November 26, 2019 / 6:18 PM / 16 days ago

U.S. prosecutors open criminal probe of opioid makers, distributors

(Reuters) - Federal prosecutors are investigating six pharmaceutical companies for potential criminal charges in connection with shipping big quantities of opioid painkillers that contributed to a healthcare crisis, according to regulatory filings.

FILE PHOTO: A person holds pharmaceutical tablets and capsules in this picture illustration taken in Ljubljana September 18, 2013.REUTERS/Srdjan Zivulovic

Five companies have received subpoenas from the U.S. Attorney’s office in the Eastern District of New York as part of the investigation: drugmakers Teva Pharmaceutical Industries Ltd, Mallinckrodt Plc, Johnson & Johnson and Amneal Pharmaceuticals Inc, and distributor McKesson Corp, regulatory filings showed.

The Wall Street Journal first reported the investigation on Tuesday. The newspaper said the probe was in the early stages and prosecutors were expected to subpoena other companies in the coming months, citing a source.

A spokesman for the U.S. Attorney’s office for the Eastern District of New York declined to comment.

The WSJ also said distributor AmerisourceBergen Corp had received a subpoena as part of the investigation. The company said in regulatory filings that it has received subpoenas from multiple U.S. attorneys including the Eastern District of New York, but unlike the other companies, AmerisourceBergen did not specify the nature of the probe.

Shares of AmerisourceBergen, Amneal, Teva, Mallinckrodt and McKesson ended down 3% to 9%, while J&J shares were down marginally following the report. J&J’s disclosure of the investigation was reported by Reuters in October.

Teva said it was confident in its monitoring practices, which it said were designed to ensure medicines were delivered appropriately.

McKesson referred to recent regulatory filings while the other companies did not immediately respond to requests for comment.

Opioid manufacturers, distributors and pharmacy chains have been defending themselves against thousands of lawsuits by state attorneys general, local governments and class actions accusing them of fueling an addiction crisis.

Opioids have contributed to more than 400,000 deaths since 1997.

Some of the companies’ filings described the subpoenas as part of an industry-wide probe into anti-diversion policies and distribution of opioid medications under the Controlled Substances Act (CSA).

Several companies said they received grand jury subpoenas, indicating a criminal investigation.

The CSA requires companies to report orders of controlled substances such as opioids that are unusually large or unusually frequent, or that substantially deviate from norm.

In July, federal prosecutors charged an Ohio drug distributor, Miami-Luken Inc, for shipping millions of opioid pills to rural Appalachia, ground zero for the epidemic.

The company shipped 3.7 million hydrocodone pills from 2008 to 2011 to a pharmacy in Kermit, West Virginia, a town of just 400 people, prosecutors said.

In 2016, distributor Cardinal Health Inc agreed to pay $44 million to resolve allegations it violated the CSA by filling unusually large orders of oxycodone without reporting them.

Teva, Mallinckrodt and J&J also recently disclosed they had received subpoenas from the New York State Department of Financial Services. J&J said it was part of an industry-wide inquiry into the effect of opioid prescriptions on New York health insurance premiums.

Reporting by Tom Hals in Wilmington, Delaware, Brendan Pierson in New York and Manas Mishra in Bengaluru; Editing by Anil D'Silva, Bill Berkrot and Cynthia Osterman

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