were foreseeable, and in fact
were foreseen, by Defendants. See City of Everett v. Purdue Pharma L.P. et al., No. C17-

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209RSM, 2017 WL 4236062 at *4, 6-7 (W.D. Wash. Sept. 25, 2017) (sustaining a negligence
claim by city against Purdue for damages caused by the opioid crisis).
572.

Reasonably prudent manufacturers and distributors of prescription opioids would

have anticipated that the scourge of opioid addiction would wreak havoc on communities, and
the significant costs which would be imposed upon the governmental entities associated with
those communities. The closed system of opioid distribution whereby wholesale distributors are
the gatekeepers between manufacturers and pharmacies, and wherein all links in the chain have a
duty to prevent diversion, exists for the purpose of controlling dangerous substances such as
opioids and preventing diversion and abuse.
573.

Reasonably prudent manufacturers of pharmaceutical products would know that

aggressively pushing highly addictive opioids for chronic pain would result in the severe harm of
addiction, foreseeably causing patients to seek increasing levels of opioids, frequently turning to
the illegal drug market as a result of a drug addiction that was foreseeable to the Manufacturer
Defendants.
574.

Moreover, Defendants were repeatedly warned by law enforcement of the

unlawfulness and consequences of their actions and omissions.
575.

The escalating amounts of addictive drugs flowing through Defendants’

businesses, and the sheer volume of these prescription opioids, further alerted Defendants that
addiction was fueling increased consumption and that legitimate medical purposes were not
being served.
576.

Distributor Defendants breached their duties to exercise due care in the business

of wholesale distribution of dangerous opioids, which are Schedule II Controlled Substances, by
failing to monitor for, failing to report, and filling highly suspicious orders time and again.

162

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Because the very purpose of these duties was to prevent the resulting harm – diversion of highly
addictive drugs for non- medical purposes – the causal connection between Defendants’ breach
of duties and the ensuing harm was entirely foreseeable.
577.

Distributor Defendants misrepresented their compliance with their duties under

the law and concealed their noncompliance and shipments of suspicious orders of opioids to
Indianapolis and Marion County and destinations from which they knew opioids were likely to
be diverted into Indianapolis and Marion County, in addition to other misrepresentations alleged
and incorporated herein.
578.

Manufacturer Defendants breached their duties to exercise due care in the

business of pharmaceutical manufacturers of dangerous opioids, which are Schedule II
Controlled Substances, and by misrepresenting the nature of the drugs and aggressively
promoting them for chronic pain for which they knew the drug were not safe or suitable.
579.

The Manufacturer Defendants misrepresented and concealed the addictive nature

of prescription opioids and its lack of suitability for chronic pain, in addition to other
misrepresentations alleged and incorporated herein.
580.

All Defendants breached their duties to prevent diversion and report and halt

suspicious orders, and all Defendants misrepresented their compliance with their legal duties.
581.

Defendants’ breaches were intentional and unlawful, and Defendants’ conduct

was willful, wanton, malicious, reckless, oppressive, and fraudulent.
582.

The causal connection between Defendants’ breaches of duties and

misrepresentations and the ensuing harm was entirely foreseeable.
583.

Defendants’ breaches of duty and misrepresentations caused, bears a causal

connection with, and proximately resulted in the damages sought herein.

163

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584.

Defendants were selling dangerous drugs statutorily categorized as posing a high

potential for abuse and severe dependence. Defendants knowingly traded in drugs that presented
a high degree of danger if prescribed incorrectly or diverted to other than medical, scientific, or
industrial channels. However, Defendants breached their duties to monitor for, report, and halt
suspicious orders, breached their duties to prevent diversion, and, further, misrepresented what
their duties were and their compliance with their legal duties.
585.

As a direct and proximate result of Defendants’ breaches of duties, Plaintiffs have

been harmed and damaged.
COUNT VI:
UNJUST ENRICHMENT
(AGAINST ALL DEFENDANTS)
586.

Plaintiffs incorporate and re-allege each preceding paragraph of this Complaint as

if fully set forth below.
587.

“To prevail on a claim of unjust enrichment, a plaintiff must establish that a

measurable benefit has been conferred on the defendant under such circumstances that the
defendant’s retention of the benefit without payment would be unjust.” Dominiack Mech., Inc. v.
Dunbar, 757 N.E.2d 186, 191 (Ind. Ct. App. 2001) (reversing dismissal of claim for unjust
enrichment where defendants had received benefit from plaintiff through a third party) (citing
Bayh v. Sonnenburg, 573 N.E.2d 398 (Ind. 1991)).
588.

As set forth above, Plaintiffs rendered a measurable benefit to the Defendants

under such circumstances that Defendants’ retention of the benefit without payment would be
unjust. See City of Everett, No. C17-209RSM, 2017 WL 4236062, at *9 (Sustaining unjust
enrichment claim where City alleged Purdue Pharma profited immensely from its supply of
opioids in the black market).

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COUNT VII:
DAMAGES RESULTING FROM CIVIL CONSPIRACY
(AGAINST ALL DEFENDANTS)
589.

Plaintiffs incorporate and re-allege each preceding paragraph of this Complaint as

if fully set forth below.
590.

“Indiana recognizes a cause of action for damages resulting from conspiracy.” SJS

Refractory Co. v. Empire Refractory Sales, Inc., 952 N.E.2d 758, 769 (Ind. Ct. App. 2011).
591.

“A civil conspiracy is a combination of two or more persons who engage in a

concerted action to accomplish an unlawful purpose or to accomplish some lawful purpose by
unlawful means.” Birge v. Town of Linden, 57 N.E.3d 839, 845 (Ind. Ct. App. 2016) (reversing
dismissal of civil conspiracy allegations where plaintiff alleged defendants conspired to create a
public nuisance) (quoting Miller v. Cent. Ind. Cmty. Found., 11 N.E.3d 944, 962 (Ind. Ct. App.
2014), trans. denied.
592.

“It is not necessary in order to establish a conspiracy that there be direct evidence

of an agreement.” Miller, 11 N.E.3d at 944 (quoting Tucker et al. v. Hyatt, 151 Ind. 332, 51 N.E.
469 (1898)). “Rather, a civil conspiracy may be asserted through circumstantial evidence or by
averment of isolated or independent facts susceptible of an inference of concurrence of
sentiment.” Id. (quoting Moore v. Fletcher, 136 Ind. App. 478, 196 N.E.2d 422 (1964), trans.
denied).
593.

“Each participant in the conspiracy may be held responsible as a joint tortfeasor

for damages caused by the wrongful or contemptuous acts regardless of the degree of active
participation.” SJS Refractory Co., 952 N.E.2d at 769.
594.

Indiana courts have held that a claim for damages exists for a civil conspiracy to

create a public nuisance or to commit other tortious acts. See,e.g., Birge v. Town of Linden, 57
N.E.3d at 845.
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595.

As set forth above in detail, Defendants conspired to create a public nuisance and

to commit the tortious conduct alleged in this complaint and are therefore jointly and severally
liable for the damages flowing from the conspiracy.
CLAIM FOR RELIEF
WHEREFORE, Plaintiffs respectfully ask the Court to grant the following relief:
596.

Enter Judgment in favor of the Plaintiffs in a final order against each of the

Defendants;
597.

Order that Defendants compensate the Plaintiffs for past and future costs to abate

the ongoing public nuisance caused by the opioid epidemic;
598.

Order Defendants to fund an “abatement fund” for the purposes of abating the

opioid nuisance;
599.

Award actual damages, treble damages, f i n e s , injunctive and equitable relief,

forfeiture as deemed proper by the Court, and attorneys’ fees and all costs and expenses of
suit pursuant to Plaintiffs’ racketeering claims;
600.

Award the Plaintiffs the damages caused by the opioid epidemic, including (A)

costs for providing medical care, additional therapeutic and prescription drug purchases, and
other treatments for patients suffering from opioid-related addiction or disease, including
overdoses and deaths; (B) costs for providing treatment, counseling, and rehabilitation services;
(C) costs for providing treatment of infants born with opioid-related medical conditions; (D)
costs for providing care for children whose parents suffer from opioid-related disability or
incapacitation; and (E) costs associated with law enforcement and public safety relating to the
opioid epidemic; and
601.

Award such other relief as the Court deems proper.

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DEMAND FOR JURY TRIAL
Plaintiffs demand a trial by jury of any and all issues in this action so triable of right.
Respectfully submitted,
Dated: November 14, 2017

s/Richard E. Shevitz
Irwin B. Levin, No. 8786-49
Richard E. Shevitz, No. 12007-49
Jeff S. Gibson, No. 22362-49
Vess A. Miller, No. 26495-53
Lynn A. Toops, No. 26386-49A
Jonathan A. Knoll, No. 29324-49
COHEN & MALAD, LLP
One Indiana Square, Suite 1400
Indianapolis, Indiana 46204
Telephone: (317) 636-6481
Facsimile: (317) 636-2593
ilevin@cohenandmalad.com
rshevitz@cohenandmalad.com
jgibson@cohenandmalad.com
vmiller@cohenandmalad.com
ltoops@cohenandmalad.com
jknoll@cohenandmalad.com
Counsel for Plaintiffs City of Indianapolis and
Marion County.

167