THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
NORTHEASTERN DIVISION
JOHNSON COUNTY, TENNESSEE,
Plaintiff,
v.
AMERISOURCEBERGEN DRUG
CORPORATION, CARDINAL HEALTH,
INC., McKESSON CORPORATION,
PURDUE PHARMA L.P.; PURDUE
PHARMA, INC.; THE PURDUE FREDERICK
COMPANY, INC.; TEVA
PHARMACEUTICAL INDUSTRIES, LTD.;
TEVA PHARMACEUTICALS USA, INC.;
CEPHALON, 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.;
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.;
MALLINCKRODT PLC and
MALLINCKRODT LLC.
Defendants.

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CIVIL ACTION NO.: _______________

COMPLAINT
Complaint for Public Nuisance;
Violations of Racketeer Influenced and
Corrupt Organizations Act (RICO) 18
U.S.C. § 1961 et seq.; Violations of 18
U.S.C. § 1962 et seq.; Negligence and
Negligent Misrepresentation; Violation of
the Tennessee Consumer Protection Act;
Negligence Per Se; Civil Conspiracy; and
Fraud and Fraudulent Misrepresentation

JURY TRIAL DEMANDED AND
ENDORSED HEREON

Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 1 of 162 PageID #: 1

 TABLE OF CONTENTS
I. INTRODUCTION ......................................................................................................................1
II. PARTIES ...................................................................................................................................2
A. Plaintiff................................................................................................................................ 2
B. Defendants........................................................................................................................... 3
1. Manufacturer Defendants. ............................................................................................3
2. Distributor Defendants. .................................................................................................9
III. JURISDICTION & VENUE ................................................................................................11
IV. FACTUAL BACKGROUND ...............................................................................................12
A. THE OPIOID EPIDEMIC. ............................................................................................. 12
1. The National Opioid Epidemic. ..................................................................................12
2. Tennessee’s Opioid Epidemic. ....................................................................................16
3. The Opioid Epidemic in Plaintiff’s Community. ......................................................18
B. THE MANUFACTURER DEFENDANTS’ FALSE, DECEPTIVE, AND UNFAIR
MARKETING OF OPIOIDS. ............................................................................................. 18
1. Each Manufacturer Defendant Used Multiple Avenues to Disseminate Their
False and Deceptive Statements about Opioids.............................................................20
i.

Direct Marketing. ............................................................................................ 21

ii.

Indirect Marketing.......................................................................................... 23

2. The Manufacturer Defendants’ Marketing Scheme Misrepresented the
Risks and Benefits of Opioids. ........................................................................................34
i.
The Manufacturer Defendants embarked upon a campaign of false,
deceptive, and unfair assurances grossly understating and misstating the
dangerous addiction risks of the opioid drugs. ...................................................... 34
ii.
The Manufacturer Defendants embarked upon a campaign of false,
deceptive, and unfair assurances grossly overstating the benefits of the opioid
drugs. .......................................................................................................................... 44

Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 2 of 162 PageID #: 2

 3. The Manufacturer Defendants Targeted Susceptible Prescribers and
Vulnerable Patient Populations. .....................................................................................51
4. The Manufacturer Defendants made Materially Deceptive Statements and
Concealed Materials Facts. .............................................................................................52
5. The Manufacturer Defendants Fraudulently Concealed Their Misconduct..........58
C. THE DISTRIBUTOR DEFENDANTS’ UNLAWFUL DISTRIBUTION OF
OPIOIDS. ............................................................................................................................... 60
1. Wholesale Drug Distributors Have a Duty under State and Federal Law to
Guard Against, and Report, Unlawful Diversion and to Report and Prevent
Suspicious Orders. ...........................................................................................................61
2. The Distributor Defendants Breached their Duties. .................................................68
3. The Distributor Defendants Have Sought to Avoid and Have
Misrepresented their Compliance with their Legal Duties. .........................................70
D. THE MANUFACTURER DEFENDANTS’ UNLAWFUL FAILURE TO PREVENT
DIVERSION AND MONITOR, REPORT, AND PREVENT SUSPICIOUS ORDERS.
................................................................................................................................................. 78
E. DEFENDANTS’ UNLAWFUL CONDUCT AND BREACHES OF LEGAL DUTIES
CAUSED THE HARM ALLEGED HEREIN AND SUBSTANTIAL DAMAGES. ...... 84
F. STATUTES OF LIMITATIONS ARE TOLLED AND DEFENDANTS ARE
ESTOPPED FROM ASSERTED STATUTES OF LIMITATIONS AS DEFENSES. .. 87
1. Continuing Conduct.....................................................................................................87
2. Equitable Estoppel. ......................................................................................................88
3. Fraudulent Concealment. ............................................................................................90
V. LEGAL CAUSES OF ACTION ............................................................................................91
COUNT I – PUBLIC NUISANCE..............................................................................................91
COUNT II – RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS
ACT – 18 U.S.C. 1961, et seq. ...................................................................................................100
A.

THE OPIOID DIVERSION ENTERPRISE ........................................................ 104

B.

CONDUCT OF THE OPIOID DIVERSION ENTERPRISE ............................ 118

C.

PATTERN OF RACKETEERING ACTIVITY. ................................................. 123

Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 3 of 162 PageID #: 3

 1. The RICO Defendants Engaged in Mail and Wire Fraud. ....................................123
2. The RICO Defendants Manufactured, Sold and/or Dealt in Controlled
Substances and Their Crimes Are Punishable as Felonies. .......................................131
D.

DAMAGES .............................................................................................................. 137

COUNT III – RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS
ACT – 18 U.S.C. 1962(d), et seq. ..............................................................................................137
A.

THE OPIOID DIVERSION ENTERPRISE. ....................................................... 138

B.

CONDUCT OF THE OPIOID DIVERSION ENTERPRISE. ........................... 138

C.

PATTERN OF RACKETEERING ACTIVITY. ................................................. 138

D.

DAMAGES. ............................................................................................................. 139

COUNT IV – NEGLIGENCE AND NEGLIGENT MISREPRESENTATION ..................139
COUNT V – TENNESSEE CONSUMER PROTECTION ACT Error! Bookmark not defined.
COUNT VI –NEGLIGENCE PER SE .....................................................................................148
COUNT VII – CIVIL CONSPIRACY .....................................................................................151
COUNT VIII – FRAUD AND FRADULENT MISREPRESENTATION ...........................153
PUNITIVE DAMAGES ............................................................................................................155

Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 4 of 162 PageID #: 4

 Plaintiff, Johnson County, Tennessee (“Plaintiff”), brings this Complaint against
Defendants Purdue Pharma L.P.; Purdue Pharma, Inc.; The Purdue Frederick Company, Inc.; Teva
Pharmaceutical Industries, LTD.; Teva Pharmaceuticals USA, Inc.; Cephalon, 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.; 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.; Mallinckrodt plc; Mallinckrodt
LLC; McKesson Corporation; Cardinal Health, Inc.; and AmerisourceBergen Drug Corporation
(collectively “Defendants”) and alleges as follows:
I. INTRODUCTION
1.

Plaintiff brings this civil 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 that
have been spent because of Defendants’ false, deceptive and unfair marketing and/or unlawful
diversion of prescription opioids.1 Such economic damages were foreseeable to Defendants and
were sustained because of Defendants intentional and/or unlawful actions and omissions.
2.

Opioid analgesics are widely diverted and improperly used, and the widespread

abuse of opioids has resulted in a national epidemic of opioid overdose deaths and addictions.2
3.

The opioid epidemic is “directly related to the increasingly widespread misuse of

powerful opioid pain medications.”3

1

As used herein, the term “opioid” refers to the entire family of opiate drugs including natural, synthetic and semisynthetic opiates.
2

See Nora D. Volkow & A. Thomas McLellan, Opioid Abuse in Chronic Pain—Misconceptions and Mitigation
Strategies, 374 N. Eng. J. Med. 1253 (2016).
3 See Robert M. Califf et al., A Proactive Response to Prescription Opioid Abuse, 374 N. Eng. J. Med. 1480 (2016).

1
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 5 of 162 PageID #: 5

 4.

Plaintiff brings this suit against the manufacturers of prescription opioids. The

manufacturers aggressively pushed highly addictive, dangerous opioids, falsely representing to
doctors that patients would only rarely succumb to drug addiction. These pharmaceutical
companies aggressively advertised to and persuaded doctors to prescribe highly addictive,
dangerous opioids, turned patients into drug addicts for their own corporate profit. Such actions
were intentional and/or unlawful.
5.

Plaintiff also brings this suit against the wholesale distributors of these highly

addictive drugs. The distributors and manufacturers intentionally and/or unlawfully breached their
legal duties under federal and state law to monitor, detect, investigate, refuse and report suspicious
orders of prescription opiates.
II. PARTIES
A. PLAINTIFF.
6.

Plaintiff is authorized to bring the causes of action brought herein. See, e.g., T.C.A.

§§ 5-1-118; 6-2-201(22).
7.

Plaintiff has declared, inter alia, that opioid4 abuse, addiction, morbidity and

mortality has created a serious public health and safety crisis, and is a public nuisance, and that
the diversion of legally produced controlled substances into the illicit market causes or contributes
to this public nuisance.
8.

The distribution and diversion of opioids into Tennessee (“the State”), and into

Johnson County and surrounding areas (collectively, “Plaintiff’s Community”), created the
foreseeable opioid crisis and opioid public nuisance for which Plaintiff here seeks relief.

4

As used herein, the term “opioid” refers to the entire family of opiate drugs including natural, synthetic and semisynthetic opiates.

2
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 6 of 162 PageID #: 6

 9.

Plaintiff directly and foreseeably sustained all economic damages alleged herein.

Defendants’ conduct has exacted a financial burden for which the Plaintiff seeks relief. Categories
of past and continuing sustained damages include, inter alia,: (1) 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; (2) costs for providing
treatment, counseling, and rehabilitation services; (3) costs for providing treatment of infants born
with opioid-related medical conditions; (4) costs associated with law enforcement and public
safety relating to the opioid epidemic; (5) and costs associated with providing care for children
whose parents suffer from opioid-related disability or incapacitation. These damages have been
suffered, and continue to be suffered directly, by the Plaintiff.
10.

Plaintiff also seeks the means to abate the epidemic created by Defendants’ wrongful

and/or unlawful conduct.
11.

Plaintiff has standing to recover damages incurred as a result of Defendants’ actions

and omissions. Plaintiff has standing to bring all claims pled herein, including, inter alia, to bring
claims under the federal RICO statute, pursuant to 18 U.S.C. § 1961(3) (“persons” include entities
which can hold legal title to property) and 18 U.S.C. § 1964 (“persons” have standing).
B. DEFENDANTS.
1. Manufacturer Defendants.
12.

The Manufacturer Defendants are defined below. At all relevant times, the

Manufacturer Defendants have packaged, distributed, supplied, sold, placed into the stream of
commerce, labeled, described, marketed, advertised, promoted and purported to warn or purported
to inform prescribers and users regarding the benefits and risks associated with the use of the
prescription opioid drugs. The Manufacturer Defendants, at all times, have manufactured and sold

3
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 7 of 162 PageID #: 7

 prescription opioids without fulfilling their legal duty prevent diversion and report suspicious
orders.
13.

PURDUE PHARMA L.P. is a limited partnership organized under the laws of

Delaware. PURDUE PHARMA INC. is a New York corporation with its principal place of
business in Stamford, Connecticut, and THE PURDUE FREDERICK COMPANY is a Delaware
corporation with its principal place of business in Stamford, Connecticut (collectively, “Purdue”).
14.

Purdue manufactures, promotes, sells, and distributes opioids such as OxyContin,

MS Contin, Dilaudid/Dilaudid HP, Butrans, Hysingla ER, and Targiniq ER in the United States.
OxyContin is Purdue’s best-selling opioid. Since 2009, Purdue’s annual nationwide sales of
OxyContin have fluctuated between $2.47 billion and $2.99 billion, up four-fold from its 2006
sales of $800 million. OxyContin constitutes roughly 30% of the entire market for analgesic drugs
(painkillers).
15.

CEPHALON, INC. is a Delaware corporation with its principal place of business in

Frazer, Pennsylvania. 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. TEVA PHARMACEUTICALS USA, INC. (“Teva USA”) is a Delaware
corporation and is a wholly owned subsidiary of Teva Ltd. in Pennsylvania. Teva USA acquired
Cephalon in October 2011.
16.

Cephalon, Inc. manufactures, promotes, sells, and distributes opioids such as Actiq

and Fentora in the United States. Actiq has been approved by the FDA only for the “management
of breakthrough cancer pain in patients 16 years and older with malignancies who are already
receiving and who are tolerant to around-the-clock opioid therapy for the underlying persistent

4
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 8 of 162 PageID #: 8

 cancer pain.”5 Fentora has been approved by the FDA only for the “management of breakthrough
pain in cancer patients 18 years of age and older who are already receiving and who are tolerant
to around-the-clock opioid therapy for their underlying persistent cancer pain.”6 In 2008, 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.7
17.

Teva Ltd., Teva USA, and Cephalon, Inc. work together closely to market and sell

Cephalon products in the United States. Teva Ltd. conducts all sales and marketing activities for
Cephalon in the United States through Teva USA and has done so since its October 2011
acquisition of Cephalon. Teva Ltd. and Teva USA hold out Actiq and Fentora as Teva products to
the public. Teva USA sells all former Cephalon branded products through its “specialty medicines”
division. The FDA-approved prescribing information and medication guide, which is distributed
with Cephalon opioids, discloses that the guide was submitted by Teva USA, and directs
physicians to contact Teva USA to report adverse events.
18.

All of Cephalon’s promotional websites, including those for Actiq and Fentora,

display Teva Ltd.’s logo.8 Teva Ltd.’s financial reports list Cephalon’s and Teva USA’s sales as
its own, and its year-end report for 2012 – the year immediately following the Cephalon acquisition
– attributed a 22% increase in its specialty medicine sales to “the inclusion of a full year of

5

Highlights of Prescribing Information, ACTIQ® (fentanyl citrate) oral transmucosal lozenge, CII (2009),
https://www.accessdata.fda.gov/drugsatfda_docs/label/2009/020747s030lbl.pdf.
6

Highlights of Prescribing Information, FENTORA® (fentanyl citrate) buccal tablet, CII (2011),
https://www.accessdata.fda.gov/drugsatfda_docs/label/2012/021947s015lbl.pdf.
7

Press Release, U.S. Dep’t of Justice, Biopharmaceutical Company, Cephalon, to Pay $425 Million & Enter Plea to
Resolve
Allegations
of
Off-Label
Marketing
(Sept.
29,
2008),
https://www.justice.gov/archive/opa/pr/2008/September/08-civ-860.html.
8

E.g., ACTIQ, http://www.actiq.com/ (displaying logo at bottom-left) (last visited Dec. 11, 2017).

5
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 9 of 162 PageID #: 9

 Cephalon’s specialty sales,” including inter alia sales of Fentora®.9 Through interrelated
operations like these, Teva Ltd. operates in the United States through its subsidiaries Cephalon
and Teva USA. The United States is the largest of Teva Ltd.’s global markets, representing 53%
of its global revenue in 2015, and, were it not for the existence of Teva USA and Cephalon, Inc.,
Teva Ltd. would conduct those companies’ business in the United States itself. Upon information
and belief, Teva Ltd. directs the business practices of Cephalon and Teva USA, and their profits
inure to the benefit of Teva Ltd. as controlling shareholder. Teva Pharmaceutical Industries, Ltd.,
Teva Pharmaceuticals USA, Inc., and Cephalon, Inc. are referred to as “Cephalon.”
19.

JANSSEN PHARMACEUTICALS, INC. is a Pennsylvania corporation with its

principal place of business in Titusville, New Jersey, and is a wholly owned subsidiary of
JOHNSON & JOHNSON (J&J), a New Jersey corporation with its principal place of business in
New Brunswick, New Jersey. NORAMCO, INC. (“Noramco”) is a Delaware company
headquartered in Wilmington, Delaware and was a wholly owned subsidiary of J&J until July
2016. ORTHO-MCNEIL-JANSSEN PHARMACEUTICALS, INC., now known as JANSSEN
PHARMACEUTICALS, INC., is a Pennsylvania corporation with its principal place of business
in Titusville, New Jersey. JANSSEN PHARMACEUTICA INC., now known as JANSSEN
PHARMACEUTICALS, INC., is a Pennsylvania corporation with its principal place of business
in Titusville, New Jersey. J&J is the only company that owns more than 10% of Janssen
Pharmaceuticals’ stock, and corresponds with the FDA regarding Janssen’s products. Upon
information and belief, J&J controls the sale and development of Janssen Pharmaceuticals’ drugs

9

Teva
Ltd.,
Annual
Report
(Form
20-F)
62
(Feb.
http://annualreports.com/HostedData/AnnualReportArchive/t/NASDAQ_TEVA_2012.pdf.

12,

2013),

6
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 and Janssen’s profits inure to J&J’s benefit. Janssen Pharmaceuticals, Inc., Ortho-McNeil-Janssen
Pharmaceuticals, Inc., Janssen Pharmaceutica, Inc., Noramco, and J&J are referred to as “Janssen.”
20.

Janssen manufactures, promotes, sells, and distributes drugs in the United States,

including the opioid Duragesic (fentanyl). Before 2009, Duragesic accounted for at least $1 billion
in annual sales. Until January 2015, Janssen developed, marketed, and sold the opioids Nucynta
(tapentadol) and Nucynta ER. Together, Nucynta and Nucynta ER accounted for $172 million in
sales in 2014.
21.

ENDO HEALTH SOLUTIONS INC. is a Delaware corporation with its principal

place of business in Malvern, Pennsylvania. ENDO PHARMACEUTICALS INC. is a wholly
owned subsidiary of Endo Health Solutions Inc. and is a Delaware corporation with its principal
place of business in Malvern, Pennsylvania. Endo Health Solutions Inc. and Endo Pharmaceuticals
Inc. are referred to as “Endo.”
22.

Endo develops, markets, and sells prescription drugs, including the opioids

Opana/Opana ER, Percodan, Percocet, and Zydone, in the United States. Opioids made up roughly
$403 million of Endo’s overall revenues of $3 billion in 2012. Opana ER yielded $1.15 billion in
revenue from 2010 and 2013, and it accounted for 10% of Endo’s total revenue in 2012. Endo also
manufactures and sells generic opioids such as oxycodone, oxymorphone, hydromorphone, and
hydrocodone products in the United States, by itself and through its subsidiary, Qualitest
Pharmaceuticals, Inc.
23.

ALLERGAN PLC is a public limited company incorporated in Ireland with its

principal place of business in Dublin, Ireland. ACTAVIS PLC acquired ALLERGAN PLC in
March 2015, and the combined company changed its name to ALLERGAN PLC in January 2013.
Before that, WATSON PHARMACEUTICALS, INC. acquired ACTAVIS, INC. in October 2012,

7
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 and the combined company changed its name to Actavis, Inc. as of January 2013 and then
ACTAVIS PLC in October 2013. WATSON LABORATORIES, INC. is a Nevada corporation
with its principal place of business in Corona, California, and is a wholly-owned subsidiary of
ALLERGAN PLC (f/k/a Actavis, Inc., f/k/a Watson Pharmaceuticals, Inc.). 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. 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 ALLERGAN PLC, which uses them to market and sell its
drugs in the United States. Upon information and belief, ALLERGAN PLC exercises control over
these marketing and sales efforts and profits from the sale of Allergan/Actavis products ultimately
inure to its benefit. 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.”
24.

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.
25.

MALLINCKRODT, PLC is an Irish public limited company headquartered in

Staines-upon-Thames, United Kingdom, with its U.S. headquarters in St. Louis, Missouri.
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 referred to as “Mallinckrodt.”

8
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 26.

Mallinckrodt manufactures, markets, and sells drugs in the United States including

generic oxycodone, of which it is one of the largest manufacturers. In July 2017 Mallinckrodt
agreed to pay $35 million to settle allegations brought by the Department of Justice that it failed to
detect and notify the DEA of suspicious orders of controlled substances.
2. Distributor Defendants.
27.

The Distributor Defendants also are defined below. At all relevant times, the

Distributor Defendants have distributed, supplied, sold, and placed into the stream of commerce
the prescription opioids, without fulfilling the fundamental duty of wholesale drug distributors to
detect and warn of diversion of dangerous drugs for non-medical purposes. The Distributor
Distributors universally failed to comply with federal and/or state law. The Distributor Defendants
are engaged in “wholesale distribution,” as defined under state and federal law. Plaintiff alleges
the unlawful conduct by the Distributor Distributors is responsible for the volume of prescription
opioids plaguing Plaintiff’s Community.
28.

McKESSON CORPORATION (“McKesson”) is registered with the Tennessee

Secretary of State as a Delaware corporation, which may be served through its registered agent for
service of process, Corporation Service Company, 2908 Poston Ave., Nashville, TN 37203-1312.
McKesson has its principal place of business located in San Francisco, California.
29.

CARDINAL HEALTH, INC. (“Cardinal”) at is an Ohio corporation with its

principal office located in Dublin, Ohio and may be served through its registered agent for service
of process, CT Corporation System, 4400 Easton Commons Way, Suite 125, Columbus, Ohio
43219. Upon information and belief, Cardinal Health, Inc. operates a distribution center in
Knoxville, Tennessee.
30.

AMERISOURCEBERGEN DRUG CORPORATION (“AmerisourceBergen is

registered with the Tennessee Secretary of State as a Delaware corporation, which may be served
9
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 through its registered agent for service of process, CT Corporation System, 800 S. Gay Street,
Suite 2021, Knoxville, TN 37929-9710. AmerisourceBergen’s principal place of business is
located in Chesterbrook, Pennsylvania.
31.

The data which reveals and/or confirms the identity of each wrongful opioid

distributor is hidden from public view in the DEA’s confidential ARCOS database. See Madel v.
USDOJ, 784 F.3d 448 (8th Cir. 2015). Neither the DEA10 nor the wholesale distributors11 will
voluntarily disclose the data necessary to identify with specificity the transactions which will form
the evidentiary basis for the claims asserted herein.
32.

Consequently, Plaintiff has named the three (3) wholesale distributors (i.e.,

AmerisourceBergen Drug Corporation, Cardinal Health, Inc., and McKesson Corporation) which
dominate 85% of the market share for the distribution of prescription opioids. The “Big 3” are
Fortune 500 corporations listed on the New York Stock Exchange whose principal business is the
nationwide wholesale distribution of prescription drugs. See Fed. Trade Comm'n v. Cardinal
Health, Inc., 12 F. Supp. 2d 34, 37 (D.D.C. 1998) (describing Cardinal Health, Inc., McKesson
Corporation, and AmerisourceBergen Drug Corporation predecessors). Each has been investigated
and/or fined by the DEA for the failure to report suspicious orders. Plaintiff has reason to believe
each has engaged in unlawful conduct which resulted in the diversion of prescription opioids into
our community and that discovery will likely reveal others who likewise engaged in unlawful
conduct. Plaintiff names each of the “Big 3” herein as defendants and places the industry on notice

10

See Declaration of Katherine L. Myrick, Chief, Freedom of Information (FOI)/Privacy Act Unit (“SARF”), FOI,
Records Management Section (“SAR”), Drug Enforcement Administration (DEA), United States Department of
Justice (DOJ), Madel v. USDOJ, Case 0:13-cv-02832-PAM-FLN, (Document 23) (filed 02/06/14) (noting that
ARCOS data is “kept confidential by the DEA”).
11

See Declaration of Tina Lantz, Cardinal Health VP of Sales Operation, Madel v. USDOJ, Case 0:13-cv-02832PAM-FLN, (Document 93) (filed 11/02/16) (“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.”).

10
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 that the Plaintiff is acting to abate the public nuisance plaguing the community. Plaintiff will
request expedited discovery pursuant to Rule 26(d) of the Federal Rules of Civil Procedure to
secure the data necessary to reveal and/or confirm the identities of the wholesale distributors,
including data from the ARCOS database.
III. JURISDICTION & VENUE
33.

This Court has subject matter jurisdiction under 28 U.S.C. § 1331 based upon 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 Plaintiff’s state law claims
pursuant to 28 U.S.C. § 1367 because those claims are so related to Plaintiff’s federal claims that
they form part of the same case or controversy.
34.

This Court also has jurisdiction over this action in accordance with 28 U.S.C. §

1332(a) because the Plaintiff is a “citizen” of this State, the named Defendants are citizens of
different states and the amount in controversy exceeds the sum or value of $75,000, exclusive of
interest and costs.
35.

This Court has personal jurisdiction over Defendants because they conduct business

in the State, purposefully direct or directed their actions toward the State, some or all consented to
be sued in the State by registering an agent for service of process, they consensually submitted to
the jurisdiction of the State when obtaining a manufacturer or distributor license, and because they
have the requisite minimum contacts with the State necessary to constitutionally permit the Court
to exercise jurisdiction.
36.

This Court also has personal jurisdiction over all of the defendants under 18 U.S.C.

1965(b). This Court may exercise nation-wide jurisdiction over the named Defendants where the
“ends of justice” require national service and Plaintiff demonstrates national contacts. Here, the

11
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 15 of 162 PageID #: 15

 interests of justice require that Plaintiff be allowed to bring all members of the nationwide RICO
enterprise before the court in a single trial. See, e.g., Iron Workers Local Union No. 17 Insurance
Fund v. Philip Morris Inc., 23 F. Supp. 2d 796 (1998) (citing LaSalle National Bank v. Arroyo
Office Plaza, Ltd., 1988 WL 23824, *3 (N.D. Ill. Mar 10, 1988); Butcher’s Union Local No. 498
v. SDC Invest., Inc., 788 F.2d 535, 539 (9th Cir. 1986).
37.

Venue is proper in this District pursuant to 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
District and each Defendant transacted affairs and conducted activity that gave rise to the claim of
relief in this District. 28 U.S.C. § 1391(b); 18 U.S.C. §1965(a).
IV. FACTUAL BACKGROUND
A. THE OPIOID EPIDEMIC.
1. The National Opioid Epidemic.
38.

The past two decades have been characterized by increasing abuse and diversion of

prescription drugs, including opioid medications, in the United States.12
39.

Prescription opioids have become widely prescribed. By 2010, enough prescription

opioids were sold to medicate every adult in the United States with a dose of 5 milligrams of
hydrocodone every 4 hours for 1 month.13
40.

By 2011, the U.S. Department of Health and Human Resources, Centers for Disease

Control and Prevention, declared prescription painkiller overdoses at epidemic levels. The News
Release noted:
a. The death toll from overdoses of prescription painkillers has
more than tripled in the past decade.
12

See Richard C. Dart et al, Trends in Opioid Analgesic Abuse and Mortality in the United States, 372 N. Eng. J. Med.
241 (2015).
13

Katherine M. Keyes at al., Understanding the Rural-Urban Differences in Nonmedical Prescription Opioid Use
and Abuse in the United States, 104 Am. J. Pub. Health e52 (2014).

12
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 b. More than 40 people die every day from overdoses involving
narcotic pain relievers like hydrocodone (Vicodin),
methadone, oxycodone (OxyContin), and oxymorphone
(Opana).
c. Overdoses involving prescription painkillers are at epidemic
levels and now kill more Americans than heroin and cocaine
combined.
d. The increased use of prescription painkillers for nonmedical
reasons, along with growing sales, has contributed to a large
number of overdoses and deaths. In 2010, 1 in every 20
people in the United States age 12 and older—a total of 12
million people—reported using prescription painkillers nonmedically according to the National Survey on Drug Use and
Health. Based on the data from the Drug Enforcement
Administration, sales of these drugs to pharmacies and
health care providers have increased by more than 300
percent since 1999.
e. Prescription drug abuse is a silent epidemic that is stealing
thousands of lives and tearing apart communities and
families across America.
f. Almost 5,500 people start to misuse prescription painkillers
every day.14
41.

The number of annual opioid prescriptions written in the United States is now

roughly equal to the number of adults in the population.15
42.

Many Americans are now addicted to prescription opioids, and the number of deaths

due to prescription opioid overdose is unacceptable. In 2016, drug overdoses killed roughly 64,000

14

See Press Release, Ctrs. for Disease Control and Prevention, U.S. Dep’t of Health and Human Servs., Prescription
Painkiller
Overdoses
at
Epidemic
Levels
(Nov.
1,
2011),
https://www.cdc.gov/media/releases/2011/p1101_flu_pain_killer_overdose.html.
15

See Robert M. Califf et al., A Proactive Response to Prescription Opioid Abuse, 374 N. Eng. J. Med. 1480 (2016).

13
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 people in the United States, an increase of more than 22 percent over the 52,404 drug deaths
recorded the previous year.16
43.

Moreover, the CDC has identified addiction to prescription pain medication as the

strongest risk factor for heroin addiction. People who are addicted to prescription opioid painkillers
are forty times more likely to be addicted to heroin.17
44.

Heroin is pharmacologically similar to prescription opioids. The majority of current

heroin users report having used prescription opioids non-medically before they initiated heroin
use. Available data indicates that the nonmedical use of prescription opioids is a strong risk factor
for heroin use.18
45.

The CDC reports that drug overdose deaths involving heroin continued to climb

sharply, with heroin overdoses more than tripling in 4 years. This increase mirrors large increases
in heroin use across the country and has been shown to be closely tied to opioid pain reliever
misuse and dependence. Past misuse of prescription opioids is the strongest risk factor for heroin
initiation and use, specifically among persons who report past-year dependence or abuse. The
increased availability of heroin, combined with its relatively low price (compared with diverted
prescription opioids) and high purity appear to be major drivers of the upward trend in heroin use
and overdose.19

16

See Ctrs. for Disease Control and Prevention, U.S. Dep’t of Health and Human Servs., Provisional Counts of Drug
Overdose Deaths, (August 8, 2016), https://www.cdc.gov/nchs/data/health_policy/monthly-drug-overdose-deathestimates.pdf.
17

See Ctrs. for Disease Control and Prevention, U.S. Dep’t of Health and Human Servs., Today’s Heroin Epidemic,
https://www.cdc.gov/vitalsigns/heroin/index.html (last updated July 7, 2015).
18

See Wilson M. Compton, Relationship Between Nonmedical Prescription-Opioid Use and Heroin, 374 N. Eng. J.
Med. 154 (2016).
19

See Rose A. Rudd et al., Increases in Drug and Opioid Overdose Deaths—United States, 2000–2014, 64 Morbidity
& Mortality Wkly. Rep. 1378 (2016).

14
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 46.

The societal costs of prescription drug abuse are “huge.”20

47.

Across the nation, local governments are struggling with a pernicious, ever-

expanding epidemic of opioid addiction and abuse. Every day, more than 90 Americans lose their
lives after overdosing on opioids.21
48.

The National Institute on Drug Abuse identifies misuse and addiction to opioids as

“a serious national crisis that affects public health as well as social and economic welfare.” 22 The
economic burden of prescription opioid misuse alone is $78.5 billion a year, including the costs of
healthcare, lost productivity, addiction treatment, and criminal justice expenditures.23
49.

The U.S. opioid epidemic is continuing, and drug overdose deaths nearly tripled

during 1999–2014. Among 47,055 drug overdose deaths that occurred in 2014 in the United States,
28,647 (60.9%) involved an opioid.24
50.

The rate of death from opioid overdose has quadrupled during the past 15 years in

the United States. Nonfatal opioid overdoses that require medical care in a hospital or emergency
department have increased by a factor of six in the past 15 years.25

20

See Amicus Curiae Brief of Healthcare Distribution Management Association in Support of Appellant Cardinal
Health, Inc., Cardinal Health, Inc. v. United States Dept. Justice, No. 12-5061 (D.C. Cir. May 9, 2012), 2012 WL
1637016, at *10 [hereinafter Brief of HDMA].
21

Opioid Crisis, NIH, National Institute on Drug Abuse (available at https://www.drugabuse.gov/drugsabuse/opioids/opioid-crisis, last visited Sept. 19, 2017) (“Opioid Crisis, NIH”) (citing at note 1 Rudd RA, Seth P,
David F, Scholl L, Increases in Drug and Opioid-Involved Overdose Deaths — United States, 2010–2015, MMWR
MORB MORTAL WKLY REP. 2016;65, doi:10.15585/mmwr.mm655051e1).
22

Opioid Crisis, NIH.

23

Id. (citing at note 2 Florence CS, Zhou C, Luo F, Xu L, The Economic Burden of Prescription Opioid Overdose,
Abuse,
and
Dependence
in
the
United
States,
2013,
MED CARE
2016;54(10):901-906,
doi:10.1097/MLR.0000000000000625).
24

See Rose A. Rudd et al., Increases in Drug and Opioid-Involved Overdose Deaths—United States, 2010–2015, 65
Morbidity & Mortality Wkly. Rep. 1445 (2016).
25

See Nora D. Volkow & A. Thomas McLellan, Opioid Abuse in Chronic Pain—Misconceptions and Mitigation
Strategies, 374 N. Eng. J. Med. 1253 (2016).

15
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 51.

Every day brings a new revelation regarding the depth of the opioid plague: just to

name one example, the New York Times reported in September 2017 that the epidemic, which
now claims 60,000 lives a year, is now killing babies and toddlers because ubiquitous, deadly
opioids are “everywhere” and mistaken as candy.26
52.

In 2016, the President of the United States declared an opioid and heroin epidemic.27

53.

The epidemic of prescription pain medication and heroin deaths is devastating

families and communities across the country.28 Meanwhile, the manufacturers and distributors of
prescription opioids extract billions of dollars of revenue from the addicted American public while
public entities experience tens of millions of dollars of injury caused by the reasonably foreseeable
consequences of the prescription opioid addiction epidemic.
54.

The prescription opioid manufacturers and distributors, including the Defendants,

have continued their wrongful, intentional, and unlawful conduct, despite their knowledge that
such conduct is causing and/or continuing to the national, state, and local opioid epidemic.
2. Tennessee’s Opioid Epidemic.
55.

Tennessee has been especially ravaged by the national opioid crisis.

56.

Tennessee has an opioid prescription rate of 142.8 per 100 persons, which ranks

second in the country (U.S. median rate: 82.5) and a benzodiazepine prescription rate of 61.4 per
100 persons, which ranks third nationally (U.S. median rate: 37.6).29

26

Julie Turkewitz, ‘The Pills are Everywhere’: How the Opioid Crisis Claims Its Youngest Victims, N.Y. Times,
Sept. 20, 2017 (“‘It’s a cancer,’ said [grandmother of dead one-year old], of the nation’s opioid problem, ‘with tendrils
that are going everywhere.’”).
27

See Proclamation No. 9499, 81 Fed. Reg. 65,173 (Sept. 16, 2016) (proclaiming “Prescription Opioid and Heroin
Epidemic Awareness Week”).
28

See Presidential Memorandum – Addressing Prescription Drug Abuse and Heroin Use, 2015 Daily Comp. Pres.
Doc. 743 (Oct. 21, 2015), https://www.gpo.gov/fdsys/pkg/DCPD-201500743/pdf/DCPD-201500743.pdf.
29

See Leonard J. Paulozzi, M.D., et al., Vital Signs: Variation Among States in Prescribing of Opioid Pain Relievers
and Benzodiazepines – United States, 2012, Morbidity and Mortality Weekly Report, Centers for Disease Control and

16
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 57.

In 2016, Tennessee had 1,186 deaths caused by opioid overdose, which was the

highest annual number of such deaths recorded in state history.30 From 2015 to 2016, rates of death
from all drug overdoses increased 12 percent and overdose deaths caused by the opioid fentanyl
have increased 74% in the same time frame with the biggest increase in individuals aged 25-34
years old.31 Tennessee also saw a dramatic jump in deaths associated with heroin, which rose 26
percent from 2015 to 2016.32
58.

Health care costs related to opioid abuse in Tennessee reached $422,584,057 in

59.

Non-fatal outpatient visits involving heroin overdoses in Tennessee increased from

2015.33

141 in 2012 to 663 in 2015.34
60.

The rise of the opioid epidemic in Tennessee has also contributed to the significant

increase in the placement of children in foster case. Since 2010, the number of parents whose rights
have been terminated has increased 51%.35
61.

The rate of children born with neonatal abstinence syndrome (“NAS”), a set of

symptoms experienced by babies born addicted to opioids, has dramatically increased in Tennessee

Prevention, U.S. Department of Health and Human Services (July 4, 2014). The combination of hydrocodone,
oxycodone, and benzodiazepines is referred to as the “holy trinity” and significantly increases the risk of harm to those
that abuse prescription pills.
30

“Increasing Number of Tennesseans Dying from Drug Overdoses,” Tennessee Department of Health, available at
https://www.tn.gov/content/dam/tn/health/documents/TN_Overdose_Deaths_2016.pdf (last visited December 15,
2017).
31
Id.
32
Id.
33
“Tennessee’s Children 2017,” Child Welfare League of America, available at https://www.cwla.org/wpcontent/uploads/2017/04/TENNESSEE.pdf (last visited December 15, 2017).
34
“Tennessee Drug Overdose Dashboard,” Tennessee Department of Health, available at
https://www.tn.gov/health/health-program-areas/pdo/pdo/data-dashboard.html (last visited December 15, 2017).
35
“Tennessee Statistics,” Tennessee Alliance for Kids, available at http://tnallianceforkids.org/stats/ (last visited
December 15, 2017).

17
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 with some counties reporting rates of babies born with NAS to be eight times the national
average.36 Niswonger Children’s Hospital in Johnson City, Tennessee, has become so
overwhelmed by children needing treatment for NAS that it opened a new ward in 2017 just for
NAS treatment.37
3. The Opioid Epidemic in Plaintiff’s Community.
62.

The opioid epidemic is particularly devastating in Plaintiff’s Community.

According to data compiled by the Centers for Disease Control and Prevention, in 2016 for every
100 Johnson County residents, there were 106.6 opioid prescriptions dispensed. The rates were
even higher in years leading up to 2016. In 2015, Johnson County’s prescription rate was 120.6
prescriptions per 100 residents, 137.4 in 2014, and 144.9 in 2013.38
B. THE MANUFACTURER DEFENDANTS’ FALSE, DECEPTIVE, AND
UNFAIR MARKETING OF OPIOIDS.
63.

The opioid epidemic did not happen by accident.

64.

Before the 1990s, generally accepted standards of medical practice dictated that

opioids should only be used short-term for acute pain, pain relating to recovery from surgery, or
for cancer or palliative (end-of-life) care. Due to the lack of evidence that opioids improved
patients’ ability to overcome pain and function, coupled with evidence of greater pain complaints
as patients developed tolerance to opioids over time and the serious risk of addiction and other
side effects, the use of opioids for chronic pain was discouraged or prohibited. As a result, doctors
generally did not prescribe opioids for chronic pain.

36

Hannah Rappeleye, Rich McHugh, and Ronan Farrow, Born Addicted: The Number of Opioid Addicted Babies Is
Soaring, October 9, 2017, available at https://www.nbcnews.com/storyline/americas-heroin-epidemic/born-addictednumber-opioid-addicted-babies-soaring-n806346 (last visited December 15, 2017).
37
Id.
38
Centers for Disease Control and Prevention, U.S. County Prescribing Rates 2016.
https://www.cdc.gov/drugoverdose/maps/rxcounty2016.html (last visited December 11, 2017).

18
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 65.

Each Manufacturer Defendant has conducted, and has continued to conduct, a

marketing scheme designed to persuade doctors and patients that opioids can and should be used
for chronic pain, resulting in opioid treatment for a far broader group of patients who are much
more likely to become addicted and suffer other adverse effects from the long-term use of opioids.
In connection with this scheme, each Manufacturer Defendant spent, and continues to spend,
millions of dollars on promotional activities and materials that falsely deny or trivialize the risks
of opioids while overstating the benefits of using them for chronic pain.
66.

The Manufacturer Defendants have made false and misleading claims, contrary to

the language on their drugs’ labels, regarding the risks of using their drugs that: (1) downplayed
the serious risk of addiction; (2) created and promoted the concept of “pseudoaddiction” when
signs of actual addiction began appearing and advocated that the signs of addiction should be
treated with more opioids; (3) exaggerated the effectiveness of screening tools to prevent
addiction; (4) claimed that opioid dependence and withdrawal are easily managed; (5) denied the
risks of higher opioid dosages; and (6) exaggerated the effectiveness of “abuse-deterrent” opioid
formulations to prevent abuse and addiction. The Manufacturer Defendants have also falsely
touted the benefits of long-term opioid use, including the supposed ability of opioids to improve
function and quality of life, even though there was no scientifically reliable evidence to support
the Manufacturer Defendants’ claims.
67.

The Manufacturer Defendants have disseminated these common messages to reverse

the popular and medical understanding of opioids and risks of opioid use. They disseminated these
messages directly, through their sales representatives, in speaker groups led by physicians the
Manufacturer Defendants recruited for their support of their marketing messages, and through
unbranded marketing and industry-funded front groups.

19
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 68.

The Manufacturer Defendants’ efforts have been wildly successful. Opioids are now

the most prescribed class of drugs. Globally, opioid sales generated $11 billion in revenue for drug
companies in 2010 alone; sales in the United States have exceeded $8 billion in revenue annually
since 2009.39 In an open letter to the nation’s physicians in August 2016, the then-U.S. Surgeon
General expressly connected this “urgent health crisis” to “heavy marketing of opioids to doctors
. . . [m]any of [whom] were even taught – incorrectly – that opioids are not addictive when
prescribed for legitimate pain.”40 This epidemic has resulted in a flood of prescription opioids
available for illicit use or sale (the supply), and a population of patients physically and
psychologically dependent on them (the demand). And when those patients can no longer afford
or obtain opioids from licensed dispensaries, they often turn to the street to buy prescription opioids
or even non-prescription opioids, like heroin.
69.

The Manufacturer Defendants intentionally continued their conduct, as alleged

herein, with knowledge that such conduct was creating the opioid nuisance and causing the harms
and damages alleged herein.
1. Each Manufacturer Defendant Used Multiple Avenues to Disseminate Their
False and Deceptive Statements about Opioids.
70.

The Manufacturer Defendants spread their false and deceptive statements by

marketing their branded opioids directly to doctors and patients in and around the State, including
in Plaintiff’s Community. Defendants also deployed seemingly unbiased and independent third
parties that they controlled to spread their false and deceptive statements about the risks and

39

See Katherine Eban, Oxycontin: Purdue Pharma’s Painful Medicine, Fortune, Nov. 9, 2011,
http://fortune.com/2011/11/09/oxycontin-purdue-pharmas-painful-medicine/; David Crow, Drugmakers Hooked on
$10bn Opioid Habit, Fin. Times, Aug. 10, 2016, https://www. ft.com/content/f6e989a8-5dac-11e6-bb77a121aa8abd95.
40

Letter from Vivek H. Murthy, U.S. Surgeon General (Aug. 2016), http://turnthetiderx.org/.

20
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 24 of 162 PageID #: 24

 benefits of opioids for the treatment of chronic pain throughout the State and Plaintiff’s
Community.
71.

The Manufacturer Defendants employed the same marketing plans and strategies and

deployed the same messages in and around the State, including in Plaintiff’s Community, as they
did nationwide. Across the pharmaceutical industry, “core message” development is funded and
overseen on a national basis by corporate headquarters. This comprehensive approach ensures that
the Manufacturer Defendants’ messages are accurately and consistently delivered across
marketing channels – including detailing visits, speaker events, and advertising – and in each sales
territory. The Manufacturer Defendants consider this high level of coordination and uniformity
crucial to successfully marketing their drugs.
72.

The Manufacturer Defendants ensure marketing consistency nationwide through

national and regional sales representative training; national training of local medical liaisons, the
company employees who respond to physician inquiries; centralized speaker training; single sets
of visual aids, speaker slide decks, and sales training materials; and nationally coordinated
advertising. The Manufacturer Defendants’ sales representatives and physician speakers were
required to stick to prescribed talking points, sales messages, and slide decks, and supervisors rode
along with them periodically to both check on their performance and compliance.
i.
73.

Direct Marketing.

The Manufacturer Defendants’ direct marketing of opioids generally proceeded on

two tracks. First, each Manufacturer Defendant conducted and continues to conduct advertising
campaigns touting the purported benefits of their branded drugs. For example, upon information
and belief, the Manufacturer Defendants spent more than $14 million on medical journal
advertising of opioids in 2011, nearly triple what they spent in 2001.

21
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 74.

Many of the Manufacturer Defendants’ branded ads deceptively portrayed the

benefits of opioids for chronic pain. For example, Endo distributed and made available on its
website opana.com a pamphlet promoting Opana ER with photographs depicting patients with
physically demanding jobs like construction worker, chef, and teacher, misleadingly implying that
the drug would provide long-term pain-relief and functional improvement. Upon information and
belief, Purdue also ran a series of ads, called “Pain vignettes,” for OxyContin in 2012 in medical
journals. These ads featured chronic pain patients and recommended OxyContin for each. One ad
described a “54-year-old writer with osteoarthritis of the hands” and implied that OxyContin would
help the writer work more effectively.
75.

Second, each Manufacturer Defendant promoted the use of opioids for chronic pain

through “detailers” – sales representatives who visited individual doctors and medical staff in their
offices – and small-group speaker programs. The Manufacturer Defendants have not corrected this
misinformation. Instead, each Defendant devoted massive resources to direct sales contacts with
doctors. Upon information and belief, in 2014 alone, the Manufacturer Defendants spent in excess
of $168 million on detailing branded opioids to doctors, more than twice what they spent on
detailing in 2000.
76.

The Manufacturer Defendants’ detailing to doctors is effective. Numerous studies

indicate that marketing impacts prescribing habits, with face-to-face detailing having the greatest
influence. Even without such studies, the Manufacturer Defendants purchase, manipulate and
analyze some of the most sophisticated data available in any industry, data available from IMS
Health Holdings, Inc., to track, precisely, the rates of initial prescribing and renewal by individual
doctor, which in turn allows them to target, tailor, and monitor the impact of their core messages.
Thus, the Manufacturer Defendants know their detailing to doctors is effective.

22
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 77.

The Manufacturer Defendants’ detailers have been reprimanded for their deceptive

promotions. In March 2010, for example, the FDA found that Actavis had been distributing
promotional materials that “minimize[] the risks associated with Kadian and misleadingly
suggest[] that Kadian is safer than has been demonstrated.” Those materials in particular “fail to
reveal warnings regarding potentially fatal abuse of opioids, use by individuals other than the
patient for whom the drug was prescribed.”41
ii.
78.

Indirect Marketing.

The Manufacturer Defendants’ indirectly marketed their opioids using unbranded

advertising, paid speakers and “key opinion leaders” (“KOLs”), and industry-funded organizations
posing as neutral and credible professional societies and patient advocacy groups (referred to
hereinafter as “Front Groups”).
79.

The Manufacturer Defendants deceptively marketed opioids in the State and

Plaintiff’s Community through unbranded advertising – e.g., advertising that promotes opioid use
generally but does not name a specific opioid. This advertising was ostensibly created and
disseminated by independent third parties. But by funding, directing, reviewing, editing, and
distributing this unbranded advertising, the Manufacturer Defendants controlled the deceptive
messages disseminated by these third parties and acted in concert with them to falsely and
misleadingly promote opioids for the treatment of chronic pain. Much as Defendants controlled
the distribution of their “core messages” via their own detailers and speaker programs, the
Manufacturer Defendants similarly controlled the distribution of these messages in scientific
publications, treatment guidelines, Continuing Medical Education (“CME”) programs, and

41

Letter from Thomas Abrams, Dir., Div. of Drug Mktg., Advert., & Commc’ns, U.S. Food & Drug Admin., to Doug
Boothe,
CEO,
Actavis
Elizabeth
LLC
(Feb.
18,
2010),
http://www.fdanews.com/ext/resources/files/archives/a/ActavisElizabethLLC.pdf.

23
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 27 of 162 PageID #: 27

 medical conferences and seminars. To this end, the Manufacturer Defendants used third-party
public relations firms to help control those messages when they originated from third-parties.
80.

The Manufacturer Defendants marketed through third-party, unbranded advertising

to avoid regulatory scrutiny because that advertising is not submitted to and typically is not
reviewed by the FDA. The Manufacturer Defendants also used third-party, unbranded advertising
to give the false appearance that the deceptive messages came from an independent and objective
source. Like the tobacco companies, the Manufacturer Defendants used third parties that they
funded, directed, and controlled to carry out and conceal their scheme to deceive doctors and
patients about the risks and benefits of long term opioid use for chronic pain.
81.

Defendants also identified doctors to serve, for payment, on their speakers’ bureaus

and to attend programs with speakers and meals paid for by Defendants. These speaker programs
provided: (1) an incentive for doctors to prescribe a particular opioid (so they might be selected to
promote the drug); (2) recognition and compensation for the doctors selected as speakers; and (3)
an opportunity to promote the drug through the speaker to his or her peers. These speakers give
the false impression that they are providing unbiased and medically accurate presentations when
they are, in fact, presenting a script prepared by Defendants. On information and belief, these
presentations conveyed misleading information, omitted material information, and failed to correct
Defendants’ prior misrepresentations about the risks and benefits of opioids.
82.

Borrowing a page from Big Tobacco’s playbook, the Manufacturer Defendants

worked through third parties they controlled by: (a) funding, assisting, encouraging, and directing
doctors who served as KOLS, and (b) funding, assisting, directing, and encouraging seemingly
neutral and credible Front Groups. The Manufacturer Defendants then worked together with those
KOLs and Front Groups to taint the sources that doctors and patients relied on for ostensibly

24
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 28 of 162 PageID #: 28

 “neutral” guidance, such as treatment guidelines, CME programs, medical conferences and
seminars, and scientific articles. Thus, working individually and collectively, and through these
Front Groups and KOLs, the Manufacturer Defendants persuaded doctors and patients that what
they have long known – that opioids are addictive drugs, unsafe in most circumstances for longterm use – was untrue, and that the compassionate treatment of pain required opioids.
83.

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
Consent Judgments that prohibited Purdue from making misrepresentations in the promotion and
marketing of OxyContin in the future. By using indirect marketing strategies, however, Purdue
intentionally circumvented these restrictions. Such actions include contributing the creation of
misleading publications and prescribing guidelines which lack reliable scientific basis and promote
prescribing practices which have worsened the opioid crisis.
84.

Pro-opioid doctors are one of the most important avenues that the Manufacturer

Defendants use to spread their false and deceptive statements about the risks and benefits of longterm opioid use. The Manufacturer Defendants know that doctors rely heavily and less critically
on their peers for guidance, and KOLs provide the false appearance of unbiased and reliable
support for chronic opioid therapy. For example, the State of New York found in its settlement
with Purdue that the Purdue website “In the Face of Pain” failed to disclose that doctors who
provided testimonials on the site were paid by Purdue and concluded that Purdue’s failure to
disclose these financial connections potentially misled consumers regarding the objectivity of the
testimonials.
85.

Defendants utilized many KOLs, including many of the same ones.

25
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 29 of 162 PageID #: 29

 86.

Dr. Russell Portenoy, former Chairman of the Department of Pain Medicine and

Palliative Care at Beth Israel Medical Center in New York, is one example of a KOL whom the
Manufacturer Defendants identified and promoted to further their marketing campaign. Dr.
Portenoy received research support, consulting fees, and honoraria from Cephalon, Endo, Janssen,
and Purdue (among others), and was a paid consultant to Cephalon and Purdue. Dr. Portenoy was
instrumental in opening the door for the regular use of opioids to treat chronic pain. He served on
the American Pain Society (“APS”) / American Academy of Pain Medicine (“AAPM”) Guidelines
Committees, which endorsed the use of opioids to treat chronic pain, first in 1996 and again in
2009. He was also a member of the board of the American Pain Foundation (“APF”), an advocacy
organization almost entirely funded by the Manufacturer Defendants.
87.

Dr. Portenoy also made frequent media appearances promoting opioids and

spreading misrepresentations, such as his claim that “the likelihood that the treatment of pain using
an opioid drug which is prescribed by a doctor will lead to addiction is extremely low.” He
appeared on Good Morning America in 2010 to discuss the use of opioids long-term to treat
chronic pain. On this widely-watched program, broadcast across the country, Dr. Portenoy
claimed: “Addiction, when treating pain, is distinctly uncommon. If a person does not have a
history, a personal history, of substance abuse, and does not have a history in the family of
substance abuse, and does not have a very major psychiatric disorder, most doctors can feel very
assured that that person is not going to become addicted.”42
88.

Dr. Portenoy later admitted that he “gave innumerable lectures in the late 1980s and

‘90s about addiction that weren’t true.” These lectures falsely claimed that fewer than 1% of
patients would become addicted to opioids. According to Dr. Portenoy, because the primary goal

42

Good Morning America (ABC television broadcast Aug. 30, 2010).

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 was to “destigmatize” opioids, he and other doctors promoting them overstated their benefits and
glossed over their risks. Dr. Portenoy also conceded that “[d]ata about the effectiveness of opioids
does not exist.”43 Portenoy candidly stated: “Did I teach about pain management, specifically about
opioid therapy, in a way that reflects misinformation? Well, . . . I guess I did.”44
89.

Another KOL, Dr. Lynn Webster, was the co-founder and Chief Medical Director of

Lifetree Clinical Research, an otherwise unknown pain clinic in Salt Lake City, Utah. Dr. Webster
was President of American Academy of Pain Medicine (“AAPM”) in 2013. He is a Senior Editor
of Pain Medicine, the same journal that published Endo special advertising supplements touting
Opana ER. Dr. Webster was the author of numerous CMEs sponsored by Cephalon, Endo, and
Purdue. At the same time, Dr. Webster was receiving significant funding from the Manufacturer
Defendants (including nearly $2 million from Cephalon).
90.

During a portion of his time as a KOL, Dr. Webster was under investigation for

overprescribing by the U.S. Department of Justice’s Drug Enforcement Agency, which raided his
clinic in 2010. Although the investigation was closed without charges in 2014, more than 20 of
Dr. Webster’s former patients at the Lifetree Clinic have died of opioid overdoses.
91.

Ironically, Dr. Webster created and promoted the Opioid Risk Tool, a five question,

one-minute screening tool relying on patient self-reports that purportedly allows doctors to manage
the risk that their patients will become addicted to or abuse opioids. The claimed ability to pre-sort
patients likely to become addicted is an important tool in giving doctors confidence to prescribe
opioids long-term, and for this reason, references to screening appear in various industry-supported
guidelines. Versions of Dr. Webster’s Opioid Risk Tool appear on, or are linked to, websites run

43

Thomas Catan & Evan Perez, A Pain-Drug Champion Has Second Thoughts, Wall St. J., Dec. 17, 2012,
https://www.wsj.com/articles/SB10001424127887324478304578173342657044604.
44

Id.

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 by Endo, Janssen, and Purdue. Unaware of the flawed science and industry bias underlying this
tool, certain states and public entities have incorporated the Opioid Risk Tool into their own
guidelines, indicating, also, their reliance on the Manufacturer Defendants and those under their
influence and control.
92.

In 2011, Dr. Webster presented, via webinar, a program sponsored by Purdue entitled

“Managing Patient’s Opioid Use: Balancing the Need and the Risk.” Dr. Webster recommended
use of risk screening tools, urine testing, and patient agreements as a way to prevent “overuse of
prescriptions” and “overdose deaths.” This webinar was available to and was intended to reach
doctors in the State and doctors treating members of Plaintiff’s Community.45
93.

Dr. Webster also was a leading proponent of the concept of “pseudoaddiction,” the

notion that addictive behaviors should be seen not as warnings, but as indications of undertreated
pain. In Dr. Webster’s description, the only way to differentiate the two was to increase a patient’s
dose of opioids. As he and co-author Beth Dove wrote in their 2007 book Avoiding Opioid Abuse
While Managing Pain—a book that is still available online—when faced with signs of aberrant
behavior, increasing the dose “in most cases . . . should be the clinician’s first response.”46 Upon
information and belief, Endo distributed this book to doctors. Years later, Dr. Webster reversed
himself, acknowledging that “[pseudoaddiction] obviously became too much of an excuse to give
patients more medication.”47

45

See Emerging Solutions in Pain, Managing Patient’s Opioid Use: Balancing the Need and the Risk,
http://www.emergingsolutionsinpain.com/ce-education/opioidmanagement?option=com_continued&view=frontmatter&Itemid=303&course=209 (last visited Aug. 22, 2017).
46

Lynn Webster & Beth Dove, Avoiding Opioid Abuse While Managing Pain (2007).

47

John Fauber, Painkiller Boom Fueled by Networking, Milwaukee Wisc. J. Sentinel, Feb. 18, 2012,
http://archive.jsonline.com/watchdog/watchdogreports/painkiller-boom-fueled-by-networking-dp3p2rn139609053.html.

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 94.

The Manufacturer Defendants also entered into arrangements with seemingly

unbiased and independent patient and professional organizations to promote opioids for the
treatment of chronic pain. Under the direction and control of the Manufacturer Defendants, these
“Front Groups” generated treatment guidelines, unbranded materials, and programs that favored
chronic opioid therapy. They also assisted the Manufacturer Defendants by responding to negative
articles, by advocating against regulatory changes that would limit opioid prescribing in
accordance with the scientific evidence, and by conducting outreach to vulnerable patient
populations targeted by the Manufacturer Defendants.
95.

These Front Groups depended on the Manufacturer Defendants for funding and, in

some cases, for survival. The Manufacturer Defendants also exercised control over programs and
materials created by these groups by collaborating on, editing, and approving their content, and by
funding their dissemination. In doing so, the Manufacturer Defendants made sure that the Front
Groups would generate only the messages that the Manufacturer Defendants wanted to distribute.
Despite this, the Front Groups held themselves out as independent and serving the needs of their
members – whether patients suffering from pain or doctors treating those patients.
96.

Defendants Cephalon, Endo, Janssen, and Purdue, in particular, utilized many Front

Groups, including many of the same ones. Several of the most prominent are described below, but
there are many others, including the American Pain Society (“APS”), American Geriatrics Society
(“AGS”), the Federation of State Medical Boards (“FSMB”), American Chronic Pain Association
(“ACPA”), the Center for Practical Bioethics (“CPB”), the U.S. Pain Foundation (“USPF”) and
Pain & Policy Studies Group (“PPSG”).48

48

See generally, e.g., Letter from Sen. Ron Wyden, U.S. Senate Comm. on Fin., to Sec. Thomas E. Price, U.S. Dep’t
of
Health
and
Human
Servs.,
(May
5,
2015),
https://www.finance.senate.gov/imo/media/doc/050517%20Senator%20Wyden%20to%20Secretary%20Price%20re
%20FDA%20Opioid%20Prescriber%20Working%20Group.pdf.

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 97.

The most prominent of the Manufacturer Defendants’ Front Groups was the

American Pain Foundation (“APF”), which, upon information and belief, received more than $10
million in funding from opioid manufacturers from 2007 until it closed its doors in May 2012,
primarily from Endo and Purdue. APF issued education guides for patients, reporters, and
policymakers that touted the benefits of opioids for chronic pain and trivialized their risks,
particularly the risk of addiction. APF also launched a campaign to promote opioids for returning
veterans, which has contributed to high rates of addiction and other adverse outcomes – including
death – among returning soldiers. APF also engaged in a significant multimedia campaign –
through radio, television and the internet – to educate patients about their “right” to pain treatment,
namely opioids. All of the programs and materials were available nationally and were intended to
reach citizens of the State and Plaintiff’s Community.
98.

In 2009 and 2010, more than 80% of APF’s operating budget came from

pharmaceutical industry sources. Including industry grants for specific projects, APF received
about $2.3 million from industry sources out of total income of about $2.85 million in 2009; its
budget for 2010 projected receipts of roughly $2.9 million from drug companies, out of total
income of about $3.5 million. By 2011, upon information and belief, APF was entirely dependent
on incoming grants from defendants Purdue, Cephalon, Endo, and others to avoid using its line of
credit.
99.

APF held itself out as an independent patient advocacy organization. It often engaged

in grassroots lobbying against various legislative initiatives that might limit opioid prescribing,
and thus the profitability of its sponsors. Upon information and belief, it was often called upon to
provide “patient representatives” for the Manufacturer Defendants’ promotional activities,
including for Purdue’s Partners Against Pain and Janssen’s Let’s Talk Pain. APF functioned

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 largely as an advocate for the interests of the Manufacturer Defendants, not patients. Indeed, upon
information and belief, as early as 2001, Purdue told APF that the basis of a grant was Purdue’s
desire to “strategically align its investments in nonprofit organizations that share [its] business
interests.”
100. Plaintiff is informed, and believes, that on several occasions, representatives of the
Manufacturer Defendants, often at informal meetings at conferences, suggested activities and
publications for APF to pursue. APF then submitted grant proposals seeking to fund these activities
and publications, knowing that drug companies would support projects conceived as a result of
these communications.
101. The U.S. Senate Finance Committee began looking into APF in May 2012 to
determine the links, financial and otherwise, between the organization and the manufacturers of
opioid painkillers. The investigation caused considerable damage to APF’s credibility as an
objective and neutral third party, and the Manufacturer Defendants stopped funding it. Within days
of being targeted by Senate investigation, APF’s board voted to dissolve the organization “due to
irreparable economic circumstances.” APF “cease[d] to exist, effective immediately.”49
102. Another front group for the Manufacturer Defendants was the American Academy
of Pain Medicine (“AAPM”). With the assistance, prompting, involvement, and funding of the
Manufacturer Defendants, the AAPM issued purported treatment guidelines and sponsored and
hosted medical education programs essential to the Manufacturer Defendants’ deceptive marketing
of chronic opioid therapy.

49

Charles Ornstein & Tracy Weber, Senate Panel Investigates Drug Companies’ Ties to Pain Groups, Wash. Post,
May 8, 2012, https://www.washingtonpost.com/national/health-science/senate-panel-investigates-drug-companiesties-to-pain-groups/2012/05/08/gIQA2X4qBU_story.html.

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 103. AAPM received substantial funding from opioid manufacturers. For example,
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 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 education programs 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. Defendants Endo, Purdue, and Cephalon
were members of the council and presented deceptive programs to doctors who attended this
annual event.
104. Upon information and belief, AAPM is viewed internally by Endo as “industry
friendly,” with Endo advisors and speakers among its active members. Endo attended AAPM
conferences, funded its CMEs, and distributed its publications. The conferences sponsored by
AAPM heavily emphasized sessions on opioids – 37 out of roughly 40 at one conference alone.
AAPM’s presidents have included top industry-supported KOLs Perry Fine and Lynn Webster.
Dr. Webster was even elected president of AAPM while under a DEA investigation.
105. The Manufacturer Defendants were able to influence AAPM through both their
significant and regular funding and the leadership of pro-opioid KOLs within the organization.
106. In 1996, AAPM and APS jointly issued a consensus statement, “The Use of Opioids
for the Treatment of Chronic Pain,” which endorsed opioids to treat chronic pain and claimed that
the risk of a patients’ addiction to opioids was low. Dr. Haddox, who co-authored the AAPM/APS
statement, was a paid speaker for Purdue at the time. Dr. Portenoy was the sole consultant. The

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 consensus statement remained on AAPM’s website until 2011, and, upon information and belief,
was taken down from AAPM’s website only after a doctor complained.50
107. AAPM and APS issued their own guidelines in 2009 (“AAPM/APS Guidelines”) and
continued to recommend the use of opioids to treat chronic pain.51 Treatment guidelines have been
relied upon by doctors, especially the general practitioners and family doctors targeted by the
Manufacturer Defendants. Treatment guidelines not only directly inform doctors’ prescribing
practices, but are cited throughout the scientific literature and referenced by third-party payors in
determining whether they should cover treatments for specific indications. Pharmaceutical sales
representatives employed by Endo, Actavis, and Purdue discussed treatment guidelines with
doctors during individual sales visits.
108. At least fourteen of the 21 panel members who drafted the AAPM/APS Guidelines,
including KOLs Dr. Portenoy and Dr. Perry Fine of the University of Utah, received support from
Janssen, Cephalon, Endo, and Purdue. The 2009 Guidelines promote opioids as “safe and
effective” for treating chronic pain, despite acknowledging limited evidence, and conclude that the
risk of addiction is manageable for patients regardless of past abuse histories.52 One panel member,
Dr. Joel Saper, Clinical Professor of Neurology at Michigan State University and founder of the
Michigan Headache & Neurological Institute, resigned from the panel because of his concerns that
the 2009 Guidelines were influenced by contributions that drug companies, including
Manufacturer Defendants, made to the sponsoring organizations and committee members. These
AAPM/APS Guidelines have been a particularly effective channel of deception and have

50

The Use of Opioids for the Treatment of Chronic Pain: A Consensus Statement From the American Academy of
Pain Medicine and the American Pain Society, 13 Clinical J. Pain 6 (1997).
51

Roger Chou et al., Clinical Guidelines for the Use of Chronic Opioid Therapy in Chronic Non-Cancer Pain, 10 J.
Pain 113 (2009).
52

Id.

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 influenced not only treating physicians, but also the body of scientific evidence on opioids; the
Guidelines have been cited hundreds of times in academic literature, were disseminated in the
State and/or Plaintiff’s Community during the relevant time period, are still available online, and
were reprinted in the Journal of Pain. The Manufacturer Defendants widely referenced and
promoted the 2009 Guidelines without disclosing the lack of evidence to support them or the
Manufacturer Defendants financial support to members of the panel.
109. The Manufacturer Defendants worked together, through Front Groups, to spread
their deceptive messages about the risks and benefits of long-term opioid therapy. For example,
Defendants combined their efforts through the Pain Care Forum (“PCF”), which began in 2004 as
an APF project. PCF is comprised of representatives from opioid manufacturers (including
Cephalon, Endo, Janssen, and Purdue) and various Front Groups, almost all of which received
substantial funding from the Manufacturer Defendants. Among other projects, PCF worked to
ensure that an FDA-mandated education project on opioids was not unacceptably negative and did
not require mandatory participation by prescribers, which the Manufacturer Defendants
determined would reduce prescribing.
2. The Manufacturer Defendants’ Marketing Scheme Misrepresented the
Risks and Benefits of Opioids.
i.

The Manufacturer Defendants embarked upon a campaign of
false, deceptive, and unfair assurances grossly understating and
misstating the dangerous addiction risks of the opioid drugs.

110. To falsely assure physicians and patients that opioids are safe, the Manufacturer
Defendants deceptively trivialized and failed to disclose the risks of long-term opioid use,
particularly the risk of addiction, through a series of misrepresentations that have been
conclusively debunked by the FDA and CDC. These misrepresentations – which are described
below – reinforced each other and created the dangerously misleading impression that: (1) starting
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 patients on opioids was low risk because most patients would not become addicted, and because
those at greatest risk for addiction could be identified and managed; (2) patients who displayed
signs of addiction probably were not addicted and, in any event, could easily be weaned from the
drugs; (3) the use of higher opioid doses, which many patients need to sustain pain relief as they
develop tolerance to the drugs, do not pose special risks; and (4) abuse-deterrent opioids both
prevent abuse and overdose and are inherently less addictive. The Manufacturer Defendants have
not only failed to correct these misrepresentations, they continue to make them today.
111. Opioid manufacturers, including Defendants Endo Pharmaceuticals, Inc. and Purdue
Pharma L.P., have entered into settlement agreements with public entities that prohibit them from
making many of the misrepresentations identified in this Complaint. Yet even afterward, each
Manufacturer Defendant continued to misrepresent the risks and benefits of long-term opioid use
in the State and Plaintiff’s Community and each continues to fail to correct its past
misrepresentations.
112. Some illustrative examples of the Manufacturer Defendants’ false, deceptive, and
unfair claims about the purportedly low risk of addiction include:
a. Actavis’s predecessor caused a patient education brochure, Managing Chronic
Back Pain, to be distributed beginning in 2003 that admitted that opioid addiction
is possible, but falsely claimed that it is “less likely if you have never had an
addiction problem.” Based on Actavis’s acquisition of its predecessor’s marketing
materials along with the rights to Kadian, it appears that Actavis continued to use
this brochure in 2009 and beyond.
b. Cephalon and Purdue sponsored APF’s Treatment Options: A Guide for People
Living with Pain (2007), which suggested that addiction is rare and limited to
extreme cases of unauthorized dose escalations, obtaining duplicative opioid
prescriptions from multiple sources, or theft. This publication is still available
online.53

53

Am. Pain Found., Treatment Options: A Guide for People Living in Pain (2007) [hereinafter APF, Treatment
Options], https://assets.documentcloud.org/documents/277605/apf-treatmentoptions.pdf.

35
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 c. Endo sponsored a website, “PainKnowledge,” which, upon information and belief,
claimed in 2009 that “[p]eople who take opioids as prescribed usually do not
become addicted.” Upon information and belief, another Endo website,
PainAction.com, stated “Did you know? Most chronic pain patients do not become
addicted to the opioid medications that are prescribed for them.” Endo also
distributed an “Informed Consent” document on PainAction.com that misleadingly
suggested that only people who “have problems with substance abuse and
addiction” are likely to become addicted to opioid medications.
d. Upon information and belief, Endo distributed a pamphlet with the Endo logo
entitled Living with Someone with Chronic Pain, which stated that: “Most health
care providers who treat people with pain agree that most people do not develop an
addiction problem.”
e. Janssen reviewed, edited, approved, and distributed a patient education guide
entitled Finding Relief: Pain Management for Older Adults (2009), which
described as “myth” the claim that opioids are addictive, and asserted as fact that
“[m]any studies show that opioids are rarely addictive when used properly for the
management of chronic pain.”
f. Janssen currently runs a website, Prescriberesponsibly.com (last updated July 2,
2015), which claims that concerns about opioid addiction are “overestimated.”
g. Purdue sponsored APF’s A Policymaker’s Guide to Understanding Pain & Its
Management, which claims that less than 1% of children prescribed opioids will
become addicted and that pain is undertreated due to “[m]isconceptions about
opioid addiction.”54
h. Consistent with the Manufacturer Defendants’ published marketing materials, upon
information and belief, detailers for Purdue, Endo, Janssen, and Cephalon in the
State and Plaintiff’s Community minimized or omitted any discussion with doctors
of the risk of addiction; misrepresented the potential for abuse of opioids with
purportedly abuse-deterrent formulations; and routinely did not correct the
misrepresentations noted above.
i. Seeking to overturn the criminal conviction of a doctor for illegally prescribing
opioids, the Manufacturer Defendants’ Front Groups APF and NFP argued in an
amicus brief to the United States Fourth Circuit Court of Appeals that “patients
rarely become addicted to prescribed opioids,” citing research by their KOL, Dr.
Portenoy.55
54

Am. Pain Found., A Policymaker’s Guide to Understanding Pain and Its Management 6 (2011) [hereinafter APF,
Policymaker’s Guide], http://s3.documentcloud.org/documents/277603/apf-policymakers-guide.pdf.
55

Brief of the American Pain Foundation, the National Pain Foundation, and the National Foundation for the
Treatment of Pain in Support of Appellant and Reversal of the Conviction, United States v. Hurowitz, No. 05-4474
(4th Cir. Sept. 8, 2005) [hereinafter Brief of APF] at 9.

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 113. These claims are contrary to longstanding scientific evidence. A 2016 opioidprescription guideline issued by the CDC (the “2016 CDC Guideline”) explains that there is
“[e]xtensive evidence” of the “possible harms of opioids (including opioid use disorder [an
alternative term for opioid addiction], [and] overdose . . .).”56 The 2016 CDC Guideline further
explains that “[o]pioid pain medication use presents serious risks, including overdose and opioid
use disorder” and that “continuing opioid therapy for 3 months substantially increases risk for
opioid use disorder.”57
114. The FDA further exposed the falsity of Defendants’ claims about the low risk of
addiction when it announced changes to the labels for extended-release and long-acting (“ER/LA”)
opioids in 2013 and for immediate release (“IR”) opioids in 2016. In its announcements, the FDA
found that “most opioid drugs have ‘high potential for abuse’” and that opioids “are associated
with a substantial risk of misuse, abuse, NOWS [neonatal opioid withdrawal syndrome], addiction,
overdose, and death.” According to the FDA, because of the “known serious risks” associated with
long-term opioid use, including “risks of addiction, abuse, and misuse, even at recommended
doses, and because of the greater risks of overdose and death,” opioids should be used only “in
patients for whom alternative treatment options” like non-opioid drugs have failed.58

56

Deborah Dowell et al., CDC Guideline for Prescribing Opioids for Chronic Pain—United States, 2016, Morbidity
& Mortality Wkly. Rep., Mar. 18, 2016, at 15 [hereinafter 2016 CDC Guideline],
https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm.
57

Id. at 2, 25.

58

Letter from Janet Woodcock, M.D., Dir., Ctr. For Drug Evaluation and Research, U.S. Food and Drug Admin., U.S.
Dep’t of Health and Human Servs., to Andrew Koldny, M.D., President, Physicians for Responsible Opioid
Prescribing (Sept. 10, 2013), https://www.regulations.gov/contentStreamer?documentId=FDA-2012-P-08180793&attachmentNumber=1&contentType=pdf.; Letter from Janet Woodcock, M.D., Dir., Ctr. For Drug Evaluation
and Research, U.S. Food and Drug Admin., U.S. Dep’t of Health and Human Servs., to Peter R. Mathers & Jennifer
A.
Davidson,
Kleinfeld,
Kaplan
and
Becker,
LLP
(Mar.
22,
2016),

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 115. The State of New York, in a 2016 settlement agreement with Endo, found that opioid
“use disorders appear to be highly prevalent in chronic pain patients treated with opioids, with up
to 40% of chronic pain patients treated in specialty and primary care outpatient centers meeting
the clinical criteria for an opioid use disorder.”59 Endo had claimed on its www.opana.com website
that “[m]ost healthcare providers who treat patients with pain agree that patients treated with
prolonged opioid medicines usually do not become addicted,” but the State of New York found
that Endo had no evidence for that statement. Consistent with this, Endo agreed not to “make
statements that . . . opioids generally are non-addictive” or “that most patients who take opioids
do not become addicted” in New York. Endo remains free, however, to make those statements in
this State.
116. In addition to mischaracterizing the highly addictive nature of the drugs they were
pushing, the Manufacturer Defendants also fostered a fundamental misunderstanding of the signs
of addiction. Specifically, the Manufacturer Defendants misrepresented, to doctors and patients,
that warning signs and/or symptoms of addiction were, instead, signs of undertreated pain (i.e.
pseudoaddiction) – and instructed doctors to increase the opioid prescription dose for patients who
were already in danger.
117. To this end, one of Purdue’s employees, Dr. David Haddox, invented a phenomenon
called “pseudoaddiction.” KOL Dr. Portenoy popularized the term. Examples of the false,
misleading, deceptive, and unfair statements regarding pseudoaddiction include:
a. Cephalon and Purdue sponsored Responsible Opioid Prescribing (2007), which
taught that behaviors such as “requesting drugs by name,” “demanding or
https://www.regulations.gov/contentStreamer?documentId=FDA-2014-P-02050006&attachmentNumber=1&contentType=pdf.
59

Assurance of Discontinuance, In re Endo Health Solutions Inc. and Endo Pharm. Inc. (Assurance No. 15-228), at
16, https://ag.ny.gov/pdfs/Endo_AOD_030116-Fully_Executed.pdf.

38
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 manipulative behavior,” seeing more than one doctor to obtain opioids, and
hoarding, are all signs of pseudoaddiction, rather than true addiction. 60 The 2012
edition, which remains available for sale online, continues to teach that
pseudoaddiction is real.61
b. Janssen sponsored, funded, and edited the Let’s Talk Pain website, which in 2009
stated: “pseudoaddiction . . . refers to patient behaviors that may occur when pain
is under-treated . . . . Pseudoaddiction is different from true addiction because such
behaviors can be resolved with effective pain management.”
c. Endo sponsored a National Initiative on Pain Control (“NIPC”) CME program in
2009 entitled “Chronic Opioid Therapy: Understanding Risk While Maximizing
Analgesia,” which, upon information and belief, promoted pseudoaddiction by
teaching that a patient’s aberrant behavior was the result of untreated pain. Endo
appears to have substantially controlled NIPC by funding NIPC projects;
developing, specifying, and reviewing content; and distributing NIPC materials.
d. Purdue published a pamphlet in 2011 entitled Providing Relief, Preventing Abuse,
which, upon information and belief, described pseudoaddiction as a concept that
“emerged in the literature” to describe the inaccurate interpretation of [drugseeking behaviors] in patients who have pain that has not been effectively treated.”
e. Upon information and belief, Purdue sponsored a CME program titled “Path of the
Patient, Managing Chronic Pain in Younger Adults at Risk for Abuse”. In a role
play, a chronic pain patient with a history of drug abuse tells his doctor that he is
taking twice as many hydrocodone pills as directed. The narrator notes that because
of pseudoaddiction, the doctor should not assume the patient is addicted even if he
persistently asks for a specific drug, seems desperate, hoards medicine, or
“overindulges in unapproved escalating doses.” The doctor treats this patient by
prescribing a high-dose, long-acting opioid.
118. In the 2016 CDC Guideline, the CDC rejects the validity of the pseudoaddiction
fallacy invented by a Purdue employee as a reason to push more opioid drugs onto already addicted
patients.
119. In addition to misstating the addiction risk and inventing the pseudoaddiction
falsehood, a third category of false, deceptive, and unfair practice is the Manufacturer Defendants’

60

Scott M. Fishman, M.D., Responsible Opioid Prescribing: A Physician’s Guide (2007) at 62.

61

See Scott M. Fishman, M.D., Responsible Opioid Prescribing: A Physician’s Guide (2d ed. 2012).

39
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 false instructions that addiction risk screening tools, patient contracts, urine drug screens, and
similar strategies allow them to reliably identify and safely prescribe opioids to patients
predisposed to addiction. These misrepresentations were especially insidious because the
Manufacturer Defendants aimed them at general practitioners and family doctors who lack the
time and expertise to closely manage higher-risk patients on opioids. The Manufacturer
Defendants’ misrepresentations made these doctors feel more comfortable prescribing opioids to
their patients, and patients more comfortable starting on opioid therapy for chronic pain.
Illustrative examples include:
a. Endo paid for a 2007 supplement in the Journal of Family Practice written by a
doctor who became a member of Endo’s speakers bureau in 2010. The supplement,
entitled Pain Management Dilemmas in Primary Care: Use of Opioids, emphasized
the effectiveness of screening tools, claiming that patients at high risk of addiction
could safely receive chronic opioid therapy using a “maximally structured
approach” involving toxicology screens and pill counts.
b. Purdue, upon information and belief, sponsored a 2011 webinar, Managing
Patient’s Opioid Use: Balancing the Need and Risk, which claimed that screening
tools, urine tests, and patient agreements prevent “overuse of prescriptions” and
“overdose deaths.”
c. As recently as 2015, upon information and belief, Purdue has represented in
scientific conferences that “bad apple” patients – and not opioids – are the source
of the addiction crisis and that once those “bad apples” are identified, doctors can
safely prescribe opioids without causing addiction.
120. The 2016 CDC Guideline confirms the falsity of these claims. The Guideline
explains that there are no studies assessing the effectiveness of risk mitigation strategies “for
improving outcomes related to overdose, addiction, abuse or misuse.”62
121. A fourth category of deceptive messaging regarding dangerous opioids is the
Manufacturer Defendants’ false assurances regarding the alleged ease of eliminating opioid

62

Id. at 11.

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 dependence. The Manufacturer Defendants falsely claimed that opioid dependence can easily be
addressed by tapering and that opioid withdrawal is not a problem, but they failed to disclose the
increased difficulty of stopping opioids after long-term use. In truth, the 2016 CDC Guideline
explains that the symptoms of opioid withdrawal include abdominal pain, vomiting, diarrhea,
sweating, tremor, tachycardia, drug cravings, anxiety, insomnia, spontaneous abortion and
premature labor in pregnant women.63
122. The Manufacturer Defendants nonetheless downplayed the severity of opioid
detoxification. For example, upon information and belief, a CME sponsored by Endo, entitled
Persistent Pain in the Older Adult, claimed that withdrawal symptoms can be avoided by tapering
a patient’s opioid dose by 10%-20% for 10 days. And Purdue sponsored APF’s A Policymaker’s
Guide to Understanding Pain & Its Management, which claimed that “[s]ymptoms of physical
dependence can often be ameliorated by gradually decreasing the dose of medication during
discontinuation” without mentioning any hardships that might occur.64
123. A fifth category of false, deceptive, and unfair statements the Manufacturer
Defendants made to sell more drugs is that opioid dosages could be increased indefinitely without
added risk. The ability to escalate dosages was critical to Defendants’ efforts to market opioids for
long-term use to treat chronic pain because, absent this misrepresentation, doctors would have
abandoned treatment when patients built up tolerance and lower dosages did not provide pain
relief. The Manufacturer Defendants’ deceptive claims include:
a.

63

Upon information and belief, Actavis’s predecessor created a patient brochure for
Kadian in 2007 that stated, “Over time, your body may become tolerant of your
current dose. You may require a dose adjustment to get the right amount of pain
relief. This is not addiction.” Based on Actavis’s acquisition of its predecessor’s

Id. at 26.

64

Am. Pain Found., A Policymaker’s Guide to Understanding Pain and Its Management 6 (2011) [hereinafter APF,
Policymaker’s Guide], http://s3.documentcloud.org/documents/277603/apf-policymakers-guide.pdf., at 32.

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 marketing materials along with the rights to Kadian, Actavis appears to have
continued to use these materials in 2009 and beyond.
b. Cephalon and Purdue sponsored APF’s Treatment Options: A Guide for People
Living with Pain (2007), which claims that some patients “need” a larger dose of
an opioid, regardless of the dose currently prescribed. The guide stated that opioids
have “no ceiling dose” and insinuated that they are therefore the most appropriate
treatment for severe pain.65 This publication is still available online.
c. Endo sponsored a website, “PainKnowledge,” which, upon information and belief,
claimed in 2009 that opioid dosages may be increased until “you are on the right
dose of medication for your pain.”
d. Endo distributed a pamphlet edited by a KOL entitled Understanding Your Pain:
Taking Oral Opioid Analgesics (2004 Endo Pharmaceuticals PM-0120). 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.”66
e. Janssen sponsored a patient education guide entitled Finding Relief: Pain
Management for Older Adults (2009), which was distributed by its sales force. This
guide listed dosage limitations as “disadvantages” of other pain medicines but
omitted any discussion of risks of increased opioid dosages.
f. Upon information and belief, Purdue’s In the Face of Pain website promoted the
notion that if a patient’s doctor does not prescribe what, in the patient’s view, is a
sufficient dosage of opioids, he or she should find another doctor who will.
g. Purdue sponsored APF’s A Policymaker’s Guide to Understanding Pain & Its
Management, which taught that dosage escalations are “sometimes necessary,” and
that “the need for higher doses of medication is not necessarily indicative of
addiction,” but inaccurately downplayed the risks from high opioid dosages.67
h. In 2007, Purdue sponsored a CME entitled “Overview of Management Options”
that was available for CME credit and available until at least 2012. The CME was
edited by a KOL and taught that NSAIDs and other drugs, but not opioids, are
unsafe at high dosages.

65

Am. Pain Found., Treatment Options: A Guide for People Living in Pain (2007) [hereinafter APF, Treatment
Options], https://assets.documentcloud.org/documents/277605/apf-treatmentoptions.pdf., at 12.
66

Margo McCaffery & Chris Pasero, Endo Pharm., Understanding Your Pain: Taking Oral Opioid Analgesics
(Russell K Portenoy, M.D., ed., 2004).
67

Am. Pain Found., A Policymaker’s Guide to Understanding Pain and Its Management 6 (2011) [hereinafter APF,
Policymaker’s Guide], http://s3.documentcloud.org/documents/277603/apf-policymakers-guide.pdf., at 32.

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 i. Purdue presented a 2015 paper at the College on the Problems of Drug Dependence,
“the oldest and largest organization in the US dedicated to advancing a scientific
approach to substance use and addictive disorders,” challenging the correlation
between opioid dosage and overdose.68
j. Seeking to overturn the criminal conviction of a doctor for illegally prescribing
opioids, the Manufacturer Defendants’ Front Groups APF and NFP argued in an
amicus brief to the United States Fourth Circuit Court of Appeals that “there is no
‘ceiling dose’” for opioids.69
124. Once again, the 2016 CDC Guideline reveals that the Manufacturer Defendants’
representations regarding opioids were lacking in scientific evidence. The 2016 CDC Guideline
clarifies that the “[b]enefits of high-dose opioids for chronic pain are not established” while the
“risks for serious harms related to opioid therapy increase at higher opioid dosage.” 70 More
specifically, the CDC explains that “there is now an established body of scientific evidence
showing that overdose risk is increased at higher opioid dosages.”71 The CDC also states that there
is an increased risk “for opioid use disorder, respiratory depression, and death at higher dosages.”72
That is why the CDC advises doctors to “avoid increasing dosage” to above 90 morphine milligram
equivalents per day.73
125. Defendants’ deceptive marketing of the so-called abuse-deterrent properties of some
of their opioids has created false impressions that these opioids can cure addiction and abuse.
126. The Manufacturer Defendants made misleading claims about the ability of their socalled abuse-deterrent opioid formulations to deter abuse. For example, Endo’s advertisements for

68

The College on Problems of Drug Dependence, About the College, http://cpdd.org (last visited Aug. 21, 2017).

69

Brief of APF, at 9.

70

2016 CDC Guideline at 22–23.

71

Id. at 23–24.

72

Id. at 21.

73

Id. at 16.

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 the 2012 reformulation of Opana ER claimed that it was designed to be crush resistant, in a way
that suggested it was more difficult to abuse. This claim was false. The FDA warned in a 2013
letter that Opana ER Extended-Release Tablets’ “extended-release features can be compromised,
causing the medication to ‘dose dump,’ when subject to . . . forms of manipulation such as cutting,
grinding, or chewing, followed by swallowing.”74 Also troubling, Opana ER can be prepared for
snorting using commonly available methods and “readily prepared for injection.” 75 The letter
discussed “the troubling possibility that a higher (and rising) percentage of [Opana ER ExtendedRelease Tablet] abuse is occurring via injection.”76 Endo’s own studies, which it failed to disclose,
showed that Opana ER could still be ground and chewed. In June 2017, the FDA requested that
Opana ER be removed from the market.
ii.

The Manufacturer Defendants embarked upon a campaign of
false, deceptive, and unfair assurances grossly overstating the
benefits of the opioid drugs.

127. To convince doctors and patients that opioids should be used to treat chronic pain,
the Manufacturer Defendants also had to persuade them that there was a significant upside to longterm opioid use. But as the CDC Guideline makes clear, “[n]o evidence shows a long-term benefit
of opioids in pain and function versus no opioids for chronic pain with outcomes examined at least
1 year later (with most placebo-controlled randomized trials ≤ 6 weeks in duration)” and that other
treatments were more or equally beneficial and less harmful than long-term opioid use.77 The FDA,
too, has recognized the lack of evidence to support long-term opioid use. Despite this, Defendants

74

Letter from Janet Woodcock, M.D., Dir., Ctr. For Drug Evaluation and Research, U.S. Food and Drug Admin., U.S.
Dep’t of Health and Human Servs., to Robert Barto, Vice President, Reg. Affairs, Endo Pharm. Inc. (May 10, 2013),
at 5.
75

Id. at 6.

76

Id. at 6 n.21.

77

Id. at 15.

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 falsely and misleadingly touted the benefits of long-term opioid use and falsely and misleadingly
suggested that these benefits were supported by scientific evidence.
128. Some illustrative examples of the Manufacturer Defendants’ false claims are:
a. Upon information and belief, Actavis distributed an advertisement claiming that the
use of Kadian to treat chronic pain would allow patients to return to work, relieve
“stress on your body and your mental health,” and help patients enjoy their lives.
b. Endo distributed advertisements that claimed that the use of Opana ER for chronic
pain would allow patients to perform demanding tasks like construction work or
work as a chef and portrayed seemingly healthy, unimpaired subjects.
c. Janssen sponsored and edited a patient education guide entitled Finding Relief:
Pain Management for Older Adults (2009) – which states as “a fact” that “opioids
may make it easier for people to live normally.” The guide lists expected functional
improvements from opioid use, including sleeping through the night, returning to
work, recreation, sex, walking, and climbing stairs.
d. Janssen promoted Ultracet for everyday chronic pain and distributed posters, for
display in doctors’ offices, of presumed patients in active professions; the caption
read, “Pain doesn’t fit into their schedules.”
e. Upon information and belief, Purdue ran a series of advertisements for OxyContin
in 2012 in medical journals entitled “Pain vignettes,” which were case studies
featuring patients with pain conditions persisting over several months and
recommending OxyContin for them. The ads implied that OxyContin improves
patients’ function.
f. Responsible Opioid Prescribing (2007), sponsored and distributed by Cephalon,
Endo and Purdue, taught that relief of pain by opioids, by itself, improved patients’
function.
g. Cephalon and Purdue sponsored APF’s Treatment Options: A Guide for People
Living with Pain (2007), which counseled patients that opioids “give [pain patients]
a quality of life we deserve.”78 This publication is still available online.
h. Endo’s NIPC website “PainKnowledge” claimed in 2009, upon information and
belief, 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 (as well as “improved function”) as benefits of
78

Am. Pain Found., Treatment Options: A Guide for People Living in Pain (2007) [hereinafter APF, Treatment
Options], https://assets.documentcloud.org/documents/277605/apf-treatmentoptions.pdf.

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 opioid therapy. The grant request that Endo approved for this project specifically
indicated NIPC’s intent to make misleading claims about function, and Endo
closely tracked visits to the site.
i. Endo was the sole sponsor, through NIPC, of a series of CMEs entitled “Persistent
Pain in the Older Patient.”79 Upon information and belief, a CME disseminated via
webcast claimed that chronic opioid therapy has been “shown to reduce pain and
improve depressive symptoms and cognitive functioning.”
j. Janssen sponsored and funded a multimedia patient education campaign called
“Let’s Talk Pain.” One feature of the campaign was to complain that patients were
under-treated. In 2009, upon information and belief, a Janssen-sponsored website,
part of the “Let’s Talk Pain” campaign, featured an interview edited by Janssen
claiming that opioids allowed a patient to “continue to function.”
k. Purdue sponsored the development and distribution of APF’s A Policymaker’s
Guide to Understanding Pain & Its Management, which claimed that “[m]ultiple
clinical studies” have shown that opioids are effective in improving “[d]aily
function,” “[p]sychological health,” and “[o]verall health-related quality of life for
chronic pain.”80 The Policymaker’s Guide was originally published in 2011.
l. Purdue’s, Cephalon’s, Endo’s, and Janssen’s sales representatives have conveyed
and continue to convey the message that opioids will improve patient function.
129. As the FDA and other agencies have made clear for years, these claims have no
support in the scientific literature.
130. In 2010, the FDA warned Actavis, in response to its advertising of Kadian described
above, that “we are not aware of substantial evidence or substantial clinical experience
demonstrating that the magnitude of the effect of the drug [Kadian] has in alleviating pain, taken
together with any drug-related side effects patients may experience . . . results in any overall
positive impact on a patient’s work, physical and mental functioning, daily activities, or enjoyment

79

E.g.,
NIPC,
Persistent
Pain
and
the
Older
https://www.painedu.org/Downloads/NIPC/Activities/B173_Providence_RI_%20Invite.pdf.

Patient

(2007),

80

Am. Pain Found., A Policymaker’s Guide to Understanding Pain and Its Management 6 (2011) [hereinafter APF,
Policymaker’s Guide], http://s3.documentcloud.org/documents/277603/apf-policymakers-guide.pdf., at 29.

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 of life.”81 And in 2008, upon information and belief, the FDA sent a warning letter to an opioid
manufacturer, making it clear “that [the claim that] patients who are treated with the drug
experience an improvement in their overall function, social function, and ability to perform daily
activities . . . has not been demonstrated by substantial evidence or substantial clinical experience.”
131. The Manufacturer Defendants also falsely and misleadingly emphasized or
exaggerated the risks of competing medications like NSAIDs, so that doctors and patients would
look to opioids first for the treatment of chronic pain. Once again, these misrepresentations by the
Manufacturer Defendants contravene pronouncements by and guidance from the FDA and CDC
based on the scientific evidence. Indeed, the FDA changed the labels for ER/LA opioids in 2013
and IR opioids in 2016 to state that opioids should only be used as a last resort “in patients for
which alternative treatment options” like non-opioid drugs “are inadequate.” And the 2016 CDC
Guideline states that NSAIDs, not opioids, should be the first-line treatment for chronic pain,
particularly arthritis and lower back pain.82 Purdue misleadingly promoted OxyContin as being
unique among opioids in providing 12 continuous hours of pain relief with one dose. In fact,
OxyContin does not last for 12 hours – a fact that Purdue has known at all times relevant to this
action. Upon information and belief, Purdue’s own research shows that OxyContin wears off in
under six hours in one quarter of patients and in under 10 hours in more than half. This is because
OxyContin tablets release approximately 40% of their active medicine immediately, after which
release tapers. This triggers a powerful initial response, but provides little or no pain relief at the
end of the dosing period, when less medicine is released. This phenomenon is known as “end of

81

Letter from Thomas Abrams, Dir., Div. of Drug Mktg., Advert., & Commc’ns, U.S. Food & Drug Admin., to Doug
Boothe,
CEO,
Actavis
Elizabeth
LLC
(Feb.
18,
2010),
http://www.fdanews.com/ext/resources/files/archives/a/ActavisElizabethLLC.pdf.
82

2016 CDC Guideline at 12.

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 dose” failure, and the FDA found in 2008 that a “substantial proportion” of chronic pain patients
taking OxyContin experience it. This not only renders Purdue’s promise of 12 hours of relief false
and deceptive, it also makes OxyContin more dangerous because the declining pain relief patients
experience toward the end of each dosing period drives them to take more OxyContin before the
next dosing period begins, quickly increasing the amount of drug they are taking and spurring
growing dependence.
132. Purdue’s competitors were aware of this problem. For example, upon information
and belief, Endo ran advertisements for Opana ER referring to “real” 12-hour dosing.
Nevertheless, Purdue falsely promoted OxyContin as if it were effective for a full 12 hours. Upon
information and belief, Purdue’s sales representatives continue to tell doctors that OxyContin lasts
a full 12 hours.
133. Front Groups supported by Purdue likewise echoed these representations. For
example, in an amicus brief submitted to the Supreme Court of Ohio by the American Pain
Foundation, the National Foundation for the Treatment of Pain and the Ohio Pain Initiative in
support of Purdue, those amici represented:
OxyContin is particularly useful for sustained long-term pain because it comes in
higher, compact pills with a slow release coating. OxyContin pills can work for 12
hours. This makes it easier for patients to comply with dosing requirements without
experiencing a roller-coaster of pain relief followed quickly by pain renewal that
can occur with shorter acting medications. It also helps the patient sleep through
the night, which is often impossible with short-acting medications. For many of
those serviced by Pain Care Amici, OxyContin has been a miracle medication.83
134. Cephalon deceptively marketed its opioids Actiq and Fentora for chronic pain even
though the FDA has expressly limited their use to the treatment of cancer pain in opioid tolerant

83

Reply Brief of Amicus Curiae of the American Pain Foundation, The National Foundation for the Treatment of
Pain and the Ohio Pain Initiative Supporting Appellants, Howland v. Purdue Pharma L.P., No. 2003-1538 (Ohio Apr.
13, 2004), 2004 WL 1637768, at *4 (footnote omitted).

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 individuals. Both Actiq and Fentora are extremely powerful fentanyl-based IR opioids. Neither is
approved for or has been shown to be safe or effective for chronic pain. Indeed, the FDA expressly
prohibited Cephalon from marketing Actiq for anything but cancer pain, and refused to approve
Fentora for the treatment of chronic pain because of the potential harm, including the high risk of
“serious and life-threatening adverse events” and abuse – which are greatest in non-cancer patients.
The FDA also issued a Public Health Advisory in 2007 emphasizing that Fentora should only be
used for cancer patients who are opioid-tolerant and should not be used for any other conditions,
such as migraines, post-operative pain, or pain due to injury.84 Specifically, the FDA advised that
Fentora “is only approved for breakthrough cancer pain in patients who are opioid-tolerant,
meaning those patients who take a regular, daily, around-the-clock narcotic pain medication.”85
135. Despite this, Cephalon conducted and continues to conduct a well-funded campaign
to promote Actiq and Fentora for chronic pain and other non-cancer conditions for which it was
not approved, appropriate, and for which it is not safe. As part of this campaign, Cephalon used
CMEs, speaker programs, KOLs, journal supplements, and detailing by its sales representatives to
give doctors the false impression that Actiq and Fentora are safe and effective for treating noncancer pain. For example:
a. Cephalon paid to have a CME it sponsored, Opioid-Based Management of Persistent
and Breakthrough Pain, published in a supplement of Pain Medicine News in 2009.
The CME instructed doctors that “[c]linically, broad classification of pain syndromes
as either cancer- or non-cancer-related has limited utility” and recommended Actiq and
Fentora for patients with chronic pain.

84

See U.S. Food & Drug Admin., Public Health Advisory: Important Information for the Safe Use of Fentora (fentanyl
buccal
tablets)
(Sept.
26,
2007),
https://www.fda.gov/Drugs/DrugSafety/PostmarketDrugSafetyInformationforPatientsandProviders/ucm051273.htm.
85

Id.

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 b. Upon information and belief, Cephalon’s sales representatives set up hundreds of
speaker programs for doctors, including many non-oncologists, which promoted Actiq
and Fentora for the treatment of non-cancer pain.
c. In December 2011, Cephalon widely disseminated a journal supplement entitled
“Special Report: An Integrated Risk Evaluation and Mitigation Strategy for Fentanyl
Buccal Tablet (FENTORA) and Oral Transmucosal Fentanyl Citrate (ACTIQ)” to
Anesthesiology News, Clinical Oncology News, and Pain Medicine News – three
publications that are sent to thousands of anesthesiologists and other medical
professionals. The Special Report openly promotes Fentora for “multiple causes of
pain” – and not just cancer pain.
136. Cephalon’s deceptive marketing gave doctors and patients the false impression that
Actiq and Fentora were not only safe and effective for treating chronic pain, but were also
approved by the FDA for such uses.
137. Purdue also unlawfully and unfairly failed to report or address illicit and unlawful
prescribing of its drugs, despite knowing about it for years. Purdue’s sales representatives have
maintained a database since 2002 of doctors suspected of inappropriately prescribing its drugs.
Rather than report these doctors to state medical boards or law enforcement authorities (as Purdue
is legally obligated to do) or cease marketing to them, Purdue used the list to demonstrate the high
rate of diversion of OxyContin – the same OxyContin that Purdue had promoted as less addictive
– in order to persuade the FDA to bar the manufacture and sale of generic copies of the drug
because the drug was too likely to be abused. In an interview with the Los Angeles Times, Purdue’s
senior compliance officer acknowledged that in five years of investigating suspicious pharmacies,
Purdue failed to take action – even where Purdue employees personally witnessed the diversion of
its drugs. The same was true of prescribers; despite its knowledge of illegal prescribing, Purdue
did not report that a Los Angeles clinic prescribed more than 1.1 million OxyContin tablets and
that Purdue’s district manager described it internally as “an organized drug ring” until years after

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 law enforcement shut it down. In doing so, Purdue protected its own profits at the expense of
public health and safety.86
138. Like Purdue, Endo has been cited for its failure to set up an effective system for
identifying and reporting suspicious prescribing. In its settlement agreement with Endo, the State
of New York found that Endo failed to require sales representatives to report signs of abuse,
diversion, and inappropriate prescribing; paid bonuses to sales representatives for detailing
prescribers who were subsequently arrested or convicted for illegal prescribing; and failed to
prevent sales representatives from visiting prescribers whose suspicious conduct had caused them
to be placed on a no-call list.
3. The Manufacturer Defendants Targeted Susceptible Prescribers and
Vulnerable Patient Populations.
139. As a part of their deceptive marketing scheme, the Manufacturer Defendants
identified and targeted susceptible prescribers and vulnerable patient populations in the U.S.,
including this State and Plaintiff’s Community. For example, the Manufacturer Defendants
focused their deceptive marketing on primary care doctors, who were more likely to treat chronic
pain patients and prescribe them drugs, but were less likely to be educated about treating pain and
the risks and benefits of opioids and therefore more likely to accept the Manufacturer Defendants’
misrepresentations.
140. The Manufacturer Defendants also targeted vulnerable patient populations like the
elderly and veterans, who tend to suffer from chronic pain. The Manufacturer Defendants targeted
these vulnerable patients even though the risks of long-term opioid use were significantly greater

86

Harriet Ryan et al., More Than 1 Million Oxycontin Pills Ended Up in the Hands of Criminals and Addicts. What
the Drugmaker Knew, L.A. Times, July 10, 2016, http://www.latimes.com/projects/la-me-oxycontin-part2/.

51
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 for them. For example, the 2016 CDC Guideline observes that existing evidence confirms that
elderly patients taking opioids suffer from elevated fall and fracture risks, reduced renal function
and medication clearance, and a smaller window between safe and unsafe dosages. 87 The 2016
CDC Guideline concludes that there must be “additional caution and increased monitoring” to
minimize the risks of opioid use in elderly patients. Id. at 27. The same is true for veterans, who
are more likely to use anti-anxiety drugs (benzodiazepines) for post-traumatic stress disorder,
which interact dangerously with opioids.
4. The Manufacturer Defendants made Materially Deceptive Statements and
Concealed Materials Facts.
141. As alleged herein, the Manufacturer Defendants made and/or disseminated
deceptive statements regarding material facts and further concealed material facts, in the course of
manufacturing, marketing, and selling prescription opioids. The Manufacturer Defendants’ actions
were intentional and/or unlawful. Such statements include, but are not limited to, those set out
below and alleged throughout this Complaint.
142. Defendant Purdue made and/or disseminated deceptive statements, and concealed
material facts in such a way to make their statements deceptive, including, but not limited to, the
following:
a. Creating, sponsoring, and assisting in the distribution of patient education materials
distributed to consumers that contained deceptive statements;
b. Creating and disseminating advertisements that contained deceptive statements
concerning the ability of opioids to improve function long-term and concerning the
evidence supporting the efficacy of opioids long-term for the treatment of chronic
non-cancer pain;
c. Disseminating misleading statements concealing the true risk of addiction and
promoting the deceptive concept of pseudoaddiction through Purdue’s own

87

2016 CDC Guideline at 13.

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 unbranded publications and on internet sites Purdue operated that were marketed to
and accessible by consumers;
d. Distributing brochures to doctors, patients, and law enforcement officials that
included deceptive statements concerning the indicators of possible opioid abuse;
e. Sponsoring, directly distributing, and assisting in the distribution of publications
that promoted the deceptive concept of pseudoaddiction, even for high-risk
patients;
f. Endorsing, directly distributing, and assisting in the distribution of publications that
presented an unbalanced treatment of the long-term and dose-dependent risks of
opioids versus NSAIDs;
g. Providing significant financial support to pro-opioid KOL doctors who made
deceptive statements concerning the use of opioids to treat chronic non-cancer pain;
h. Providing needed financial support to pro-opioid pain organizations that made
deceptive statements, including in patient education materials, concerning the use
of opioids to treat chronic non-cancer pain;
i. Assisting in the distribution of guidelines that contained deceptive statements
concerning the use of opioids to treat chronic non-cancer pain and misrepresented
the risks of opioid addiction;
j. Endorsing and assisting in the distribution of CMEs containing deceptive
statements concerning the use of opioids to treat chronic non-cancer pain;
k. Developing and disseminating scientific studies that misleadingly concluded
opioids are safe and effective for the long-term treatment of chronic non-cancer
pain and that opioids improve quality of life, while concealing contrary data;
l. Assisting in the dissemination of literature written by pro-opioid KOLs that
contained deceptive statements concerning the use of opioids to treat chronic
noncancer pain;
m. Creating, endorsing, and supporting the distribution of patient and prescriber
education materials that misrepresented the data regarding the safety and efficacy
of opioids for the long-term treatment of chronic non-cancer pain, including known
rates of abuse and addiction and the lack of validation for long-term efficacy;
n. Targeting veterans by sponsoring and disseminating patient education marketing
materials that contained deceptive statements concerning the use of opioids to treat
chronic non-cancer pain;
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 o. Targeting the elderly by assisting in the distribution of guidelines that contained
deceptive statements concerning the use of opioids to treat chronic non-cancer pain
and misrepresented the risks of opioid addiction in this population;
p. Exclusively disseminating misleading statements in education materials to hospital
doctors and staff while purportedly educating them on new pain standards;
q. Making deceptive statements concerning the use of opioids to treat chronic noncancer
pain to prescribers through in-person detailing; and
r. Withholding from law enforcement the names of prescribers Purdue believed to be
facilitating the diversion of its opioid, while simultaneously marketing opioids to these
doctors by disseminating patient and prescriber education materials and
advertisements and CMEs they knew would reach these same prescribers.
143. Defendant Endo made and/or disseminated deceptive statements, and concealed
material facts in such a way to make their statements deceptive, including, but not limited to, the
following:
a. Creating, sponsoring, and assisting in the distribution of patient education materials
that contained deceptive statements;
b. Creating and disseminating advertisements that contained deceptive statements
concerning the ability of opioids to improve function long-term and concerning the
evidence supporting the efficacy of opioids long-term for the treatment of chronic noncancer pain;
c. Creating and disseminating paid advertisement supplements in academic journals
promoting chronic opioid therapy as safe and effective for long term use for high risk
patients;
d. Creating and disseminating advertisements that falsely and inaccurately conveyed the
impression that Endo’s opioids would provide a reduction in oral, intranasal, or
intravenous abuse;
e. Disseminating misleading statements concealing the true risk of addiction and
promoting the misleading concept of pseudoaddiction through Endo’s own unbranded
publications and on internet sites Endo sponsored or operated;
f. Endorsing, directly distributing, and assisting in the distribution of publications that
presented an unbalanced treatment of the long-term and dose-dependent risks of
opioids versus NSAIDs;
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 g. Providing significant financial support to pro-opioid KOLs, who made deceptive
statements concerning the use of opioids to treat chronic non-cancer pain;
h. Providing needed financial support to pro-opioid pain organizations – including over
$5 million to the organization responsible for many of the most egregious
misrepresentations – that made deceptive statements, including in patient education
materials, concerning the use of opioids to treat chronic non-cancer pain;
i. Targeting the elderly by assisting in the distribution of guidelines that contained
deceptive statements concerning the use of opioids to treat chronic non-cancer pain and
misrepresented the risks of opioid addiction in this population;
j. Endorsing and assisting in the distribution of CMEs containing deceptive statements
concerning the use of opioids to treat chronic non-cancer pain;
k. Developing and disseminating scientific studies that deceptively concluded opioids are
safe and effective for the long-term treatment of chronic non-cancer pain and that
opioids improve quality of life, while concealing contrary data;
l. Directly distributing and assisting in the dissemination of literature written by proopioid KOLs that contained deceptive statements concerning the use of opioids to treat
chronic non-cancer pain, including the concept of pseudoaddiction;
m. Creating, endorsing, and supporting the distribution of patient and prescriber education
materials that misrepresented the data regarding the safety and efficacy of opioids for
the long-term treatment of chronic non-cancer pain, including known rates of abuse
and addiction and the lack of validation for long-term efficacy; and
n. Making deceptive statements concerning the use of opioids to treat chronic non-cancer
pain to prescribers through in-person detailing.
144. Defendant Janssen made and/or disseminated deceptive statements, and concealed
material facts in such a way to make their statements deceptive, including, but not limited to, the
following:
a.

Creating, sponsoring, and assisting in the distribution of patient education materials
that contained deceptive statements;

b.

Directly disseminating deceptive statements through internet sites over which
Janssen exercised final editorial control and approval stating that opioids are safe
and effective for the long-term treatment of chronic non-cancer pain and that
opioids improve quality of life, while concealing contrary data;
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 c.

Disseminating deceptive statements concealing the true risk of addiction and
promoting the deceptive concept of pseudoaddiction through internet sites over
which Janssen exercised final editorial control and approval;

d.

Promoting opioids for the treatment of conditions for which Janssen knew, due to
the scientific studies it conducted, that opioids were not efficacious and concealing
this information;

e.

Sponsoring, directly distributing, and assisting in the dissemination of patient
education publications over which Janssen exercised final editorial control and
approval, which presented an unbalanced treatment of the long-term and dose
dependent risks of opioids versus NSAIDs;

f.

Providing significant financial support to pro-opioid KOLs, who made deceptive
statements concerning the use of opioids to treat chronic non-cancer pain;

g.

Providing necessary financial support to pro-opioid pain organizations that made
deceptive statements, including in patient education materials, concerning the use
of opioids to treat chronic non-cancer pain;

h.

Targeting the elderly by assisting in the distribution of guidelines that contained
deceptive statements concerning the use of opioids to treat chronic non-cancer pain
and misrepresented the risks of opioid addiction in this population;

i.

Targeting the elderly by sponsoring, directly distributing, and assisting in the
dissemination of patient education publications targeting this population that
contained deceptive statements about the risks of addiction and the adverse effects
of opioids, and made false statements that opioids are safe and effective for the
long-term treatment of chronic non-cancer pain and improve quality of life, while
concealing contrary data;

j.

Endorsing and assisting in the distribution of CMEs containing deceptive
statements concerning the use of opioids to treat chronic non-cancer pain;

k.

Directly distributing and assisting in the dissemination of literature written by proopioid KOLs that contained deceptive statements concerning the use of opioids to
treat chronic non-cancer pain, including the concept of pseudoaddiction;

l.

Creating, endorsing, and supporting the distribution of patient and prescriber
education materials that misrepresented the data regarding the safety and efficacy
of opioids for the long-term treatment of chronic non-cancer pain, including known
rates of abuse and addiction and the lack of validation for long-term efficacy;

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 m.

Targeting veterans by sponsoring and disseminating patient education marketing
materials that contained deceptive statements concerning the use of opioids to treat
chronic non-cancer pain; and

n.

Making deceptive statements concerning the use of opioids to treat chronic noncancer pain to prescribers through in-person detailing.

145. Defendant Cephalon made and/or disseminated untrue, false and deceptive
statements, and concealed material facts in such a way to make their statements deceptive,
including, but not limited to, the following:
a. Creating, sponsoring, and assisting in the distribution of patient education materials
that contained deceptive statements;
b. Sponsoring and assisting in the distribution of publications that promoted the deceptive
concept of pseudoaddiction, even for high-risk patients;
c. Providing significant financial support to pro-opioid KOL doctors who made deceptive
statements concerning the use of opioids to treat chronic non-cancer pain and
breakthrough chronic non-cancer pain;
d. Developing and disseminating scientific studies that deceptively concluded opioids are
safe and effective for the long-term treatment of chronic non-cancer pain in conjunction
with Cephalon’s potent rapid-onset opioids;
e. Providing needed financial support to pro-opioid pain organizations that made
deceptive statements, including in patient education materials, concerning the use of
opioids to treat chronic non-cancer pain;
f. Endorsing and assisting in the distribution of CMEs containing deceptive statements
concerning the use of opioids to treat chronic non-cancer pain;
g. Endorsing and assisting in the distribution of CMEs containing deceptive statements
concerning the use of Cephalon’s rapid-onset opioids;
h. Directing its marketing of Cephalon’s rapid-onset opioids to a wide range of doctors,
including general practitioners, neurologists, sports medicine specialists, and workers’
compensation programs, serving chronic pain patients;
i. Making deceptive statements concerning the use of Cephalon’s opioids to treat chronic
non-cancer pain to prescribers through in-person detailing and speakers’ bureau events,
when such uses are unapproved and unsafe; and

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 j. Making deceptive statements concerning the use of opioids to treat chronic non-cancer
pain to prescribers through in-person detailing and speakers’ bureau events.
146. Defendant Actavis made and/or disseminated deceptive statements, and concealed
material facts in such a way to make their statements deceptive, including, but not limited to, the
following:
a. Making deceptive statements concerning the use of opioids to treat chronic non-cancer
pain to prescribers through in-person detailing;
b. Creating and disseminating advertisements that contained deceptive statements that
opioids are safe and effective for the long-term treatment of chronic non-cancer pain
and that opioids improve quality of life;
c. Creating and disseminating advertisements that concealed the risk of addiction in the
long-term treatment of chronic, non-cancer pain; and
d. Developing and disseminating scientific studies that deceptively concluded opioids are
safe and effective for the long-term treatment of chronic non-cancer pain and that
opioids improve quality of life while concealing contrary data.
5. The Manufacturer Defendants Fraudulently Concealed Their Misconduct.
147. The Manufacturer Defendants, both individually and collectively, made, promoted,
and profited from their misrepresentations about the risks and benefits of opioids for chronic pain
even though they knew that their misrepresentations were false and deceptive. The history of
opioids, as well as research and clinical experience establish that opioids are highly addictive and
are responsible for a long list of very serious adverse outcomes. The FDA warned Defendants of
this, and Defendants had access to scientific studies, detailed prescription data, and reports of
adverse events, including reports of addiction, hospitalization, and death – all of which clearly
described the harm from long-term opioid use and that patients were suffering from addiction,
overdose, and death in alarming numbers. More recently, the FDA and CDC have issued
pronouncements, based on medical evidence, that conclusively expose the falsity of Defendants’

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 misrepresentations, and Endo and Purdue have recently entered agreements in New York
prohibiting them from making some of the same misrepresentations described in this Complaint.
148. At all times relevant to this Complaint, the Manufacturer Defendants took steps to
avoid detection of and to fraudulently conceal their deceptive marketing and unlawful, unfair, and
fraudulent conduct. For example, the Manufacturer Defendants disguised their role in the
deceptive marketing of chronic opioid therapy by funding and working through third parties like
Front Groups and KOLs. The Manufacturer Defendants purposefully hid behind the assumed
credibility of these individuals and organizations and relied on them to vouch for the accuracy and
integrity of the Manufacturer Defendants’ false and deceptive statements about the risks and
benefits of long-term opioid use for chronic pain. Defendants also never disclosed their role in
shaping, editing, and approving the content of information and materials disseminated by these
third parties. The Manufacturer Defendants exerted considerable influence on these promotional
and “educational” materials in emails, correspondence, and meetings with KOLs, Front Groups,
and public relations companies that were not, and have not yet become, public. For example,
PainKnowledge.org, which is run by the NIPC, did not disclose Endo’s involvement. Other
Manufacturer Defendants, such as Purdue and Janssen, ran similar websites that masked their own
role.
149. Finally, the Manufacturer Defendants manipulated their promotional materials and
the scientific literature to make it appear that these documents were accurate, truthful, and
supported by objective evidence when they were not. 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 “pseudoaddiction” and promoted it to an
unsuspecting medical community. The Manufacturer Defendants provided the medical community

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 with false and misleading information about ineffectual strategies to avoid or control opioid
addiction. The Manufacturer Defendants recommended to the medical community that dosages be
increased, without disclosing the risks. The 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 lack of support for the Manufacturer
Defendants’ deceptive messages was not apparent to medical professionals who relied upon them
in making treatment decisions, nor could it have been detected by the Plaintiff or Plaintiff’s
Community. Thus, the Manufacturer Defendants successfully concealed from the medical
community, patients, and health care payors facts sufficient to arouse suspicion of the claims that
the Plaintiff now asserts. Plaintiff did not know of the existence or scope of the Manufacturer
Defendants’ industry-wide fraud and could not have acquired such knowledge earlier through the
exercise of reasonable diligence.
C. THE DISTRIBUTOR DEFENDANTS’ UNLAWFUL DISTRIBUTION OF
OPIOIDS.
150. The Distributor Defendants owe a duty under both federal law (21 U.S.C. § 823, 21
CFR 1301.74) and Tennessee law (see e.g. Tenn. Comp. R. and Regs. 1140-09-.05(9)) to monitor,
detect, investigate, refuse to fill, and report suspicious orders of prescription opioids originating
from Plaintiff’s Community as well as those orders which the Distributor Defendants knew or
should have known were likely to be diverted into Plaintiff’s Community.
151. The foreseeable harm from a breach of these duties is the diversion of prescription
opioids for nonmedical purposes.
152. Each Distributor Defendant repeatedly and purposefully breached its duties under
state and federal law. Such breaches are a direct and proximate causes of the widespread diversion
of prescription opioids for nonmedical purposes into Plaintiff’s Community.
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 153. The unlawful diversion of prescription opioids is a direct and proximate cause and/or
substantial contributing factor to of the opioid epidemic, prescription opioid abuse, addiction,
morbidity and mortality in the State and in Plaintiff’s Community. This diversion and the epidemic
are direct causes of harms for which Plaintiff seeks to recover here.
154. The opioid epidemic in the State, including inter alia in Plaintiff’s Community,
remains an immediate hazard to public health and safety.
155. The opioid epidemic in Plaintiff’s Community is a temporary and continuous public
nuisance and remains unabated.
156. The Distributor Defendants’ intentionally continued their conduct, as alleged herein,
with knowledge that such conduct was creating the opioid nuisance and causing the harms and
damages alleged herein.
1. Wholesale Drug Distributors Have a Duty under State and Federal Law to
Guard Against, and Report, Unlawful Diversion and to Report and Prevent
Suspicious Orders.
157. As under federal law, opioids are a Schedule II controlled substance under
Tennessee law. See T.C.A. § 39-17-408. Opioids are categorized as “Schedule II” drugs because
they have a “high potential for abuse” and the potential to cause “severe psychic or physical
dependence” and/or “severe psychological . . . dependence.” 21 U.S.C. § 812(b)(2)(A, C).
158. As wholesale drug distributors, each Defendant was required under Tennessee law
to first be licensed by the Tennessee Board of Pharmacy. Tenn. Comp. R. and Regs. 1140-01-.08.
To receive and maintain this license, each of the Defendant Wholesale Distributors assumed a duty
to comply with “applicable federal, state, and local laws and regulations” and “all applicable state,
local and DEA regulations.” Tenn. Comp. R. and Regs. 1140-09-.05(9).
159. Each Distributor Defendant was further required to register with the DEA, pursuant
to the federal Controlled Substance Act. See 21 U.S.C. § 823(b), (e); 28 C.F.R. § 0.100. Each
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 Distributor Defendant is a “registrant” as a wholesale distributor in the chain of distribution of
Schedule II controlled substances with a duty to comply with all security requirements imposed
under that statutory scheme.
160. Each Distributor Defendant has an affirmative duty under federal and Tennessee law
to act as a gatekeeper guarding against the diversion of the highly addictive, dangerous opioid
drugs. Federal law requires that Distributors of Schedule II drugs, including opioids, must maintain
“effective control against diversion of particular controlled substances into other than legitimate
medical, scientific, and industrial channels.” 21 U.S.C. §§ 823(b)(1). Those requirements are
adopted and incorporated into Tennessee law. See Tenn. Comp. R. and Regs. 1140-09-.05(9).
161. Federal regulations, incorporated by Tennessee law impose a non-delegable duty
upon wholesale drug distributors to “design and operate a system to disclose to the registrant
suspicious orders of controlled substances. The registrant [distributor] 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.” 21 C.F.R. § 1301.74(b); Tenn. Comp. R. and
Regs. 1140-09-.05(9)..
162. “Suspicious orders” include orders of an unusual size, orders of unusual frequency
or orders deviating substantially from a normal pattern. See 21 CFR 1301.74(b). These criteria 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 as suspicious.
Likewise, a wholesale distributor need not wait for a normal pattern to develop over time before
determining whether a particular order is suspicious. The size of an order alone, regardless of
whether it deviates from a normal pattern, is enough to trigger the wholesale distributor’s

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 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
entirety of the wholesale distributor’s customer base and the patterns throughout the relevant
segment of the wholesale distributor industry.
163. In addition to reporting all suspicious orders, distributors must also stop shipment on
any order which is flagged as suspicious and only ship orders which were flagged as potentially
suspicious if, after conducting due diligence, the distributor can determine that the order is not
likely to be diverted into illegal channels. See Southwood Pharm., Inc., 72 Fed. Reg. 36,487,
36,501 (Drug Enf’t Admin. July 3, 2007); Masters Pharmaceutical, Inc. v. Drug Enforcement
Administration, No. 15-11355 (D.C. Cir. June 30, 2017). Regardless, all flagged orders must be
reported. Id.
164. These prescription drugs are regulated for the purpose of providing a “closed” system
intended to reduce the widespread diversion of these drugs out of legitimate channels into
the illicit market, while at the same time providing the legitimate drug industry with a unified
approach to narcotic and dangerous drug control.88
165. Different entities supervise the discrete links in the chain that separate a consumer
from a controlled substance. Statutes and regulations define each participant’s role and
responsibilities.89

88

See 1970 U.S.C.C.A.N. 4566, 4571-72.

89

Brief for Healthcare Distribution Management Association and National Association of Chain Drug Stores as Amici
Curiae in Support of Neither Party, Masters Pharm., Inc. v. U.S. Drug Enf’t Admin. (No. 15-1335) (D.C. Cir. Apr. 4,
2016), 2016 WL 1321983, at *22 [hereinafter Brief for HDMA and NACDS]. The Healthcare Distribution
Management Association (HDMA or HMA)—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 (last visited Aug. 21, 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

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 166. As the DEA advised the Distributor Defendants in a letter to them dated September
27, 2006, wholesale distributors are “one of the key components of the distribution chain. If the
closed system is to function properly … distributors 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 … the illegal distribution of controlled substances has a substantial and
detrimental effect on the health and general welfare of the American people.”90
167. The Distributor Defendants have admitted that they are responsible for reporting
suspicious orders.91
168. The DEA sent a letter to each of the Distributor Defendants on September 27, 2006,
warning that it would use its authority to revoke and suspend registrations when appropriate. The
letter expressly states that a distributor, in addition to reporting suspicious orders, 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.”92 The letter also instructs
that “distributors must be vigilant in deciding whether a prospective customer can be trusted to

others: Walgreen Company, CVS Health, Rite Aid Corporation and Walmart. See generally NACDS, Mission,
https://www.nacds.org/ about/mission/ (last visited Aug. 21, 2017).
90

See Letter from Joseph T. Rannazzisi, Deputy Assistant Adm’r, Office of Diversion Control, Drug. Enf’t Admin.,
U.S. Dep’t of Justice, to Cardinal Health (Sept. 27, 2006) [hereinafter Rannazzisi Letter] (“This letter is being sent to
every commercial entity in the United States registered with the Drug Enforcement Agency (DEA) to distribute
controlled substances. The purpose of this letter is to reiterate the responsibilities of controlled substance distributors
in view of the prescription drug abuse problem our nation currently faces.”), filed in Cardinal Health, Inc. v. Holder,
No. 1:12-cv-00185-RBW (D.D.C. Feb. 10, 2012), ECF No. 14-51.
91

See Brief for HDMA and NACDS, 2016 WL 1321983, at *4 (“[R]egulations . . . 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).”).
92

Rannazzisi Letter, at 2.

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 deliver controlled substances only for lawful purposes.”93 The DEA warns that “even just one
distributor that uses its DEA registration to facilitate diversion can cause enormous harm.”94
169. The DEA sent a second letter to each of the Distributor Defendants on December 27,
2007.95 This letter reminds the Defendants of their statutory and regulatory duties to “maintain
effective controls against diversion” and “design and operate a system to disclose to the registrant
suspicious orders of controlled substances.”96 The letter further explains:
The regulation also requires that the registrant inform the local DEA Division
Office of suspicious orders when discovered by the registrant. Filing a monthly
report of completed transactions (e.g., “excessive purchase report” or “high unity
purchases”) does not meet the regulatory requirement to report suspicious orders.
Registrants are reminded that their responsibility does not end merely with the
filing of a suspicious order report. Registrants must conduct an independent
analysis of suspicious orders prior to completing a sale to determine whether the
controlled substances are likely to be diverted from legitimate channels. Reporting
an order as suspicious will not absolve the registrant of responsibility if the
registrant knew, or should have known, that the controlled substances were being
diverted.
The regulation specifically states that suspicious orders include orders of unusual
size, orders deviating substantially from a normal pattern, and orders of an unusual
frequency. These criteria 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 as 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 an 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
segment of the regulated industry.
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
93
94

Id. at 1.
Id. at 2.

95

See Letter from Joseph T. Rannazzisi, Deputy Assistant Adm’r, Office of Diversion Control, Drug. Enf’t Admin.,
U.S. Dep’t of Justice, to Cardinal Health (Dec. 27, 2007), filed in Cardinal Health, Inc. v. Holder, No. 1:12-cv-00185RBW (D.D.C. Feb. 10, 2012), ECF No. 14-8.
96

Id.

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 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
communication with DEA that the registrant is actually characterizing an order as
suspicious. Daily, weekly, or monthly reports submitted by registrant indicating
“excessive purchases” do not comply with the requirement to report suspicious
orders, even if the registrant calls such reports “suspicious order reports.”
Lastly, registrants that routinely report suspicious orders, yet fill these orders
without first determining that order is not being diverted into other than legitimate
medical, scientific, and industrial channels, may be failing to maintain effective
controls against diversion. Failure to maintain effective controls against diversion
is inconsistent with the public interest as that term is used in 21 USC 823 and 824,
and may result in the revocation of the registrant’s DEA Certificate of
Registration.97
Finally, the DEA letter references the Revocation of Registration issued in Southwood
Pharmaceuticals, Inc., 72 Fed. Reg. 36,487-01 (July 3, 2007), which discusses the obligation to
report suspicious orders and “some criteria to use when determining whether an order is
suspicious.”98
170. The Distributor Defendants admit that they “have not only statutory and regulatory
responsibilities to detect and prevent diversion of controlled prescription drugs, but undertake such
efforts as responsible members of society.”99
171. The Distributor Defendants knew they were required to monitor, detect, and halt
suspicious orders. Industry compliance guidelines established by the Healthcare Distribution

97

Id.

98

Id.

99

See Brief of HDMA, 2012 WL 1637016, at *2.

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 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.” The guidelines set forth recommended steps in the “due diligence”
process, and note in particular: If 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.100
172. Each of the Distributor Defendants sold prescription opioids, including hydrocodone
and/or oxycodone, to retailers in Plaintiff’s Community and/or to retailers from which Defendants
knew prescription opioids were likely to be diverted to Plaintiff’s Community.
173. Each Distributor Defendant owes a duty to monitor and detect suspicious orders of
prescription opioids.
174. Each Distributor Defendant owes a duty under federal and state law to investigate
and refuse suspicious orders of prescription opioids.
175. Each Distributor Defendant owes a duty under federal and state law to report
suspicious orders of prescription opioids.
176. Each Distributor Defendant owes a duty under federal and state law to prevent the
diversion of prescription opioids into illicit markets in the State and Plaintiff’s Community.

100

Healthcare Distribution Management Association (HDMA) Industry Compliance Guidelines: Reporting Suspicious
Orders and Preventing Diversion of Controlled Substances, filed in Cardinal Health, Inc. v. Holder, No. 12-5061
(D.C. Cir. Mar. 7, 2012), Doc. No. 1362415 (App’x B).

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 177. The foreseeable harm resulting from a breach of these duties is the diversion of
prescription opioids for nonmedical purposes and subsequent plague of opioid addiction.
178. The foreseeable harm resulting from the diversion of prescription opioids for
nonmedical purposes is abuse, addiction, morbidity and mortality in Plaintiff’s Community and
the damages caused thereby.
2. The Distributor Defendants Breached their Duties.
179. 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 collapses.101
180. The sheer volume of prescription opioids distributed to pharmacies in the Plaintiff’s
Community, and/or to pharmacies from which the Distributor Defendants knew the opioids were
likely to be diverted into Plaintiff’s Community, 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. 102
181. The Distributor Defendants failed to report “suspicious orders” originating from
Plaintiff’s Community, or which the Distributor Defendants knew were likely to be diverted to
Plaintiff’s Community, to the federal and state authorities, including the DEA and/or the state
Board of Pharmacy.

101

See Rannazzisi Decl. ¶ 10, filed in Cardinal Health, Inc. v. Holder, No. 1:12-cv-00185-RBW (D.D.C. Feb. 10,
2012), ECF No. 14-2.
102

Masters Pharmaceuticals, Inc., 80 Fed. Reg. 55,418-01, 55,482 (Sept. 15, 2015) (citing Holiday CVS, L.L.C., d/b/a
CVS/Pharmacy Nos. 219 and 5195, 77 Fed. Reg. 62,316, 62,322 (2012)).

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 182. The Distributor Defendants unlawfully filled suspicious orders of unusual size,
orders deviating substantially from a normal pattern and/or orders of unusual frequency in
Plaintiff’s Community, and/or in areas from which the Distributor Defendants knew opioids were
likely to be diverted to Plaintiff’s Community.
183. The Distributor Defendants breached their duty to monitor, detect, investigate, refuse
and report suspicious orders of prescription opiates originating from Plaintiff’s Community, and/or
in areas from which the Distributor Defendants knew opioids were likely to be diverted to
Plaintiff’s Community.
184. The Distributor Defendants breached their duty to maintain effective controls against
diversion of prescription opiates into other than legitimate medical, scientific, and industrial
channels.
185. The Distributor Defendants breached their duty to “design and operate a system to
disclose to the registrant suspicious orders of controlled substances” and failed to inform the
authorities including the DEA of suspicious orders when discovered, in violation of their duties
under federal and state law.
186. 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.103
187. The federal and state laws at issue here are public safety laws.
188. The Distributor Defendants’ violations of public safety statutes constitute prima facie
evidence of negligence under State law.

103

See Cardinal Health, Inc. v. Holder, 846 F. Supp. 2d 203, 206 (D.D.C. 2012).

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 189. The Distributor Defendants supplied prescription opioids to obviously suspicious
physicians and pharmacies, enabled the illegal diversion of opioids, aided criminal activity, and
disseminated massive quantities of prescription opioids into the black market.
190. The unlawful conduct by the Distributor Defendants is purposeful and intentional.
The Distributor Defendants refuse to abide by the duties imposed by federal and state law which
are required to legally acquire and maintain a license to distribute prescription opiates.
191. 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 said
actions have a great probability of causing substantial harm.
192. 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 criminal
indifference to civil obligations affecting the rights of others and justifies an award of punitive
damages.
3. The Distributor Defendants Have Sought to Avoid and Have Misrepresented
their Compliance with their Legal Duties.
193. The Distributor Defendants have repeatedly misrepresented their compliance with
their legal duties under state and federal law and have wrongfully and repeatedly disavowed those
duties in an effort to mislead regulators and the public regarding the Distributor Defendants’
compliance with their legal duties.
194. Distributor Defendants have refused to recognize any duty beyond reporting
suspicious orders. In Masters Pharmaceuticals, the HDMA, a trade association run the Distributor
Defendants, and the NACDS submitted amicus briefs regarding the legal duty of wholesale

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 distributors. Inaccurately denying the legal duties that the wholesale drug industry has been
tragically recalcitrant in performing, they argued as follows:
a. 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.”104
b. 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. Such a change in
agency position must be accompanied by an acknowledgment 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
there are good reasons for the new policy. This is especially
important here, because imposing intrusive obligation on
distributors threatens to disrupt patient access to needed prescription
medications.”105
c. The Associations alleged (inaccurately) that nothing “requires
distributors to investigate the legitimacy of orders, or to halt
shipment of any orders deemed to be suspicious.”106
d. The Association 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.”107
e. The Associations alleged (inaccurately) that “DEA’s regulations []
sensibly impose[] a duty on distributors simply to report suspicious
orders, but left it to DEA and its agents to investigate and halt
suspicious orders.”108
f. 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
104

Brief for HDMA and NACDS, 2016 WL 1321983, at *4–5.

105

Id. at *8 (citations and quotation marks omitted).

106

Id. at *14.

107

Id. at *22.

108

Id. at *24–25.

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 force distributors to take a shot-in-the-dark approach to complying
with DEA’s demands.”109
195. The positions taken by the trade groups is emblematic of the position taken by the
Distributor Defendants in a futile attempt to deny their legal obligations to prevent diversion of
the dangerous drugs.110
196. The Court of Appeals for the District of Columbia recently issued its opinion
affirming that a wholesale drug distributor does, in fact, have duties beyond reporting. Masters
Pharm., Inc. v. Drug Enf’t Admin., 861 F.3d 206 (D.C. Cir. 2017). The D.C. Circuit Court upheld
the revocation of Master Pharmaceutical’s license and determined that DEA regulations require
that in addition to reporting suspicious orders, distributors must “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.” Id. at 212. Master Pharmaceutical was in violation
of legal requirements because it failed to conduct necessary investigations and filled suspicious
orders. Id. at 218–19, 226. A distributor’s investigation must dispel all the red flags giving rise to
suspicious circumstance prior to shipping a suspicious order. Id. at 226. The Circuit Court also
rejected the argument made by the HDMA and NACDS (quoted above), that, allegedly, the DEA
had created or imposed new duties. Id. at 220.
197. Wholesale Distributor McKesson has recently been forced to specifically admit to
breach of its duties to monitor, report, and prevent suspicious orders. Pursuant to an Administrative
Memorandum of Agreement (“2017 Agreement”) entered into between McKesson and the DEA
in January 2017, McKesson admitted that, at various times during the period from January 1, 2009
109

Id. at 26.

110

See Brief of HDMA, 2012 WL 1637016, at *3 (arguing the wholesale distributor industry “does not know the
rules of the road because” they claim (inaccurately) that the “DEA has not adequately explained them”).

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 through the effective date of the Agreement (January 17, 2017) it “did not identify or report to
[the] 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.”111 Further, the
2017 Agreement specifically finds that McKesson “distributed controlled substances to
pharmacies even though those McKesson 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 usual course of their professional
practice, as required by 21 C.F.R § 1306.04(a).”112 McKesson admitted that, during this time
period, it “failed to maintain effective controls against diversion of particular controlled substances
into other than legitimate medical, scientific and industrial channels by sales to certain of its
customers in violation of the CSA and the CSA’s implementing regulations, 21 C.F.R. Part 1300
et seq., at the McKesson Distribution Centers” including the McKesson Distribution Center
located in “Washington Courthouse, Ohio.”113 Due to these violations, McKesson agreed that its
authority to distribute controlled substances from the Washington Courthouse, Ohio facility
(among other facilities) would be partially suspended.114
198. The 2017 Memorandum of Agreement followed a 2008 Settlement Agreement in
which McKesson also admitted failure to report suspicious orders of controlled substances to the

111

See Administrative Memorandum of Agreement between the U.S. Dep’t of Justice, the Drug Enf’t Admin., and the
McKesson Corp. (Jan. 17, 2017), https://www.justice.gov/opa/press-release/file/928476/download.
112

Id. at 4.

113

Id.

114

Id. at 6.

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 DEA.115 In the 2008 Settlement Agreement, McKesson “recognized that it had a duty to monitor
its sales of all controlled substances and report suspicious orders to DEA,” but had failed to do
so.116 The 2017 Memorandum of Agreement documents that McKesson continued to breach its
admitted duties by “fail[ing] to properly monitor its sales of controlled substances and/or report
suspicious orders to DEA, in accordance with McKesson’s obligations.”117 As a result of these
violations, McKesson was fined and required to pay to the United States $150,000,000.118
199. Even though McKesson had been sanctioned in 2008 for failure to comply with its
legal obligations regarding controlling diversion and reporting suspicious orders, and even though
McKesson had specifically agreed in 2008 that it would no longer violate those obligations,
McKesson continued to violate the laws in contrast to its written agreement not to do so.
200. Because of the Distributor Defendants’ refusal to abide by their legal obligations, the
DEA has repeatedly taken administrative action to attempt to force compliance. For example, in
May 2014, the United States Department of Justice, Office of the Inspector General, Evaluation
and Inspections Divisions, reported that the DEA issued final decisions in 178 registrant actions
between 2008 and 2012.119 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

115

Id. at 4.

116

Id.

117

Id.; see also Settlement Agreement and Release between the U.S. and McKesson Corp., at 5 (Jan. 17, 2017)
[hereinafter 2017 Settlement Agreement and Release] (“McKesson acknowledges that, at various times during the
Covered Time Period [2009-2017], it 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.”), https://www.justice.gov/opa/press-release/file/928471/download.
118

See 2017 Settlement Agreement and Release, at 6.

119

Evaluation and Inspections Div., Office of the Inspector Gen., U.S. Dep’t of Justice, The Drug Enforcement
Administration’s Adjudication of Registrant Actions 6 (2014), https://oig.justice.gov/reports/2014/e1403.pdf.

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 actions involving orders to show cause and 41 actions involving immediate suspension orders.120
These actions include the following:
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;
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
120

Id.

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 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
million 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 MA, Santa Fe Springs CA, Washington Courthouse
OH and West Sacramento CA.
201. Rather than abide by their non-delegable duties under public safety laws, the
Distributor Defendants, individually and collectively through trade groups in the industry,
pressured the U.S. Department of Justice to “halt” prosecutions and lobbied Congress to strip the
DEA of its ability to immediately suspend distributor registrations. The result was a “sharp drop
in enforcement actions” and the passage of the “Ensuring Patient Access and Effective Drug
Enforcement Act” which, ironically, raised the burden for the DEA to revoke a distributor’s license
from “imminent harm” to “immediate harm” and provided the industry the right to “cure” any
violations of law before a suspension order can be issued.121
121

See Lenny Bernstein & Scott Higham, Investigation: The DEA Slowed Enforcement While the Opioid Epidemic
Grew Out of Control, Wash. Post, Oct. 22, 2016, https://www.washingtonpost.com/investigations/the-dea-slowedenforcement-while-the-opioid-epidemic-grew-out-of-control/2016/10/22/aea2bf8e-7f71-11e6-8d13-

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 202. In addition to taking actions to limit regulatory prosecutions and suspensions, the
Distributor Defendants undertook 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.
203. For example, a Cardinal Health executive claimed that it uses “advanced analytics”
to monitor its supply chain, and represented that it was being “as effective and efficient as possible
in constantly monitoring, identifying, and eliminating any outside criminal activity.”122 Given the
sales volumes and the company’s history of violations, this executive was either not telling the
truth, or, if Cardinal Health had such a system, it ignored the results.
204. Similarly, Defendant McKesson publicly stated that it has a “best-in-class controlled
substance monitoring program to help identify suspicious orders,” and claimed it is “deeply
passionate about curbing the opioid epidemic in our country.”123 Again, given McKesson’s
historical conduct, this statement is either false, or the company ignored outputs of the monitoring
program.

d7c704ef9fd9_story.html; Lenny Bernstein & Scott Higham, Investigation: U.S. Senator Calls for Investigation of
DEA
Enforcement
Slowdown
Amid
Opioid
Crisis,
Wash.
Post,
Mar.
6,
2017,
https://www.washingtonpost.com/investigations/us-senator-calls-for-investigation-of-dea-enforcementslowdown/2017/03/06/5846ee60-028b-11e7-b1e9-a05d3c21f7cf_story.html; Eric Eyre, DEA Agent: “We Had No
Leadership” in WV Amid Flood of Pain Pills, Charleston Gazette-Mail, Feb. 18, 2017,
http://www.wvgazettemail.com/news/20170218/dea-agent-we-had-no-leadership-in-wv-amid-flood-of-pain-pills-.
122

Lenny Bernstein et al., How Drugs Intended for Patients Ended Up in the Hands of Illegal Users: “No One Was
Doing Their Job,” Wash. Post, Oct. 22, 2016, https://www.washingtonpost.com/investigations/how-drugs-intendedfor-patients-ended-up-in-the-hands-of-illegal-users-no-one-was-doing-their-job/2016/10/22/10e79396-30a7-11e68ff7-7b6c1998b7a0_story.html.
123

Scott Higham et al., Drug Industry Hired Dozens of Officials from the DEA as the Agency Tried to Curb Opioid
Abuse, Wash. Post, Dec. 22, 2016, https://www.washingtonpost.com/investigations/key-officials-switch-sides-fromdea-to-pharmaceutical-industry/2016/12/22/55d2e938-c07b-11e6-b527-949c5893595e_story.html.

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 205. By misleading the public about the effectiveness of their controlled substance
monitoring programs, the Distributor Defendants successfully concealed the facts sufficient to
arouse suspicion of the claims that the Plaintiff now asserts. The Plaintiff did not know of the
existence or scope of Defendants’ industry-wide fraud and could not have acquired such
knowledge earlier through the exercise of reasonable diligence.
206. Meanwhile, the opioid epidemic rages unabated in the Nation, the State, and in
Plaintiff’s Community.
207. The epidemic still rages because the fines and suspensions imposed by the DEA do
not change the conduct of the industry. The distributors, including the Distributor Defendants, pay
fines as a cost of doing business in an 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.
208. The wrongful actions and omissions of the Distributor Defendants which have
caused the diversion of opioids and which have been a substantial contributing factor to and/or
proximate cause of the opioid crisis are alleged in greater detail in Plaintiff’s racketeering
allegations below.
209. The Distributor Defendants have abandoned their duties imposed under federal and
state law, taken advantage of a lack of DEA law enforcement, and abused the privilege of
distributing controlled substances in the State and Plaintiff’s Community.
D. THE MANUFACTURER DEFENDANTS’ UNLAWFUL FAILURE TO
PREVENT DIVERSION AND MONITOR, REPORT, AND PREVENT
SUSPICIOUS ORDERS.
210. The same legal duties to prevent diversion, and to monitor, report, and prevent
suspicious orders of prescription opioids that were incumbent upon the Distributor Defendants
were also legally required of the Manufacturer Defendants under federal and Tennessee law.
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 211. The Manufacturing Defendants were required to comply with the same licensing and
permitting requirements as the Distributor Defendants. See Tenn. Comp. R. and Regs. 1140-01.08 (“No pharmacy practice site, manufacturer, outsourcing facility, oxygen supplier or
wholesaler/distributor may open within the state of Tennessee until a license has been obtained;
and such license will not be issued until an inspection by an authorized representative of the board
has been made.”).
212.

Like the Distributor Defendants, the Manufacturer Defendants were required to

register with the DEA to manufacture schedule II controlled substances, like prescription opioids.
See 21 U.S.C. § 823(a). 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 . . . .
21 USCA § 823(a)(1) (emphasis added).
213. 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.
21 C.F.R. § 1301.74. 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 chapter.”); 21
C.F.R. § 1300.01 (“Registrant means any person who is registered pursuant to either section 303

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 or section 1008 of the Act (21 U.S.C. 823 or 958).” Like the Distributor Defendants, the
Manufacture Defendants breached these duties.
214. 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 engaged in the practice of paying “chargebacks” to opioid distributors.
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 and filled. The Manufacturer Defendants built receipt of this information into the payment
structure for the opioids provided to the opioid distributors.
215. Federal statutes and regulations – and Tennessee law incorporating those
requirements - are clear: just like opioid distributors, opioid manufacturers are required to “design
and operate a system to disclose . . . suspicious orders of controlled substances” and to maintain
“effective controls against diversion.” 21 C.F.R. § 1301.74; 21 USCA § 823(a)(1).
216. The Department of Justice has recently confirmed the suspicious order obligations
clearly imposed by federal law upon opioid manufacturers, fining Mallinckrodt $35 million for
failure to report suspicious orders of controlled substances, including opioids, and for violating
recordkeeping requirements.124

124

See Press Release, U.S. Dep’t of Justice, Mallinckrodt Agrees to Pay Record $35 Million Settlement for Failure to
Report Suspicious Orders of Pharmaceutical Drugs and for Recordkeeping Violations (July 11, 2017),
https://www.justice.gov/opa/pr/mallinckrodt-agrees-pay-record-35-million-settlement-failure-report-suspiciousorders

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 217. In the press release accompanying the settlement, the Department of Justice stated:
Mallinckrodt did not meet its obligations to detect and notify DEA of suspicious orders of
controlled substances such as oxycodone, the abuse of which is part of the current opioid epidemic.
These suspicious order monitoring requirements exist to prevent excessive sales of controlled
substances, like oxycodone . . . . Mallinckrodt’s actions and omissions formed a link in the chain
of supply that resulted in millions of oxycodone pills being sold on the street. . . . “Manufacturers
and distributors have a crucial responsibility to ensure that controlled substances do not get into
the wrong hands. . . .”125
218. Among the allegations resolved by the settlement, the government alleged
“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
. . . [and] 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.”126
219. The Memorandum of Agreement entered into by Mallinckrodt (“2017 Mallinckrodt
MOA”) avers “[a]s a registrant under the CSA, Mallinckrodt had a responsibility to maintain
effective controls against diversion, including a requirement that it review and monitor these sales
and report suspicious orders to DEA.”127
220. The 2017 Mallinckrodt MOA further details the DEA’s allegations regarding
Mallinckrodt’s failures to fulfill its legal duties as an opioid manufacturer:

125

Id.

126

Id.

127

Administrative Memorandum of Agreement between the United States Department of Justice, the Drug
Enforcement Agency, and Mallinckrodt, plc. and its subsidiary Mallinckrodt, LLC (July 10, 2017),
https://www.justice.gov/usao-edmi/press-release/file/986026/download. (“2017 Mallinckrodt MOA”).

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 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
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.128
221. Mallinckrodt agreed that its “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.” Mallinckrodt further
agreed that it “recognizes the importance of the prevention of diversion of the controlled
substances they manufacture” and would “design and operate a system that meets the requirements
of 21 CFR 1301.74(b) . . . [such that it would] utilize all available transaction information to

128

2017 Mallinckrodt MOA at p. 2-3.

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 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.”129
222. Mallinckrodt acknowledged that “[a]s 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 agreed that, from this data, it
would “report to the DEA when Mallinckrodt concludes that the chargeback data or other
information indicates that a downstream registrant poses a risk of diversion.”130
223. The same duties imposed by federal law on Mallinckrodt were imposed upon all
Manufacturer Defendants.
224. 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 opioid manufacturers and distributors, including, upon information and
belief, the other Manufacturer Defendants.
225. Through, inter alia, the charge back data, the Manufacturer Defendants could
monitor suspicious orders of opioids.
226. The Manufacturer Defendants failed to monitor, report, and halt suspicious orders of
opioids as required by federal law.
227. The Manufacturer Defendants’ failures to monitor, report, and halt suspicious orders
of opioids were intentional and unlawful.

129

Id. at 3-4.

130

Id. at p.5.

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 228. The Manufacturer Defendants have misrepresented their compliance with federal
law.
229. The Manufacturer Defendants enabled the supply of prescription opioids to
obviously suspicious physicians and pharmacies, enabled the illegal diversion of opioids, aided
criminal activity, and disseminated massive quantities of prescription opioids into the black
market.
230. The wrongful actions and omissions of the Manufacturer Defendants which have
caused the diversion of opioids and which have been a substantial contributing factor to and/or
proximate cause of the opioid crisis are alleged in greater detail in Plaintiff’s racketeering
allegations below.
231. The Manufacturer Defendants’ actions and omissions in failing to effective prevent
diversion and failing to monitor, report, and prevent suspicious orders have enabled the unlawful
diversion of opioids into Plaintiff’s Community.
E. DEFENDANTS’ UNLAWFUL CONDUCT AND BREACHES OF LEGAL
DUTIES CAUSED THE HARM ALLEGED HEREIN AND SUBSTANTIAL
DAMAGES.
232. 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 the Plaintiff’s
Community. The Distributor Defendants have continued to unlawfully ship these massive
quantities of opioids into communities like the Plaintiff’s Community, fueling the epidemic.

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 233. 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.”131
234. Opioid 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.132
235. The epidemic is “directly related to the increasingly widespread misuse of powerful
opioid pain medications.”133
236. The increased abuse of prescription painkillers along with growing sales has
contributed to a large number of overdoses and deaths.134
237. As shown above, the opioid epidemic has escalated in Plaintiff’s Community with
devastating effects. Substantial opiate-related substance abuse, hospitalization and death that
mirrors Defendants’ increased distribution of opiates.
238. Because of the well-established relationship between the use of prescription opiates
and the use of non-prescription opioids, like heroin, the massive distribution of opioids to
Plaintiffs’ Community and areas from which such opioids are being diverted into Plaintiff’s
Community, has caused the Defendant-caused opioid epidemic to include heroin addiction, abuse,
and death.

131

See Richard C. Dart et al, Trends in Opioid Analgesic Abuse and Mortality in the United States, 372 N. Eng. J.
Med. 241 (2015).
132

See Nora D. Volkow & A. Thomas McLellan, Opioid Abuse in Chronic Pain—Misconceptions and Mitigation
Strategies, 374 N. Eng. J. Med. 1253 (2016).
133

See See Robert M. Califf et al., A Proactive Response to Prescription Opioid Abuse, 374 N. Eng. J. Med. 1480
(2016).
134

See Press Release, Ctrs. for Disease Control and Prevention, U.S. Dep’t of Health and Human Servs., Prescription
Painkiller
Overdoses
at
Epidemic
Levels
(Nov.
1,
2011),
https://www.cdc.gov/media/releases/2011/p1101_flu_pain_killer_overdose.html.

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 239. Prescription opioid abuse, addiction, morbidity, and mortality are hazards to public
health and safety in the State and in Plaintiff’s Community.
240. Heroin abuse, addiction, morbidity, and mortality are hazards to public health and
safety in the State and in Plaintiff’s Community.
241. 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 the Plaintiff’s
Community.
242. 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 Plaintiff’s Community. This diversion and the epidemic
are direct causes of foreseeable harms incurred by the Plaintiff and Plaintiff’s Community.
243. Defendants intentional and/or unlawful conduct resulted in direct and foreseeable,
past and continuing, economic damages for which Plaintiff seeks relief, as alleged herein. Plaintiff
also seeks the means to abate the epidemic created by Defendants’ wrongful and/or unlawful
conduct.
244. Plaintiff seeks economic damages from the Defendants as reimbursement for the
costs association with past efforts to eliminate the hazards to public health and safety.
245. Plaintiff seeks economic damages from the Defendants to pay for the cost to
permanently eliminate the hazards to public health and safety and abate the temporary public
nuisance.

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 246. 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.”135
247. 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.136
248. These community-based problems require community-based solutions that have
been limited by “budgetary constraints at the state and Federal levels.”137
249. Having profited enormously through the aggressive sale, misleading promotion, and
irresponsible distribution of opiates, Defendants should be required to take responsibility for the
financial burdens their conduct has inflicted upon the Plaintiff and Plaintiff’s Community.
F. STATUTES OF LIMITATIONS ARE TOLLED AND DEFENDANTS ARE
ESTOPPED FROM ASSERTED STATUTES OF LIMITATIONS AS
DEFENSES.
1. Continuing Conduct.
250. Plaintiff contends it continues to suffer harm from the unlawful actions by the
Defendants.
251. 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 tort is not completed nor have all the damages been

135

See Rose A. Rudd et al., Increases in Drug and Opioid Overdose Deaths—United States, 2000–2014, 64 Morbidity
& Mortality Wkly. Rep. 1378 (2016), at 1145.
136

See Johns Hopkins Bloomberg School of Public Health, The Prescription Opioid Epidemic: An Evidence-Based
Approach (G. Caleb Alexander et al. eds., 2015), http://www.jhsph.edu/research/centers-and-institutes/center-fordrug-safety-and-effectiveness/research/prescription-opioids/JHSPH_OPIOID_EPIDEMIC_REPORT.pdf.
137

See Office of Nat’l Drug Control Policy, Exec. Office of the President, Epidemic: Responding to America’s
Prescription Drug Abuse Crisis (2011), https://www.ncjrs.gov/pdffiles1/ondcp/rx_abuse_plan.pdf.

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 incurred until the wrongdoing ceases. The wrongdoing and unlawful activity by Defendants has
not ceased. The public nuisance remains unabated.
2. Equitable Estoppel.
252. Defendants are equitably estopped from relying upon a statute of limitations defense
because they undertook efforts to purposefully conceal their unlawful conduct and fraudulently
assure the public, including the State, the Plaintiff, and Plaintiff’s Community, 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. Notwithstanding the allegations set forth above, the
Defendants affirmatively assured the public, including the State, the Plaintiff, and Plaintiff’s
Community, that they are working to curb the opioid epidemic.
253. For example, a Cardinal Health executive claimed that it uses “advanced analytics”
to monitor its supply chain, and assured the public it was being “as effective and efficient as
possible in constantly monitoring, identifying, and eliminating any outside criminal activity.”138
254. Similarly, McKesson publicly stated that it has a “best-in-class controlled substance
monitoring program to help identify suspicious orders,” and claimed it is “deeply passionate about
curbing the opioid epidemic in our country.”139
255. 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 an amicus brief in Masters Pharmaceuticals, which made the following statements:140

138

Bernstein et al., supra.

139

Scott Higham et al., Drug Industry Hired Dozens of Officials from the DEA as the Agency Tried to Curb Opioid
Abuse, Wash. Post, Dec. 22, 2016, https://www.washingtonpost.com/investigations/key-officials-switch-sides-fromdea-to-pharmaceutical-industry/2016/12/22/55d2e938-c07b-11e6-b527-949c5893595e_story.html.
140

Brief for HDMA and NACDS, 2016 WL 1321983, at *3-4, *25.

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 a. “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.”
b. “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).”
c. “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.”
d. “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.”
e. “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.”
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 affirmed that their conduct was in compliance with those obligations.
256. The Distributor Defendants have also concealed and prevented discovery of
information, including data from the ARCOS database, that will confirm their identities and the
extent of their wrongful and illegal activities.
257. 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 “pseudoaddiction” and promoted it to an unsuspecting medical community.

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 Manufacturer Defendants provided the medical community with false and misleading information
about ineffectual 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, the State, and Plaintiff’s Community 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 Plaintiff’s Community.
258. Defendants intended that their actions and omissions would be relied upon, including
by Plaintiff and Plaintiff’s Community. Plaintiff and Plaintiff’s Community did not know, and did
not have the means to know, the truth due to Defendants’ actions and omissions.
259. The Plaintiff and Plaintiff’s Community reasonably relied on Defendants’
affirmative statements regarding their purported compliance with their obligations under the law
and consent orders.
3. Fraudulent Concealment.
260. The Plaintiff’s claims are further subject to equitable tolling, stemming from
Defendants’ knowingly and fraudulently concealing the facts alleged herein. As alleged herein,
Defendants knew of the wrongful acts set forth above, and had material information pertinent to
their discovery, and concealed them from the Plaintiff and Plaintiff’s community. The Plaintiff
did not know, or could not have known through the exercise of reasonable diligence, of its cause
of action, as a result of Defendants’ conduct.
261. The purposes of the statutes of limitations period are satisfied because Defendants
cannot claim prejudice due to a late filing where the Plaintiff filed suit promptly upon discovering
the facts essential to its claims, described herein, which Defendants knowingly concealed.
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 262. In light of their statements to the media, in legal filings, and settlements, it is clear
that Defendants had actual or constructive knowledge that their conduct was deceptive, in that they
consciously concealed the schemes set forth herein
263. 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, the Plaintiff was unable to obtain vital information bearing on its claims
absent any fault or lack of diligence on its part.
V. LEGAL CAUSES OF ACTION
COUNT I
PUBLIC NUISANCE
(Against all Defendants)
264. Plaintiff incorporates by reference all other paragraphs of this Complaint as if fully
set forth here, and further alleges as follows.
265. Defendants’ unlawful actions have created a public nuisance Under Tennessee law,
and Plaintiff brings an action under both common law and statutory authority for abatement of that
nuisance. See T.C.A. § 5-1-118; T.C.A. § 6-2-201(22); T.C.A. § 29-3-101(2) (“’Nuisance’ means
that which is declared to be a nuisance by other statutes, and, in addition, means: (A) Any place in
or upon which … unlawful sale of any regulated legend drug, narcotic, other controlled substance
or controlled substance analogue[.]”).
266. Each Defendant is liable for public nuisance because its conduct at issue has caused
an unreasonable and substantial interference with a right common to the general public, endangers
life and health, gives offense to the senses, violates the laws of decency, and obstructs the
reasonable and conformable use of property, all of which is the proximate cause of, and/or
substantial factor leading to, Plaintiff’s injuries.
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 267. By causing dangerously addictive drugs to flood the community, and to be diverted
for illicit purposes, in contravention of federal and State law, each Defendant has injuriously
affected rights common to the general public, specifically including the rights of the people of the
Plaintiff’s Community to public health, public safety, public peace, public comfort, and public
convenience. The public nuisance caused by Defendants’ diversion of dangerous drugs has caused
substantial annoyance, inconvenience, and injury to the public.
268. By selling dangerously addictive opioid drugs diverted from a legitimate medical,
scientific, or industrial purpose, Defendants have committed a course of conduct that injuriously
affects the safety, health, and morals of the people of the Plaintiff’s Community.
269. By failing to maintain a closed system that guards against diversion of dangerously
addictive drugs for illicit purposes, Defendants injuriously affected public rights, including the
right to public health, public safety, public peace, and public comfort of the people of the Plaintiff’s
Community.
270. Plaintiff alleges that Defendants’ wrongful and illegal actions have created a public
nuisance. Each Defendant is liable for public nuisance because its conduct at issue has caused an
unreasonable interference with a right common to the general public.
271. The Defendants have intentionally and/or unlawfully created a nuisance.
272. The residents of Plaintiff’s Community have a common right to be free from conduct
that creates an unreasonable jeopardy to the public health, welfare and safety, and to be free from
conduct that creates a disturbance and reasonable apprehension of danger to person and property.
273. Defendants intentionally, unlawfully, and recklessly manufacture, market, distribute,
and sell prescription opioids that Defendants know, or reasonably should know, will be diverted,
causing widespread distribution of prescription opioids in and/or to Plaintiff’s Community,

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 resulting in addiction and abuse, an elevated level of crime, death and injuries to the residents of
Plaintiff’s Community, a higher level of fear, discomfort and inconvenience to the residents of
Plaintiff’s Community, and direct costs to Plaintiff’s Community.
274. Defendants have unlawfully and/or intentionally caused and permitted dangerous
drugs under their control to be diverted such as to injure the Plaintiff’s Community and its
residents.
275. Defendants have unlawfully and/or intentionally distributed opioids or caused
opioids to be distributed without maintaining effective controls against diversion. Such conduct
was illegal.

Defendants’ failures to maintain effective controls against diversion include

Defendants’ failure to effectively monitor for suspicious orders, report suspicious orders, and/or
stop shipment of suspicious orders.
276. Defendants have caused a significant and unreasonable interference with the public
health, safety, welfare, peace, comfort and convenience, and ability to be free from disturbance
and reasonable apprehension of danger to person or property.
277. Defendants’ conduct in illegally distributing and selling prescription opioids, or
causing such opioids to be distributed and sold, where Defendants know, or reasonably should
know, such opioids will be diverted and possessed and/or used illegally Plaintiff’s Community is
of a continuing nature.
278. Defendants’ actions have been of a continuing nature and have produced a significant
effect upon the public’s rights, including the public’s right to health and safety.
279. A violation of any rule or law controlling the distribution of a drug of abuse in
Plaintiff’s Community and the State is a public nuisance.

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 280. Defendants’ distribution of opioids while failing to maintain effective controls
against diversion was proscribed by statute and regulation.
281. Defendants’ ongoing conduct produces an ongoing nuisance, as the prescription
opioids that they allow and/or cause to be illegally distributed and possessed in Plaintiff’s
Community will be diverted, leading to abuse, addiction, crime, and public health costs.
282. Because of the continued use and addiction caused by these illegally distributed
opioids, the public will continue to fear for its health, safety and welfare, and will be subjected to
conduct that creates a disturbance and reasonable apprehension of danger to person and property.
283. Defendants know, or reasonably should know, that their conduct will have an
ongoing detrimental effect upon the public health, safety and welfare, and the public’s ability to
be free from disturbance and reasonable apprehension of danger to person and property.
284. Defendants know, or reasonably should know, that their conduct causes an
unreasonable invasion of the public right to health, safety and welfare and the public’s ability to
be free from disturbance and reasonable apprehension of danger to person and property.
285. Defendants are aware, and at a bare minimum certainly should be aware, of the
unreasonable interference that their conduct has caused in Plaintiff’s Community. Defendants are
in the business of manufacturing, marketing, selling, and distributing prescription drugs, including
opioids, which are specifically known to Defendants to be dangerous under federal law. See, e.g.,
21 U.S.C. § 812 (b)(2).
286. Defendants’ conduct in marketing, distributing, and selling prescription opioids
which the defendants know, or reasonably should know, will likely be diverted for non-legitimate,
non-medical use, creates a strong likelihood that these illegal distributions of opioids will cause
death and injuries to residents in Plaintiff’s Community and otherwise significantly and

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 unreasonably interfere with public health, safety and welfare, and with the public’s right to be free
from disturbance and reasonable apprehension of danger to person and property.
287. It is, or should be, reasonably foreseeable to defendants that their conduct will cause
deaths and injuries to residents in Plaintiff’s Community, and will otherwise significantly and
unreasonably interfere with public health, safety and welfare, and with the public’s right to be free
from disturbance and reasonable apprehension of danger to person and property.
288. The prevalence and availability of diverted prescription opioids in the hands of
irresponsible persons and persons with criminal purposes in Plaintiff’s Community not only causes
deaths and injuries, but also creates a palpable climate of fear among residents in Plaintiff’s
Community where opioid diversion, abuse, addiction are prevalent and where diverted opioids
tend to be used frequently.
289. Defendants’ conduct makes it easier for persons to divert prescription opioids,
constituting a dangerous threat to the public.
290. Defendants’ actions were, at the least, a substantial factor in opioids becoming
widely available and widely used for non-medical purposes. Because of Defendants’ special
positions within the closed system of opioid distribution, without Defendants’ actions, opioid use
would not have become so widespread, and the enormous public health hazard of prescription
opioid and heroin overuse, abuse, and addiction that now exists would have been averted.
291. The presence of diverted prescription opioids in Plaintiff’s Community, and the
consequence of prescription opioids having been diverted in Plaintiff’s Community, proximately
results in and/or substantially contributes to the creation of significant costs to the Plaintiff and to
Plaintiff’s Community in order to enforce the law, equip its police force and treat the victims of
opioid abuse and addiction.

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 292. Stemming the flow of illegally distributed prescription opioids, and abating the
nuisance caused by the illegal flow of opioids, will help to alleviate this problem, save lives,
prevent injuries and make Plaintiff’s Community a safer place to live.
293. Defendants’ conduct is a direct and proximate cause of and/or a substantial
contributing factor to opioid addiction and abuse in Plaintiff’s Community, costs borne by
Plaintiff’s Community and the Plaintiff, and a significant and unreasonable interference with
public health, safety and welfare, and with the public’s right to be free from disturbance and
reasonable apprehension of danger to person and property.
294. Defendants’ conduct constitutes a public nuisance and, if unabated, will continue to
threaten the health, safety and welfare of the residents of Plaintiff’s Community, creating an
atmosphere of fear and addiction that tears at the residents’ sense of well-being and security.
Plaintiff has a clearly ascertainable right to abate conduct that perpetuates this nuisance.
295. Defendants created an absolute nuisance. Defendants’ actions created and expanded
the abuse of opioids, which are dangerously addictive, and the ensuing associated plague of
prescription opioid and heroin addiction. Defendants knew the dangers to public health and safety
that diversion of opioids would create in Plaintiff’s Community, however, Defendants
intentionally and/or unlawfully failed to maintain effective controls against diversion through
proper monitoring, reporting and refusal to fill suspicious orders of opioids. Defendants
intentionally and/or unlawfully distributed opioids or caused opioids to be distributed without
reporting or refusing to fill suspicious orders or taking other measures to maintain effective
controls against diversion. Defendants intentionally and/or unlawfully continued to ship and failed
to halt suspicious orders of opioids, or caused such orders to be shipped. Defendants intentionally

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 and/or unlawfully marketed opioids in manners they knew to be false and misleading. Such actions
were inherently dangerous.
296. Defendants knew the prescription opioids have a high likelihood of being diverted.
It was foreseeable to Defendants that where Defendants distributed prescription opioids or caused
such opioids to be distributed without maintaining effective controls against diversion, including
monitoring, reporting, and refusing shipment of suspicious orders, that the opioids would be
diverted, and create an opioid abuse nuisance in Plaintiff’s Community.
297. Defendants’ actions also created a nuisance by acting recklessly, negligently and/or
carelessly, in breach of their duties to maintain effective controls against diversion, thereby
creating an unreasonable risk of harm.
298. Defendants acted with actual malice because Defendants acted with a conscious
disregard for the rights and safety of other persons, and said actions have a great probability of
causing substantial harm.
299. The damages available to the Plaintiff include, inter alia, recoupment of
governmental costs, flowing from an ongoing and persistent public nuisance which the government
seeks to abate. Defendants’ conduct is ongoing and persistent, and the Plaintiff seeks all damages
flowing from Defendants’ conduct. Plaintiff further seeks to abate the nuisance and harm created
by Defendants’ conduct.
300. As a direct result of Defendants’ conduct, the Plaintiff and Plaintiff’s Community
have suffered actual injury and damages including, but not limited to, significant expenses for
police, emergency, health, prosecution, corrections and other services. The Plaintiff here seeks
recovery for its own harm.

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 301. The Plaintiff and Plaintiff’s Community have sustained specific and special injuries
because its damages include, inter alia, health services, law enforcement expenditures, and costs
related to opioid addiction treatment and overdose prevention.
302. The Plaintiff further seeks to abate the nuisance created by the Defendants’
unreasonable, unlawful, intentional, ongoing, continuing, and persistent actions and omissions and
interference with a right common to the public.
303. Plaintiff seeks all legal and equitable relief as allowed by law, including inter alia
abatement, compensatory damages, and punitive damages from the Defendants for the creation of
a public nuisance, attorney fees and costs, and pre- and post-judgment interest.
304. Defendants’ intentional and unlawful actions and omissions and unreasonable
interference with a right common to the public are of a continuing nature.
305. Defendants are aware, and at a bare minimum certainly should be aware, of the
unreasonable interference that their conduct has caused in the Plaintiff’s community. Defendants
are in the business of manufacturing or distributing prescription drugs, including opioids, which
are specifically known to Defendants to be dangerous because inter alia these drugs are defined
under federal and state law as substances posing a high potential for abuse and severe addiction.
Defendants created an absolute nuisance. Defendants’ actions created and expanded the abuse of
opioids, drugs specifically codified as constituting severely harmful substances.
306. The public nuisance created by Defendants’ actions is substantial and unreasonable
– it has caused and continues to cause significant harm to the community, and the harm inflicted
outweighs any offsetting benefit. The staggering rates of opioid and heroin use resulting from the
Defendants’ abdication of their gate-keeping and diversion prevention duties, and the

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 Manufacturer Defendants’ fraudulent marketing activities, have caused harm to the entire
community that includes, but is not limited to the following:
a. The high rates of use leading to unnecessary opioid abuse, addiction, overdose, injuries,
and deaths.
b. Even children have fallen victim to the opioid epidemic. Easy access to prescription
opioids made opioids a recreational drug of choice among teenagers. Even infants have
been born addicted to opioids due to prenatal exposure, causing severe withdrawal
symptoms and lasting developmental impacts.
c. Even those residents of Plaintiff’s Community who have never taken opioids have
suffered from the public nuisance arising from Defendants’ abdication of their gatekeeper duties and fraudulent promotions. Many residents have endured both the
emotional and financial costs of caring for loved ones addicted to or injured by opioids,
and the loss of companionship, wages, or other support from family members who have
used, abused, become addicted to, overdosed on, or been killed by opioids.
d. The opioid epidemic has increased health care costs.
e. Employers have lost the value of productive and healthy employees.
f. Defendants’ conduct created an abundance of drugs available for criminal use and
fueled a new wave of addiction, abuse, and injury.
g. Defendants’ dereliction of duties and/or fraudulent misinformation campaign pushing
dangerous drugs resulted in a diverted supply of narcotics to sell, and the ensuing
demand of addicts to buy them. More prescription opioids sold by Defendants led to
more addiction, with many addicts turning from prescription opioids to heroin. People
addicted to opioids frequently require increasing levels of opioids, and many turned to
heroin as a foreseeable result.
h. The diversion of opioids into the secondary, criminal market and the increased number
of individuals who abuse or are addicted to opioids increased the demands on health
care services and law enforcement.
i. The significant and unreasonable interference with the public rights caused by
Defendants’ conduct taxed the human, medical, public health, law enforcement, and
financial resources of the Plaintiff’s Community.
j. Defendants’ interference with the comfortable enjoyment of life in the Plaintiff’s
Community is unreasonable because there is little social utility to opioid diversion and
abuse, and any potential value is outweighed by the gravity of the harm inflicted by
Defendants’ actions.
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 307. The Plaintiff and Plaintiff’s Community have sustained specific and special injuries
because its damages include inter alia health services and law enforcement expenditures, as
described in this Complaint.
308. Plaintiff seeks economic losses (direct, incidental, or consequential pecuniary losses)
resulting from Defendants’ fraudulent activity and fraudulent misrepresentations. Plaintiff does
not seek damages for physical personal injury or any physical damage to property caused by
Defendants’ actions.
309. Plaintiff seeks all legal and equitable relief as allowed by law, other than such
damages disavowed herein, including inter alia injunctive relief, restitution, disgorgement of
profits, compensatory and punitive damages, and all damages allowed by law to be paid by the
Defendants, attorney fees and costs, and pre- and post-judgment interest.
COUNT II
RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT
18 U.S.C. 1961, et seq.
(Against All Defendants)
310. Plaintiff incorporates by reference all other paragraphs of this Complaint as if fully
set forth herein, and further alleges as follows.
311. Plaintiff brings this Count on behalf of itself against the following Defendants, as
defined above: Purdue, Cephalon, Janssen, Endo, Mallinckrodt, Actavis, McKesson, Cardinal, and
AmerisourceBergen (collectively, for purposes of this Count, the “RICO Defendants”).
312. The RICO Defendants conducted and continue to conduct their business through
legitimate and illegitimate means in the form of an association-in-fact enterprise and/or a legal
entity enterprise. At all relevant times, the RICO 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.”

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 313. 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).
314. The term “enterprise” is defined as including “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. U.S., 556
U.S. 938, 944 (2009). The definition of “enterprise” in Section 1961(4) includes legitimate and
illegitimate enterprises within its scope. 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.
315. For over a decade, the RICO 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 RICO Defendants are not
permitted to engage in a limitless expansion of their market through the unlawful sales of regulated
painkillers. As “registrants,” the RICO 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 RICO Defendants’ ability to manufacture or distribute Schedule
II 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

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 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.
316. 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].”141
317. 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.142 As discussed in detail below,
through the RICO 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. 143 In doing so, the RICO Defendants
allowed hundreds of millions of pills to enter the illicit market which allowed them to generate
obscene profits.

141

1970 U.S.C.C.A.N. 4566 at 5490; see also Testimony of Joseph T. Rannazzisi before the Caucus on International
Narcotics
Control,
United
States
Senate,
May
5,
2015
(available
at
https://www.drugcaucus.senate.gov/sites/default/files/Rannazzisi%20Testimony_0.pdf).
142

21 U.S.C. § 823(a)(1), (b)(1); 21 C.F.R. § 1301.74(b)-(c).

143

21 C.F.R. § 1303.11(b); 21 C.F.R. § 1303.23.

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 318. Defendants’ illegal scheme was hatched by an association-in-fact enterprise between
the Manufacturer Defendants and the Distributor Defendants, and executed in perfect harmony by
each of them. In particular, each of the RICO Defendants were associated with, and conducted or
participated in, the affairs of the RICO enterprise (defined below and referred to collectively as
the “Opioid Diversion Enterprise”), whose purpose was to engage in the unlawful sales of opioids,
deceive the public and federal and state regulators into believing that the RICO Defendants were
faithfully fulfilling their statutory obligations. The RICO Defendants’ scheme allowed them to
make billions in unlawful sales of opioids and, in turn, increase and/or maintain high production
quotas with the purpose of ensuring unlawfully increasing revenues, profits, and market share. As
a direct result of the RICO Defendants’ fraudulent scheme, course of conduct, and pattern of
racketeering activity, they were able to extract billions of dollars of revenue from the addicted
American public, while entities like the Plaintiff experienced tens of millions of dollars of injury
caused by the reasonably foreseeable consequences of the prescription opioid addiction epidemic.
As explained in detail below, the RICO Defendants’ misconduct violated Section 1962(c) and
Plaintiff is entitled to treble damages for its injuries under 18 U.S.C. § 1964(c).
319. Alternatively, the RICO Defendants were members of a legal entity enterprise within
the meaning of 18 U.S.C. § 1961(4), through which the RICO Defendants conducted their pattern
of racketeering activity in this jurisdiction and throughout the United States. Specifically, the
Healthcare Distribution Alliance (the “HDA”)144 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

144

Health Distribution Alliance, History, Health Distribution Alliance, (last accessed on September 15, 2017),
https://www.healthcaredistribution.org/about/hda-history.

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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.
320. On information and belief, each of the RICO Defendants is a member, participant,
and/or sponsor 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.
321. Each of the RICO Defendants is a legal entity separate and distinct from the HDA.
And, the HDA serves the interests of distributors and manufacturers beyond the RICO Defendants.
Therefore, the HDA exists separately from the Opioid Diversion Enterprise, and each of the RICO
Defendants exists separately from the HDA. Therefore, the HDA may serve as a RICO enterprise.
322. The legal and association-in-fact enterprises alleged in the previous and subsequent
paragraphs were each used by the RICO Defendants to conduct the Opioid Diversion Enterprise
by engaging in a pattern of racketeering activity. Therefore, the legal and association-in-fact
enterprises alleged in the previous and subsequent paragraphs are pleaded in the alternative and
are collectively referred to as the “Opioid Diversion Enterprise.”
A. THE OPIOID DIVERSION ENTERPRISE
323. Recognizing that there is a need for greater scrutiny over controlled substances due
to their potential for abuse and danger to public health and safety, the United States Congress
enacted the Controlled Substances Act in 1970.145 The CSA and its implementing regulations
created a closed-system of distribution for all controlled substances and listed chemicals.146
Congress specifically designed the closed chain of distribution to prevent the diversion of legally

145

Joseph T. Rannazzisi Decl. ¶ 4, Cardinal Health, Inc. v. Eric Holder, Jr., Attorney General, D.D.C. Case No. 12cv-185 (Document 14-2 February 10, 2012).
146

See H.R. Rep. No. 91-1444, 1970 U.S.C.C.A.N. at 4566.

104
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 produced controlled substances into the illicit market.147 As reflected in comments from United
States Senators during deliberation on the CSA, the “[CSA] is designed to crack down hard on the
narcotics pusher and the illegal diverters of pep pills and goof balls.” 148 Congress was concerned
with the diversion of drugs out of legitimate channels of distribution when it enacted the CSA and
acted to halt the “widespread diversion of [controlled substances] out of legitimate channels into
the illegal market.”149 Moreover, the closed-system was specifically designed to ensure that there
are multiple ways of identifying and preventing diversion through active participation by
registrants within the drug delivery chain.150 All registrants -- manufacturers and distributors alike
-- must adhere to the specific security, recordkeeping, monitoring and reporting requirements that
are designed to identify or prevent diversion.151 When registrants at any level fail to fulfill their
obligations, the necessary checks and balances collapse.152 The result is the scourge of addiction
that has occurred.
324. 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, design and operate a system to disclose suspicious orders, and to inform the

147

Gonzalez v. Raich, 545 U.S. 1, 12-14 (2005); 21 U.S.C. § 801(20; 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).
148

See H.R. Rep. No. 91-1444, 1970 U.S.C.C.A.N. at 4566; 116 Cong. Rec. 977-78 (Comments of Sen. Dodd, Jan
23, 1970).
149

See Testimony of Joseph T. Rannazzisi before the Caucus on International Narcotics Control, United State Senate,
May 5, 2015 (available at https://www.drugcaucus.senate.gov/sites/default/files/Rannazzisi%20Testimony_0.pdf).
150

See Statement of Joseph T. Rannazzisi before the Caucus on International Narcotics Control United States Senate,
July 18, 2012 (available at https://www.justice.gov/sites/default/files/testimonies/witnesses/attachments/07/18/12/0718-12-dea-rannazzisi.pdf).
151

Id.

152

Joseph T. Rannazzisi Decl. ¶ 10, Cardinal Health, Inc. v. Eric Holder, Jr., Attorney General, D.D.C. Case No. 12cv-185 (Document 14-2 February 10, 2012).

105
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 DEA of any suspicious orders.153 The DEA also published suggested questions that a distributor
should ask prior to shipping controlled substances, in order to “know their customers.”154
325. 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.”155 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
326. 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. 156

153

Joseph T. Rannazzisi, In Reference to Registration # RC0183080 (September 27, 2006); Joseph T. Rannazzisi, In
Reference to Registration # RC0183080 (December 27, 2007).
154

Suggested Questions a Distributor should ask prior to shipping controlled substances, Drug Enforcement
Administration (available at https://www.deadiversion.usdoj.gov/mtgs/pharm_industry/14th_pharm/levinl_ques.pdf).
155

1970 U.S.C.C.A.N. 4566 at 5490; see also Testimony of Joseph T. Rannazzisi before the Caucus on International
Narcotics
Control,
United
States
Senate,
May
5,
2015
(available
at
https://www.drugcaucus.senate.gov/sites/default/files/Rannazzisi%20Testimony_0.pdf).
156

See Testimony of Joseph T. Rannazzisi before the Caucus on International Narcotics Control, United State Senate,
May 5, 2015 (available at https://www.drugcaucus.senate.gov/sites/default/files/Rannazzisi%20Testimony_0.pdf).

106
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 327. 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.157
328. At all relevant times, the RICO 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 RICO Defendants conducted their
pattern of racketeering activity in this jurisdiction and throughout the United States through this
enterprise.
329. The opioid epidemic has its origins in the mid-1990s when, between 1997 and 2007,
per capita purchase of methadone, hydrocodone, and oxycodone increased 13-fold, 4-fold, and 9fold, respectively. By 2010, enough prescription opioids were sold in the United States to medicate
every adult in the county with a dose of 5 milligrams of hydrocodone every 4 hours for 1 month.158
On information and belief, the Opioid Diversion Enterprise has been ongoing for at least the last
decade.159
330. The Opioid Diversion Enterprise was and is a shockingly successful endeavor. It
Opioid Diversion Enterprise has been conducting business uninterrupted since its genesis. But, it

157

Id. (citing 21 U.S.C. 842(b)).

158

Keyes KM, Cerdá M, Brady JE, Havens JR, Galea S. Understanding the rural-urban differences in nonmedical
prescription opioid use and abuse in the United States. Am J Public Health. 2014;104(2):e52-9.
159

Matthew Perrone, Pro-Painkiller echo chamber shaped policy amid drug epidemic, The Center for Public Integrity
(September 19, 2017, 12:01 a.m.), https://www.publicintegrity.org/2016/09/19/20201/pro-painkiller-echo-chambershaped-policy-amid-drug-epidemic.

107
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 was not until recently that United States and State regulators finally began to unravel the extent of
the enterprise and the toll that it exacted on the American public.
331. At all relevant times, the Opioid Diversion Enterprise: (a) had an existence separate
and distinct from each RICO Defendant; (b) was separate and distinct from the pattern of
racketeering in which the RICO Defendants engaged; (c) was an ongoing and continuing
organization consisting of legal entities, including each of the RICO Defendants; (d) characterized
by interpersonal relationships among the RICO 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 (2009). 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 RICO
Defendants would have a larger pool of prescription opioids from which to profit.
332. The Opioid Diversion Enterprise also engaged in efforts to lobby against the DEA’s
authority to hold the RICO 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 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 registrations160 The

160

See HDMA is now the Healthcare Distribution Alliance, Pharmaceutical Commerce, (June 13, 2016, updated July
6, 2016), http://pharmaceuticalcommerce.com/business-and-finance/hdma-now-healthcare-distribution-alliance/;
Lenny Bernstein & Scott Higham, Investigation: The DEA Slowed Enforcement While the Opioid Epidemic Grew Out
of Control, Wash. Post, Oct. 22, 2016, https://www.washingtonpost.com/investigations/the-dea-slowed-enforcementwhile-the-opioid-epidemic-grew-out-of-control/2016/10/22/aea2bf8e-7f71-11e6-8d13-d7c704ef9fd9_story.html;

108
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 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. Plaintiff is informed and believes that the Pain Care Forum and its members, and
the HAD, poured millions into lobbying efforts.
333. The Opioid Diversion Enterprise functioned by selling prescription opioids. While
there are some legitimate uses and/or needs for prescription opioids, the RICO 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
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.
334. 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.

Lenny Bernstein & Scott Higham, Investigation: U.S. Senator Calls for Investigation of DEA Enforcement Slowdown
Amid Opioid Crisis, Wash. Post, Mar. 6, 2017, https://www.washingtonpost.com/investigations/us-senator-calls-forinvestigation-of-dea-enforcement-slowdown/2017/03/06/5846ee60-028b-11e7-b1e9-a05d3c21f7cf_story.html; Eric
Eyre, DEA Agent: “We Had no Leadership” in WV Amid Flood of Pain Pills, Charleston Gazette-Mail, Feb. 18, 2017,
http://www.wvgazettemail.com/news/20170218/dea-agent-we-had-no-leadership-in-wv-amid-flood-of-pain-pills-.

109
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 335. Within the Opioid Diversion Enterprise, there were interpersonal relationships and
common communication by which the RICO 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.
336. Each of the RICO 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 RICO Defendants participated in the operation and
management of the Opioid Diversion Enterprise by directing its affairs, as described herein. While
the RICO 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 roles, bank
accounts, officers, directors, employees, individual personhood, reporting requirements, and
financial statements.
337. The RICO Defendants exerted substantial control over the Opioid Diversion
Enterprise by their membership in the Pain Care Forum, the HDA, and through their contractual
relationships.
338. 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.
339. 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

110
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 114 of 162 PageID #: 114

 to the ongoing wave of prescription opioid abuse.”161 Specifically, PCF members spent over $740
million lobbying in the nation’s capital and in all 50 statehouses on an array of issues, including
opioid-related measures.162
340. Not surprisingly, each of the RICO Defendants who stood to profit from lobbying in
favor of prescription opioid use is a member of and/or participant in the PCF. 163 In 2012,
membership and participating organizations included the HDA (of which all RICO Defendants are
members), Endo, Purdue, Johnson & Johnson (the parent company for Janssen Pharmaceuticals),
Actavis (i.e., Allergan), and Teva (the parent company of Cephalon).164 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. 165
Plaintiff is informed and believes that the Distributor Defendants participated directly in the PCF
as well.
341. The 2012 Meeting Schedule for the Pain Care Forum is particularly revealing on the
subject 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

161

Matthew Perrone, Pro-Painkiller echo chamber shaped policy amid drug epidemic, The Center for Public Integrity
(September 19, 2017, 12:01 a.m.), https://www.publicintegrity.org/2016/09/19/20201/pro-painkiller-echo-chambershaped-policy-amid-drug-epidemic (emphasis added).
162

Id.

163

2011),

164

Id. Plaintiff is informed and believes that Mallinckrodt became an active member of the PCF sometime after 2012.

PAIN
CARE
FORUM
2012
Meetings
Schedule,
(last
updated
December
https://assets.documentcloud.org/documents/3108982/PAIN-CARE-FORUM-Meetings-Schedule-amp.pdf
165

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. Executive Committee, Healthcare Distribution Alliance (accessed on September 14, 2017),
https://www.healthcaredistribution.org/about/executive-committee.

111
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 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.”
342. The 2012 Pain Care Forum 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.
343. Second, the HDA -- or Healthcare Distribution Alliance -- led to the formation of
interpersonal relationships and an organization between the RICO Defendants. Although the entire
HDA membership directory is private, the HDA website confirms that each of the Distributor
Defendants and the Manufacturer Defendants named in the Complaint, including Actavis (i.e.,
Allergan), Endo, Purdue, Mallinckrodt and Cephalon were members of the HDA.166 And, the HDA
and each of the Distributor Defendants, eagerly 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.
344. 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

166

Manufacturer Membership, Healthcare Distribution Alliance, (accessed on September 14, 2017),
https://www.healthcaredistribution.org/about/membership/manufacturer.

112
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 Board of Directors events,” “participate on HDA committees, task forces and working groups with
peers and trading partners,” and “make connections.”167 Clearly, the HDA and the Distributor
Defendants believed that membership in the HDA was an opportunity to create interpersonal and
ongoing organizational relationships between the Manufacturers and Defendants.
345. The application for manufacturer membership in the HDA further indicates the level
of connection that existed between the RICO Defendants.168 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 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.169
346. After becoming members, the Distributors and Manufacturers were eligible to
participate on councils, committees, task forces and working groups, including:
a. Industry Relations Council: “This council, composed of distributor and
manufacturer members, provides leadership on pharmaceutical distribution and
supply chain issues.”170
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-

167

Manufacturer Membership Benefits, Healthcare Distribution Alliance, (accessed on September 14, 2017),
https://www.healthcaredistribution.org/~/media/pdfs/membership/manufacturer-membership-benefits.ashx?la=en.
168

Manufacturer Membership Application, Healthcare Distribution Alliance, (accessed on September 14, 2017),
https://www.healthcaredistribution.org/~/media/pdfs/membership/manufacturer-membershipapplication.ashx?la=en.
169

Id.

170

Councils and Committees, Healthcare Distribution Alliance, (accessed on September 14, 2017),
https://www.healthcaredistribution.org/about/councils-and-committees

113
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 commerce.” Participation in this committee includes distributors and manufacturer
members.171
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.172
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.173
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.174
f. Bar Code Task Force: Participation includes Distributor, Manufacturer and Service
Provider Members.175
g. eCommerce Task Force: Participation includes Distributor, Manufacturer and
Service Provider Members.176
h. ASN Working Group: Participation includes Distributor, Manufacturer and Service
Provider Members.177
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
171

Id.

172

Id.

173

Id.

174

Id.

175

Id.

176

Id.

177

Id.

114
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 118 of 162 PageID #: 118

 knowledge of interest to contract and chargeback professionals.” Participation
includes Distributor and Manufacturer Members.178
347. 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.
348. 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
leaders and influential managers . . . to hold strategic business discussions on the most pressing
industry issues.”179 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.”180 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.181
349. Third, the RICO 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.

178

Id.

179

Business and Leadership Conference – Information for Manufacturers, Healthcare Distribution Alliance, (accessed
on
September
14,
2017),
https://www.healthcaredistribution.org/events/2015-business-and-leadershipconference/blc-for-manufacturers.
180

Id.

181

2015 Distribution Management Conference and Expo, Healthcare Distribution Alliance, (accessed on September
14, 2017), https://www.healthcaredistribution.org/events/2015-distribution-management-conference.

115
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 350. The Manufacturer Defendants engaged in an industry-wide practice of paying rebates
and/or chargebacks to the Distributor Defendants for sales of prescription opioids.182 As reported
in the Washington Post, identified by Senator McCaskill, and acknowledged by the HDA, there is
an industry-wide practice whereby the Manufacturers paid the Distributors rebates and/or
chargebacks on their prescription opioid sales.183 On information and belief, 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. 184 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.
351. The contractual relationships among the RICO Defendants also include vault security
programs. The RICO Defendants are required to maintain certain security protocols and storage
facilities for the manufacture and distribution of their opiates. Plaintiff is informed and believes
that manufacturers negotiated agreements whereby the Manufacturers installed security vaults for
Distributors in exchange for agreements to maintain minimum sales performance thresholds.

182

Lenny Bernstein & Scott Higham, The government’s struggle to hold opioid manufacturers accountable, The
Washington
Post,
(April
2,
2017),
https://www.washingtonpost.com/graphics/investigations/deamallinckrodt/?utm_term=.b24cc81cc356; see also, Letter from Sen. Claire McCaskill, (July 27, 2017),
https://www.mccaskill.senate.gov/imo/media/image/july-opioid-investigation-letter-manufacturers.png; Letter from
Sen. Claire McCaskill, (July 27, 2017), https://www.mccaskill.senate.gov/imo/media/image/july-opioidinvestigation-letter-manufacturers.png; Letters From Sen. Claire McCaskill, (March 28, 2017),
https://www.mccaskill.senate.gov/opioid-investigation; Purdue Managed Markets, Purdue Pharma, (accessed on
September 14, 2017), http://www.purduepharma.com/payers/managed-markets/.
183

Id.

184

Webinars,
Healthcare
Distribution
Alliance,
(accessed
https://www.healthcaredistribution.org/resources/webinar-leveraging-edi.

on

September

14,

2017),

116
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 120 of 162 PageID #: 120

 Plaintiff is informed and believes that these agreements were used by the RICO Defendants as a
tool to violate their reporting and diversion duties in order to reach the required sales requirements.
352. 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 RICO Defendants operated together as a united entity, working together on multiple
fronts, to engage in the unlawful sale of prescription opioids. The HDA and the Pain Care Forum
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 RICO Defendants was in
communication and cooperation.
353. According to articles published by the Center for Public Integrity and The Associated
Press, the Pain Care Forum -- whose members include the Manufacturers and the Distributors’
trade association has been lobbying on behalf of the Manufacturers and Distributors for “more
than a decade.”185 And, from 2006 to 2016 the Distributors and Manufacturers worked together
through the Pain Care Forum to spend over $740 million lobbying in the nation’s capital and in all
50 statehouses on issues including opioid-related measures.186 Similarly, the HDA has continued
its work on behalf of Distributors and Manufacturers, without interruption, since at least 2000, if
not longer.187

185

Matthew Perrone, Pro-Painkiller echo chamber shaped policy amid drug epidemic, The Center for Public Integrity
(September 19, 2017, 12:01 a.m.), https://www.publicintegrity.org/2016/09/19/20201/pro-painkiller-echo-chambershaped-policy-amid-drug-epidemic.
186

Id.

187

HDA History, Healthcare Distribution Alliance,
https://www.healthcaredistribution.org/about/hda-history.

(accessed

on

September

14,

2017),

117
Case 2:18-cv-00003 Document 1 Filed 01/04/18 Page 121 of 162 PageID #: 121

 354. As described above, the RICO Defendants began working together as early as 2006
through the Pain Care Forum and/or the HDA to promote the common purpose of their enterprise.
Plaintiff is informed and believes that the RICO Defendants worked together as an ongoing and
continuous organization throughout the existence of their enterprise.
B. CONDUCT OF THE OPIOID DIVERSION ENTERPRISE
355. During the time period alleged in this Complaint, the RICO Defendants exerted
control over, conducted and/or participated in the Opioid Diversion Enterprise by fraudulently
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:
356. 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.
357. 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.
358. 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.
359. 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 RICO Defendants
were all members of their Pain Care Forum either directly or indirectly through the HDA. The
lobbying efforts of the Pain Care Forum and its members, included efforts to pass legislation
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 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.
360. The RICO Defendants exercised control and influence over the distribution industry
by participating and maintaining membership in the HDA.
361. The RICO 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 to strip the DEA of its ability to immediately suspend registrations pending investigation
by passing the “Ensuring Patient Access and Effective Drug Enforcement Act.”188
362. The RICO Defendants engaged in an industry-wide practice of paying rebates and
chargebacks to incentivize unlawful opioid prescription sales. Plaintiff is informed and believes
that the Manufacturer Defendants used the chargeback program to acquire detailed high-level data
regarding sales of the opioids they manufactured. And, Plaintiff is informed and believes that 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.
363. The Manufacturer Defendants lobbied the DEA to increase Aggregate Production
Quotas, year after year by submitting net disposal information that the Manufacturer Defendants

188

See HDMA is now the Healthcare Distribution Alliance, Pharmaceutical Commerce, (June 13, 2016, updated July
6, 2016), http://pharmaceuticalcommerce.com/business-and-finance/hdma-now-healthcare-distribution-alliance/;
Lenny Bernstein & Scott Higham, Investigation: The DEA Slowed Enforcement While the Opioid Epidemic Grew Out
of Control, Wash. Post, Oct. 22, 2016, https://www.washingtonpost.com/investigations/the-dea-slowed-enforcementwhile-the-opioid-epidemic-grew-out-of-control/2016/10/22/aea2bf8e-7f71-11e6-8d13-d7c704ef9fd9_story.html;
Lenny Bernstein & Scott Higham, Investigation: U.S. Senator Calls for Investigation of DEA Enforcement Slowdown
Amid Opioid Crisis, Wash. Post, Mar. 6, 2017, https://www.washingtonpost.com/investigations/us-senator-calls-forinvestigation-of-dea-enforcement-slowdown/2017/03/06/5846ee60-028b-11e7-b1e9-a05d3c21f7cf_story.html; Eric
Eyre, DEA Agent: “We Had no Leadership” in WV Amid Flood of Pain Pills, Charleston Gazette-Mail, Feb. 18, 2017,
http://www.wvgazettemail.com/news/20170218/dea-agent-we-had-no-leadership-in-wv-amid-flood-of-pain-pills-.

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 knew included sales that were suspicious and involved the diversion of opioids that had not been
properly investigated or reported by the RICO Defendants.
364. 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 RICO Defendants identify suspicious orders or customers who were likely to
divert prescription opioids.189 On information and belief, the “know your customer” questionnaires
informed the RICO Defendants of the number of pills that the pharmacies sold, how many noncontrolled 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, among others, and these questionnaires
put the recipients on notice of suspicious orders.
365. The RICO Defendants refused to identify, investigate and report suspicious orders to
the DEA when they became aware of the same despite their actual knowledge of drug diversion
rings. The RICO 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 2012190 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.191
189

Suggested Questions a Distributor should ask prior to shipping controlled substances, Drug Enforcement
Administration (available at https://www.deadiversion.usdoj.gov/mtgs/pharm_industry/14th_pharm/levinl_ques.pdf);
Richard Widup, Jr., Kathleen H. Dooley, Esq. Pharmaceutical Production Diversion: Beyond the PDMA, Purdue
Pharma
and
McQuite
Woods
LLC,
(available
at
https://www.mcguirewoods.com/newsresources/publications/lifesciences/product_diversion_beyond_pdma.pdf).
190

Evaluation and Inspections Div., Office of the Inspector Gen., U.S. Dep’t of Justice, The Drug Enforcement
Administration’s Adjudication of Registrant Actions 6 (2014), https://oig.justice.gov/reports/2014/e1403.pdf.
191

Id.

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 366. 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 Government’s response to the
manufacture and distribution of prescription opioids by increasing production quotas through a
systematic refusal to maintain effective controls against diversion, and identify suspicious orders
and report them to the DEA.
367. The RICO Defendants worked together to control the flow of information and
influence state and federal governments and political candidates to pass legislation that was proopioid. The Manufacturer and Distributor Defendants did this through their participation in the
Pain Care Forum and Healthcare Distributors Alliance.
368. The RICO 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 RICO Defendants ensured that the DEA had no basis for
refusing to increase or decrease the production quotas for prescription opioids due to diversion of
suspicious orders. The RICO 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;

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 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.”192
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 their
distribution efforts to specific areas where the purchase of prescription opioids was
most frequent;
h. The RICO 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 RICO 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

192

Harriet Ryan, et al., More than 1 million OxyContin pills ended up in the hands of criminals and addicts. What the
drugmaker knew, Los Angeles Times, (July 10, 2016), http://www.latimes.com/projects/la-me-oxycontin-part2/

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 j. The RICO 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.
369. The scheme devised and implemented by the RICO 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.
C. PATTERN OF RACKETEERING ACTIVITY.
370. The RICO 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.
1. The RICO Defendants Engaged in Mail and Wire Fraud.
371. The RICO Defendants carried out, or attempted to carry out, a scheme to defraud
federal and state regulators, and the American public 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 use of mail and wire facilities, in violation
of 18 U.S.C. § 1341 (mail fraud) and § 1343 (wire fraud).
372. The RICO Defendants committed, conspired to commit, and/or 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
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 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 RICO Defendants’
regular use of the facilities, services, distribution channels, and employees of the Opioid Diversion
Enterprise. The RICO Defendants participated in the scheme to defraud by using mail, telephone
and the Internet to transmit mailings and wires in interstate or foreign commerce.
373. The RICO Defendants used, directed the use of, and/or 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.
374. In devising and executing the illegal scheme, the RICO Defendants devised and
knowingly carried out a material scheme and/or 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 RICO Defendants committed these racketeering acts, which
number in the thousands, intentionally and knowingly with the specific intent to advance the illegal
scheme.
375. The RICO Defendants’ predicate acts of racketeering (18 U.S.C. § 1961(1)) include,
but are not limited to:
a. Mail Fraud: The RICO Defendants violated 18 U.S.C. § 1341 by sending or
receiving, or by causing to be sent and/or 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.

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 b. Wire Fraud: The RICO 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.
376. The RICO 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 RICO 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/or facilitated Defendants’
DEA registrations;
e. Documents and communications that supported and/or 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;
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;

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 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.
377. On information and belief, the RICO Defendants (and/or their agents), 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:
378. 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.
379. The Distributor Defendants shipped Purdue’s prescription opioids throughout this
jurisdiction.
380. 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.
381. The Distributor Defendants shipped Teva’s prescription opioids throughout this
jurisdiction.
382. Janssen manufactures prescription opioids known as Duragesic. Janssen
manufactured and shipped its prescription opioids to the Distributor Defendants in this jurisdiction.
383. The Distributor Defendants shipped Janssen’s prescription opioids throughout this
jurisdiction.

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 384. 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 the State.
385. The Distributor Defendants shipped Janssen’s prescription opioids throughout this
jurisdiction.
386. 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.
387. The Distributor Defendants shipped Actavis’ prescription opioids throughout this
jurisdiction.
388. Mallinckrodt manufactures multiple forms of prescription opioids, including but not
limited to: Exalgo and Roxicodone.
389. The Distributor Defendants shipped Mallinckrodt’s prescription opioids throughout
this jurisdiction.
390. The RICO Defendants also used the internet and other electronic facilities to carry
out their scheme and conceal the ongoing fraudulent activities. Specifically, the RICO 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.
391. At the same time, the RICO Defendants misrepresented the superior safety features
of their order monitoring programs, ability to detect suspicious orders, commitment to preventing

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 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.
392. Plaintiff is also informed and believes that the RICO Defendants utilized the internet
and other electronic resources to exchange communications, to exchange information regarding
prescription opioid sales, and to transmit payments and rebates/chargebacks.
393. The RICO 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.
394. 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 RICO 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.
395. 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, Plaintiff has 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.
396. The RICO 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,

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 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 RICO
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 RICO Defendants.
397. The RICO 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.
398. The RICO Defendants hid from the general public, and suppressed and/or ignored
warnings from third parties, whistleblowers and governmental entities, about the reality of the
suspicious orders that the RICO Defendants were filling on a daily basis -- leading to the diversion
of a tens of millions of doses of prescriptions opioids into the illicit market.
399. The RICO 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.
400. 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.
401. As described herein, the RICO 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.

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 402. The predicate acts all had the purpose of generating significant revenue and profits
for the RICO Defendants while Plaintiff was left with substantial injury to its business through the
damage that the prescription opioid epidemic caused. The predicate acts were committed or caused
to be committed by the RICO Defendants through their participation in the Opioid Diversion
Enterprise and in furtherance of its fraudulent scheme.
403. The pattern of racketeering activity alleged herein and the Opioid Diversion
Enterprise are separate and distinct from each other. Likewise, Defendants are distinct from the
enterprise.
404. The pattern of racketeering activity alleged herein is continuing as of the date of this
Complaint and, upon information and belief, will continue into the future unless enjoined by this
Court.
405. Many of the precise dates of the RICO Defendants’ criminal actions at issue here
have been hidden and cannot be alleged without access to Defendants’ books and records. Indeed,
an essential part of the successful operation of the Opioids Addiction and Opioid Diversion
Enterprise alleged herein depended upon secrecy.
406. 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 consumers in this jurisdiction and the Plaintiff.
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 consumers in this jurisdiction, its citizens or the Plaintiff. In designing and implementing
the scheme, at all times Defendants were cognizant of the fact that those in the manufacturing and
distribution chain rely on the integrity of the pharmaceutical companies and ostensibly neutral

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 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 Plaintiff 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.
407. 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.
408. 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 Plaintiff by allowing the flow
of prescriptions opioids from appropriate medical channels into the illicit drug market.
409. The last racketeering incident occurred within five years of the commission of a prior
incident of racketeering.
2. The RICO Defendants Manufactured, Sold and/or Dealt in
Controlled Substances and Their Crimes Are Punishable as
Felonies.
410. The RICO 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. §
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.
411. The RICO 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

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 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).
412. Each of the RICO Defendants qualify as registrants 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).
413. 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.
414. The RICO Defendants knowingly and intentionally furnished false or fraudulent
information in their reports to the DEA about suspicious orders, and/or omitted material
information from reports, records and other document required to be filed with the DEA including
the Manufacturer Defendants’ applications for production quotas. Specifically, the RICO
Defendants were aware of suspicious orders of prescription opioids and the diversion of their
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.
415. 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

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 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, 2017.193
416. 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.194 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.”195 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 that time, 1.1 million
pills had spilled into the hands of Armenian mobsters, the Crips gang and other criminals.”196
417. Finally, Mallinckrodt 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

193

McKesson, McKesson Finalizes Settlement with U.S. Department of Justice and U.S. Drug Enforcement
Administration to Resolve Past Claims, About McKesson / Newsroom / Press Releases, (January 17, 2017(),
http://www.mckesson.com/about-mckesson/newsroom/press-releases/2017/mckesson-finalizes-settlement-with-dojand-dea-to-resolve-past-claims/.
194

Harriet Ryan, et al., More than 1 million OxyContin pills ended up in the hands of criminals and addicts. What the
drugmaker knew, Los Angeles Times, (July 10, 2016), http://www.latimes.com/projects/la-me-oxycontin-part2/.
195

Id.

196

Id.

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 2008 and 2012.197 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.198
418. Plaintiff is informed and believes that the foregoing examples reflect the RICO
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.199 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;
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;
197

Lenny Bernstein & Scott Higham, The government’s struggle to hold opioid manufacturers accountable, The
Washington
Post,
(April
2,
2017),
https://www.washingtonpost.com/graphics/investigations/deamallinckrodt/?utm_term=.b24cc81cc356. This number accounted for 66% of all oxycodone sold in the state of Florida
during that time.
198

Id.

199

Evaluation and Inspections Div., Office of the Inspector Gen., U.S. Dep’t of Justice, The Drug Enforcement
Administration’s Adjudication of Registrant Actions 6 (2014), https://oig.justice.gov/reports/2014/e1403.pdf.

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 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 MA, Santa
Fe Springs CA, Washington Courthouse OH and West Sacramento CA.
419. 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, on information and belief, that the Manufacturer Defendants were aware of the

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 enforcement against their Distributors and the diversion of the prescription opioids and a
corresponding duty to report suspicious orders.
420. The pattern of racketeering activity alleged herein is continuing as of the date of this
Complaint and, upon information and belief, will continue into the future unless enjoined by this
Court.
421. Many of the precise dates of Defendants’ criminal actions at issue herein 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.
422. 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 consumers in this jurisdiction and the Plaintiff.
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 Plaintiff. The Defendants were aware that Plaintiff 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.
423. 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.

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 424. 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 Plaintiff by allowing the flow
of prescriptions opioids from appropriate medical channels into the illicit drug market.
425. The last racketeering incident occurred within five years of the commission of a prior
incident of racketeering.
D. DAMAGES
426. The RICO Defendants’ violations of law and their pattern of racketeering activity
directly and proximately caused Plaintiff injury in its business and property because Plaintiff paid
for costs associated with the opioid epidemic, as described above in allegations expressly
incorporated herein by reference.
427. Plaintiff’s injuries, and those of her citizens, were proximately caused by
Defendants’ racketeering activities. But for the RICO Defendants’ conduct, Plaintiff would not
have paid the health services and law enforcement services and expenditures required as a result
of the plague of drug-addicted residents.
428. Plaintiff’s injuries and those of her citizens were directly caused by the RICO
Defendants’ racketeering activities.
429. Plaintiff was most directly harmed and there is no other Plaintiff better suited to seek
a remedy for the economic harms at issue here.
430. Plaintiff seeks all legal and equitable relief as allowed by law, including inter alia
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.
COUNT III
RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT
18 U.S.C. 1962(d), et seq.
(Against All Defendants)
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 431. Plaintiff hereby incorporates by reference all other paragraphs of this Complaint as
if fully set forth herein, and further alleges as follows.
432. Plaintiff brings this claim on its own behalf against all RICO Defendants. At all
relevant times, the RICO 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).
433. 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.
A. THE OPIOID DIVERSION ENTERPRISE.
434. For efficiency and avoiding repetition, for purposes of this claim, Plaintiff
incorporates by reference the paragraphs set out above concerning the “Opioid Diversion
Enterprise.”
B. CONDUCT OF THE OPIOID DIVERSION ENTERPRISE.
435. For efficiency and avoiding repetition, for purposes of this claim, Plaintiff
incorporates by reference the paragraphs set out above concerning the “Conduct of the Opioid
Diversion Enterprise.”
C. PATTERN OF RACKETEERING ACTIVITY.
436. For efficiency and avoiding repetition, for purposes of this claim, Plaintiff
incorporates by reference the paragraphs set out above concerning the “Pattern of Racketeering
Activity.”
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 D. DAMAGES.
437. The RICO Defendants’ violations of law and their pattern of racketeering activity
directly and proximately caused Plaintiff injury in its business and property because Plaintiff paid
for costs associated with the opioid epidemic, as described above in allegations expressly
incorporated herein by reference.
438. Plaintiff’s injuries, and those of her citizens, were proximately caused by the RICO
Defendants’ racketeering activities. But for the RICO Defendants’ conduct, Plaintiff would not
have paid the health services and law enforcement services and expenditures required as a result
of the plague of drug-addicted residents.
439. Plaintiff’s injuries and those of her citizens were directly caused by the RICO
Defendants’ racketeering activities.
440. Plaintiff was most directly harmed and there is no other Plaintiff better suited to seek
a remedy for the economic harms at issue here.
441. Plaintiff seeks all legal and equitable relief as allowed by law, including inter alia
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.
COUNT IV
NEGLIGENCE AND NEGLIGENT MISREPRESENTATION
(Against All Defendants)
442. Plaintiff incorporates by reference all other paragraphs of this Complaint as if fully
set forth here, and further alleges as follows.
443. Plaintiff seeks economic damages which were the foreseeable result of Defendants’
intentional and/or unlawful actions and omissions.

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 444. Under State law, to establish actionable negligence, one must show in addition to the
existence of a duty, a breach of that duty, and injury resulting proximately therefrom and/or was
substantially caused thereby. All such essential elements exist here.
445. Further, as Section 302B of the Restatement of Torts provides: “An act or an
omission may be negligent if the actor realizes or should realize that it involves an unreasonable
risk of harm to another through the conduct of the other or a third person which is intended to
cause harm, even though such conduct is criminal.”
446. Defendants, acting in the course of their business and in transactions in which they
had a pecuniary interest, supplied false information to Plaintiff and its residents and citizens meant
to guide and influence their decisions without exercising reasonable care.
447. Each Defendant had an obligation to exercise reasonable care in manufacturing,
marketing, selling, and distributing highly dangerous opioid drugs to the State and Plaintiff’s
Community.
448. Each Defendant had an obligation to exercise due care in manufacturing, marketing,
selling, and distributing highly dangerous opioid drugs in the State and Plaintiff’s Community.
449. Each Defendant owed a duty to the Plaintiff, and to the public in the Plaintiff’s
Community, because the injury was foreseeable, and in fact foreseen, by the Defendants.
450. 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

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 to prevent diversion, exists for the purpose of controlling dangerous substances such as opioids
and preventing diversion and abuse.
451. 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.
452. Moreover, Defendants were repeatedly warned by law enforcement of the
unlawfulness and consequences of their actions and omissions.
453. 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.
454. As described above in allegations expressly incorporated herein, 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. 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.
455. As described elsewhere in the Complaint in allegations expressly incorporated
herein, Distributor Defendants misrepresented their compliance with their duties under the law and
concealed their noncompliance and shipments of suspicious orders of opioids to Plaintiff’s

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 Community and destinations from which they knew opioids were likely to be diverted into
Plaintiff’s Community, in addition to other misrepresentations alleged and incorporated herein.
456. As described elsewhere in the Complaint in allegations expressly incorporated
herein, 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, upon which the Plaintiff’s Community, its
residents, and Plaintiff reasonably relied.
457. 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.
458. All Defendants breached their duties to prevent diversion and report and halt
suspicious orders, and all Defendants misrepresented their compliance with their legal duties.
459. Defendants’ breaches were intentional and/or unlawful, and Defendants’ conduct
was willful, wanton, malicious, reckless, oppressive, and/or fraudulent.
460. The

causal

connection

between

Defendants’

breaches

of

duties

and

misrepresentations and the ensuing harm was entirely foreseeable.
461. As described above in allegations expressly incorporated herein, Defendants’
breaches of duty and misrepresentations caused, bears a causal connection with, and/or
proximately resulted in the damages sought herein.
462. 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

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 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.
463. The Defendants failed to disclose the material facts that inter alia they were not in
compliance with laws and regulations requiring that they maintain a system to prevent diversion,
protect against addiction and severe harm, and specifically monitor, investigate, report, and refuse
suspicious orders. But for these material factual omissions, Defendants would not have been able
to sell opioids.
464. As alleged herein, each Manufacturer Defendant wrongfully represented that the
opioid prescription medications they manufactured, marketed, and sold had characteristics, uses,
or benefits that they do not have. The Manufacturer Defendants also wrongfully misrepresented
that the opioids were safe and effective when such representations were untrue, false, and
misleading.
465. Because of the dangerously addictive nature of these drugs, which the Manufacturer
Defendants concealed and misrepresented, they lacked medical value, and in fact caused addiction
and overdose deaths.
466. The Manufacturer Defendants made deceptive representations about the use of
opioids to treat chronic non-cancer pain. Each Manufacturer Defendant also omitted or concealed
material facts and failed to correct prior misrepresentations and omissions about the risks and
benefits of opioids. Each Defendant’s omissions rendered even their seemingly truthful statements
about opioids deceptive, and the Plaintiff’s Community, its residents, and Plaintiff reasonably
relied upon said misrepresentations.

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 467. Defendants’ unlawful and/or intentional actions create a rebuttable presumption of
negligence under State law.
468. Plaintiff seeks economic losses (direct, incidental, or consequential pecuniary losses)
resulting from Defendants’ actions and omissions. Plaintiff does not seek damages for physical
personal injury or any physical damage to property caused by Defendants’ actions.
469. Plaintiff seeks all legal and equitable relief as allowed by law, other than such
damages disavowed herein, including inter alia injunctive relief, restitution, disgorgement of
profits, compensatory and punitive damages, and all damages allowed by law to be paid by the
Defendants, attorney fees and costs, and pre- and post-judgment interest.
COUNT V
VIOLATIONS OF THE TENNESSEE CONSUMER PROTECTION ACT OF 1977,
T.C.A. § 47-18-101, et seq.
(AGAINST ALL DEFENDANTS)
470. Plaintiff hereby incorporates by reference all other paragraphs of this Complaint as
if fully set forth herein, and further alleges as follows.
471. Plaintiff asserts this action on its behalf and on behalf of the Johnson County public.
472. Defendants violated T.C.A. § 47-18-101 et seq., because they engaged in deceptive
trade practices in this State. Defendants’ actions also violated Tennessee common law.
473. Defendants committed and are committing repeated and willful unfair or deceptive
acts or practices, and unconscionable trade practices, in the conduct of commerce.
474. Each Defendant failed to report suspicious orders of and/or prevent the diversion of
highly addictive prescription drugs to illegal sources.
475. Because of the dangerously addictive nature of these drugs, the Defendants’
manufacturing, marketing, sales, and/or distribution practices unlawfully caused an opioid and
heroin plague and epidemic in the State and Plaintiff’s Community. Each Defendant had a non144
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 delegable duty to guard against and prevent the diversion of prescription opioids to other than
legitimate medical, scientific, and industrial channels.
476. The Defendants also omitted material facts, causing confusion or misunderstanding
as to approval or certification of goods or services.
477. The Defendants failed to disclose the material facts that inter alia they were not in
compliance with laws and regulations requiring that they maintain a system to prevent diversion,
protect against addiction and severe harm, and specifically monitor, investigate, report, and refuse
suspicious orders. But for these material factual omissions, Defendants would not have been able
to sell opioids, and the Distributor Defendants would not have been able to receive and renew
licenses to sell opioids.
478. As alleged herein, each Manufacturer Defendant wrongfully represented that the
opioid prescription medications they manufactured, marketed, and sold had characteristics, uses,
or benefits that they do not have.
479. The Manufacturer Defendants also wrongfully misrepresented that the opioids were
safe and effective when such representations were untrue, false, and misleading.
480. The Manufacturer Defendants also used exaggeration and/or ambiguity as to material
facts and omitted material facts, which tended to deceive and/or did in fact deceive.
481. Because of the dangerously addictive nature of these drugs, which the Manufacturer
Defendants concealed and misrepresented, they lacked medical value, and in fact caused addiction
and overdose deaths; therefore, Defendants’ sales and marketing of opioids constituted a violation
of State law.
482. The Manufacturer Defendants made deceptive representations about the use of
opioids to treat chronic non-cancer pain. Each Manufacturer Defendant also omitted or concealed

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 material facts and failed to correct prior misrepresentations and omissions about the risks and
benefits of opioids. Each Defendant’s omissions rendered even their seemingly truthful statements
about opioids deceptive.
483. Defendants’ unfair, deceptive, and unconscionable representations, concealments,
and omissions were reasonably calculated to deceive the State, the public, Plaintiff’s Community,
and Plaintiff.
484. As described more specifically above, Defendants’ representations, concealments,
and omissions constitute a willful course of conduct which continues to this day.
485. The damages which Plaintiff seeks to recover were sustained as a direct and
proximate cause of the Manufacturer and Distributor Defendants’ intentional and/or unlawful
actions and omissions.
486. Defendants’ actions and omissions in the course of marketing, selling, and
distributing prescriptions opioids constituted deceptive trade practices under applicable law.
487. It is unlawful to represent that goods or services have sponsorship, approval,
characteristics, uses, or benefits that they do not have. It is unlawful to represent that goods are of
a standard, quality, or grade if they are of another.
488. Defendants committed committing repeated and willful unfair or deceptive acts or
practices, and unconscionable trade practices, in the conduct of commerce in this State and in
Plaintiff’s Community.
489. Each Defendant failed to report and/or prevent the diversion of highly addictive
prescription drugs.
490. Because of the dangerously addictive nature of these drugs, the Distributor
Defendants’ manufacturing, marketing, sales, and distribution practices unlawfully caused an

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 opioid and heroin plague and epidemic in the State and Plaintiff’s Community. Each Defendant
had a non-delegable duty to guard against and prevent the diversion of prescription opioids to other
than legitimate medical, scientific, and industrial channels.
491. The Defendants also omitted material facts, causing confusion or misunderstanding
as to approval or certification of goods or services.
492. The Defendants failed to disclose the material facts that inter alia they were not in
compliance with laws and regulations requiring that they maintain a system to prevent diversion,
protect against addiction and severe harm, and specifically monitor, investigate, report, and refuse
suspicious orders. But for these material factual omissions, Defendants would not have been able
to sell opioids, and the Distributor Defendants would not have been able to receive and renew
licenses to sell opioids.
493. As alleged herein, each Manufacturer Defendant wrongfully represented that the
opioid prescription medications they manufactured, marketed, and sold had characteristics, uses,
or benefits that they do not have.
494. The Manufacturer Defendants also wrongfully misrepresented that the opioids were
safe and effective when such representations were untrue, false, and misleading.
495. The Manufacturer Defendants also used exaggeration and/or ambiguity as to material
facts and omitted material facts, which had a tendency to deceive and/or did in fact deceive.
496. Because of the dangerously addictive nature of these drugs, which the Manufacturer
Defendants concealed and misrepresented, they lacked medical value, and in fact caused addiction
and overdose deaths; therefore, Defendants’ sales and marketing of opioids constituted a violation
of State law.

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 497. The Manufacturer Defendants made deceptive representations about the use of
opioids to treat chronic non-cancer pain. Each Manufacturer Defendant also omitted or concealed
material facts and failed to correct prior misrepresentations and omissions about the risks and
benefits of opioids. Each Defendant’s omissions rendered even their seemingly truthful statements
about opioids deceptive.
498. Defendants acted intentionally and/or unlawfully.
499. Defendants’ actions were directed toward the Plaintiff and proximately caused injury
to Plaintiff, as alleged herein.
500. Defendants’ actions affected commerce and constituted commercial activity.
501. Plaintiff seeks all damages for injuries sustained because of Defendants’ violation
of statutory and common law, and all legal and equitable relief as allowed by law, including inter
alia injunctive relief, restitution, disgorgement of profits, compensatory and punitive damages,
and all damages allowed by law to be paid by the Defendants, attorney fees and costs, and preand post-judgment interest.
COUNT VI
NEGLIGENCE PER SE
(Against All Defendants)
502. Plaintiff incorporates by reference all other paragraphs of this Complaint as if fully
set forth here, and further alleges as follows.
503. Violations of statutes and regulations support a cause of action for negligence per se
where the plaintiff is within the class protected, the harm sustained is the type sought to be
prevented, and that the violations proximately caused the plaintiff’s injuries.

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 504. Defendants violated the minimum requirements for controlled substance
manufacture and wholesale drug distribution to comply with all applicable local, state and federal
laws and regulations and all applicable state and federal DEA regulations.
505. The federal laws and requirements which the State incorporates into its own laws
require Defendants to act as gatekeepers guarding against the diversion of the highly addictive,
dangerous opioid drugs.
506. The federal mandates incorporated into State law require that Defendants must
maintain “effective control against diversion of particular controlled substances into other than
legitimate medical, scientific, and industrial channels.” 21 U.S.C. §§ 823(a)(1), (b)(1). These
federal regulations impose a non-delegable duty upon both manufacturers and distributors to
“design and operate a system to disclose to the registrant suspicious orders of controlled
substances. The registrant [distributor or manufacturer] 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.” 21 C.F.R. § 1301.74(b).
507. In addition to reporting all suspicious orders, distributors must also stop shipment on
any order which is flagged as suspicious and only ship orders which were flagged as potentially
suspicious if, after conducting due diligence, the distributor can determine that the order is not
likely to be diverted into illegal channels. See Southwood Pharm., Inc., 72 Fed. Reg. 36,487,
36,501 (Drug Enf’t Admin. July 3, 2007); Masters Pharm., Inc. v. Drug Enf’t Admin., 861 F.3d
206 (D.C. Cir. 2017). Regardless, all flagged orders must be reported. Id.
508. Each Defendant was further required to register with the DEA, pursuant to the federal
Controlled Substance Act, as incorporated into State law. See 21 U.S.C. § 823(b), (e); 28 C.F.R. §

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 0.100. Each Defendant is a “registrant” as a wholesale distributor and/or manufacturer in the chain
of distribution of Schedule II controlled substances with a duty to comply with all security
requirements imposed under that statutory scheme.
509. Defendants violated prohibiting the manufacture and/or distribution of controlled
substances, where such manufacturer and/or distribution does not comply with the requirements
of State and federal law.
510. Defendants do not qualify for the authorized by law exceptions to the applicable law
because Defendants did not comply with the mandatory terms of the licenses, registrations, and/r
permits issued to them by the State or with federal requirements incorporated by reference, as
further detailed in this Complaint.
511. Plaintiff is within the class intended to be protected by the public safety statutes and
regulations concerning controlled substances.
512. Defendants’ violations of these public safety laws are prima facie evidence of
negligence per se. Each Defendant had a duty under, inter alia, these laws to maintain effective
controls against diversion of prescription opioids and to guard against, prevent, and report
suspicious orders of opioids. Defendants’ violations of the law constitute negligence per se.
Defendants breached mandatory, non-delegable legal duties and did not act reasonably under the
circumstances.
513. As described above in allegations expressly incorporated herein, Defendants
breached their duties to maintain effective controls against diversion of dangerously addictive
opioids, including violating public safety statutes and regulations requiring that as wholesale drug
distributors, Defendants could only distribute these dangerous drugs under a closed system – a
system Defendants were responsible for guarding.

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 514. As described above in allegations expressly incorporated herein, Defendants’ breach
of statutory and regulatory duties caused, bears a causal connection with, is and was a substantial
factor contributing to, and/or proximately resulted in, harm and damages to Plaintiff.
515. The injuries and damages sustained are those which the State and federal statutes and
regulations were designed to prevent.
516. Defendants’ violations of the State and federal statutes and public safety regulations
cited herein were and are a substantial factor in the injuries and damages sustained.
517. It was foreseeable that Defendants’ breach of statutory and regulatory duties
described herein would result in the damages sustained.
518. Plaintiff seeks economic losses (direct, incidental, or consequential pecuniary losses)
resulting from Defendants’ negligence per se. Plaintiff does not seek damages for physical
personal injury or any physical damage to property caused by Defendants’ actions.
519. Plaintiff seeks all legal and equitable relief as allowed by law, except as expressly
disavowed herein, including inter alia injunctive relief, restitution, disgorgement of profits,
compensatory and punitive damages, and all damages allowed by law to be paid by the Distributor
Defendants, attorney fees and costs, and pre- and post-judgment interest.
COUNT VII
CIVIL CONSPIRACY
(Against All Defendants)
520. Plaintiff incorporates by reference all other paragraphs of this Complaint as if fully
set forth here, and further alleges as follows.
521. As set forth herein, Defendants engaged in a civil conspiracy to create a public
nuisance in conjunction with their unlawful marketing, sale, distribution and/or diversion of
opioids into the State and Plaintiff’s Community.

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 522. As set forth herein, Defendants engaged in a civil conspiracy to commit fraud and
misrepresentation in conjunction with their unlawful distribution and diversion of opioids into the
State and Plaintiff’s Community.
523. Distributor and Manufacturer Defendants unlawfully failed to act to prevent
diversion and failed to monitor for, report, and prevent suspicious orders of opioids.
524. The Manufacturer Defendants further unlawfully marketed opioids in the State and
Plaintiffs’ Community in furtherance of that conspiracy.
525. Defendants acted tortiously in agreement and/or in concert with each other and/or in
pursuit of a common design, and/or Defendants knew each other’s conduct constituted a breach of
their legal duties and provided substantial assistance and/or encouragement in the conduct.
526. Defendant’s conspiracy is a continuing conspiracy, and the overt acts performed in
compliance with the conspiracy’s objective(s) are ongoing and/or have occurred within the last
year.
527. Defendants’ conspiracy and acts in furtherance thereof are alleged in greater detail
earlier in the complaint, including, without limitation, in Plaintiff’s federal and state law
racketeering allegations. Such allegations are incorporated herein.
528. Defendants acted with agreement and a common understanding or design to commit
unlawful acts and/or lawful acts unlawfully, as alleged herein, and acted purposely, without a
reasonable or lawful excuse, to create the injuries alleged herein.
529. Defendants acted with malice, purposely, intentionally, unlawfully, and without a
reasonably or lawful excuse.

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 530. Defendants’ conspiracy, and Defendants’ actions and omissions in furtherance
thereof, proximately caused and/or substantially contributed to the direct and foreseeable losses
alleged herein.
531. Plaintiff seeks economic losses (direct, incidental, or consequential pecuniary losses)
resulting from Defendants’ civil conspiracy. Plaintiff does not seek damages for physical personal
injury or any physical damage to property caused by Defendants’ actions.
532. Plaintiff seeks all legal and equitable relief as allowed by law, except as expressly
disavowed herein, including inter alia injunctive relief, restitution, disgorgement of profits,
compensatory and punitive damages, and all damages allowed by law to be paid by the Distributor
Defendants, attorney fees and costs, and pre- and post-judgment interest.
COUNT VIII
FRAUD AND FRAUDULENT MISREPRESENTATION
(Against All Defendants)
533. Plaintiff incorporates by reference all other paragraphs of this Complaint as if fully
set forth here, and further alleges as follows.
534. Defendants violated their general duty not to actively deceive, and have made
knowingly false statements and have omitted and/or concealed information which made statements
by Defendants knowingly false. Defendants acted intentionally and/or unlawfully.
535. As alleged herein, Defendants made false statements regarding their compliance with
state and federal law regarding their duties to prevent diversion, their duties to monitor, report and
halt suspicious orders, and/or concealed their noncompliance with these requirements.
536. As alleged herein, the Manufacturer Defendants engaged in false representations and
concealments of material fact regarding the use of opioids to treat chronic non-cancer pain.

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 537. As alleged herein, Defendants knowingly and/or intentionally made representations
that were false. Defendants had a duty to disclose material facts and concealed them. These false
representations and concealed facts were material to the conduct and actions at issue. Defendants
made these false representations and concealed facts with knowledge of the falsity of their
representations, and did so with the intent of misleading Plaintiff, Plaintiff’s community, the
public, and persons on whom Plaintiff relied.
538. These false representations and concealments were reasonably calculated to deceive
Plaintiff, Plaintiff’s Community, and the physicians who prescribed opioids for persons in
Plaintiff’s Community, were made with the intent to deceive, and did in fact deceive these persons,
Plaintiff, and Plaintiff’s Community.
539. Plaintiff, Plaintiff’s Community, and the physicians who prescribed opioids
reasonably relied on these false representations and concealments of material fact.
540. Plaintiff justifiably relied on Defendants’ representations and/or concealments, both
directly and indirectly. Plaintiff’s injuries were proximately caused by this reliance.
541. The injuries alleged by Plaintiff herein were sustained as a direct and proximate cause
of Defendants’ fraudulent conduct.
542. Plaintiff seeks economic losses (direct, incidental, or consequential pecuniary losses)
resulting from Defendants’ fraudulent activity, including fraudulent misrepresentations and
fraudulent concealment. Plaintiff does not seek damages for physical personal injury or any
physical damage to property caused by Defendants’ actions.
543. Plaintiff seeks all legal and equitable relief as allowed by law, except as expressly
disavowed herein, including inter alia injunctive relief, restitution, disgorgement of profits,

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 compensatory and punitive damages, and all damages allowed by law to be paid by the Distributor
Defendants, attorney fees and costs, and pre- and post-judgment interest.
PUNITIVE DAMAGES
544. Plaintiff re-alleges all paragraphs of this Complaint as if set forth fully herein.
545. By engaging in the above-described intentional and/or unlawful acts or practices,
Defendants acted with actual malice, wantonly, and oppressively. Defendants acted with conscious
disregard to the rights of others and/or in a reckless, wanton, willful, or gross manner. Defendants
acted with a prolonged indifference to the adverse consequences of their actions and/or omissions.
Defendants acted with a conscious disregard for the rights and safety of others in a manner that
had a great probability of causing substantial harm. Defendants acted toward the Plaintiff with
fraud, oppression, and/or malice.
546. Defendants were selling and/or manufacturing dangerous drugs statutorily
categorized as posing a high potential for abuse and severe dependence. Thus, Defendants
knowingly traded in drugs that presented a high degree of danger if prescribed incorrectly or
diverted to other than legitimate medical, scientific, or industrial channels. Because of the severe
level of danger posed by, and indeed visited upon the State and Plaintiff’s Community by, these
dangerous drugs, Defendants owed a high duty of care to ensure that these drugs were only used
for proper medical purposes. Defendants chose profit over prudence, and the safety of the
community, and an award of punitive damages is appropriate, as punishment and a deterrence.
547. By engaging in the above-described wrongful conduct, Defendants also engaged in
willful misconduct and exhibited an entire want of care that would raise the presumption of a
conscious indifference to consequences.
RELIEF
WHEREFORE, the Plaintiff respectfully prays that this Court grant the following relief:
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 548. Entering Judgment in favor of the Plaintiff in a final order against each of the
Defendants;
549. Enjoining the Defendants and their employees, officers, directors, agents, successors,
assignees, merged or acquired predecessors, parent or controlling entities, subsidiaries, and all
other persons acting in concert or participation with it, from engaging in unfair or deceptive
practices in violation of law and ordering temporary, preliminary or permanent injunction;
550. Order that Defendants compensate the Plaintiff for past and future costs to abate the
ongoing public nuisance caused by the opioid epidemic;
551. Order Defendants to fund an “abatement fund” for the purposes of abating the opioid
nuisance;
552. Awarding actual damages, treble damages, injunctive and equitable relief, forfeiture
as deemed proper by the Court, and attorney fees and all costs and expenses of suit pursuant to
Plaintiff’s racketeering claims;
553. Awarding the Plaintiff 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.
554. Awarding judgment against the Defendants requiring Defendants to pay punitive
damages;
555. Granting the Plaintiff:

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 1. The cost of investigation, reasonable attorneys’ fees, and all costs and expenses;
2. Pre-judgment and post-judgment interest; and,
3. All other relief as provided by law and/or as the Court deems appropriate and just.
Dated: January 4, 2018

Respectfully Submitted,
JOHNSON COUNTY, TENNESSEE,
Plaintiff
/s/Michael J. Fuller, Jr.
Michael J. Fuller, Jr. (TN Bar # 024906)
MCHUGH FULLER LAW GROUP, PLLC
97 Elias Whiddon Rd.
Hattiesburg, MS 39402
Tel.: 601-261-2220
Fax: 601-261-2481
mike@mchughfuller.com

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 Paul T. Farrell, Jr. (pro hac vice pending)
GREENE, KETCHUM, FARRELL,
BAILEY & TWEEL, LLP
419 - 11th Street (25701)/ P.O. Box 2389
Huntington, West Virginia 25724-2389
Tel.: 800-479-0053 or 304-525-9115
Fax: 304-529-3284
paul@greeneketchum.com

R. Edison Hill (pro hac vice pending)
HILL, PETERSON, CARPER,
BEE & DEITZLER, PLLC
NorthGate Business Park
500 Tracy Way
Charleston, WV 25311
Tel.: 304-345-5667
Fax: 304-345-1519
rehill@hpcbd.com

Peter J. Mougey (pro hac vice pending)
LEVIN, PAPANTONIO, THOMAS, MITCHELL,
RAFFERTY & PROCTOR, P.A.
316 S. Baylen Street, Suite 600
Pensacola, FL 32502-5996
Tel.: 850-435-7068
Fax: 850-436-6068
pmougey@levinlaw.com

J. Burton LeBlanc, IV
(pro hac vice pending)
BARON & BUDD, P.C.
3102 Oak Lawn Avenue, Suite 1100
Dallas, TX 75219
Tel.: 214-521-3605
Fax: 214-520-1181
bleblanc@baronbudd.com

Crystal Jessee, BPR# 024445
JESSEE LAW OFFICE
P.O. Box 1537
Greeneville, Tennessee
Tel: 423-638-4006
Fax: 423-638-4007
crystaljessee@jesseelawoffice.com

Anthony J. Majestro
(pro hac vice pending)
POWELL & MAJESTRO, PLLC
405 Capitol Street, Suite P-1200
Charleston, WV 25301
304-346-2889 / 304-346-2895 (f)
amajestro@powellmajestro.com

Thomas C. Jessee, BPR# 000113
JESSEE AND JESSEE
P.O. Box 997
Johnson City, Tennessee
Tel: 423-928-7175
Fax: 423-928-9650
tom@jesseeandjessee.com

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