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DOJ Escalates the Fight Against Opioids, Preemptively Shuts Down Pharmacies

In early February, the U.S. Department of Justice took the unprecedented step of temporarily shutting down two Tennessee pharmacies accused of allowing opioid prescriptions to flow into the local market unchecked, signaling an escalation in the DOJ’s enforcement surrounding the opioid cases.

The decision to preemptively shut down the pharmacies presents a change in tactics for the DOJ, which has historically sought administrative remedies to revoke a pharmacy’s registration with the U.S. Drug Enforcement Administration. The administrative remedy can take months, whereas here, DOJ attorneys sought, and were awarded, an ex parte order temporarily shutting the pharmacies down while the DOJ pursues a case under the Controlled Substances Act. Moving forward, the DOJ is signaling that it may shut down pharmacies that it deems to be a danger to the public, even before they have the opportunity to present a defense in court.

This new approach is broadly consistent with the DOJ’s strengthened commitment to attack the opioid crisis on all fronts. In October of last year, the DOJ announced it would allocate nearly $320 million to combat the opioid crisis. In connection with this effort, the DOJ assigned more than 300 federal prosecutors and 400 DEA task force officers with addressing opioid issues.

The DOJ has also created a data analytics program to detect and allocate resources toward opioid “hot spot” districts. Data analytics were crucial in establishing the case against the two shuttered pharmacies, as the DOJ was able to show that, of all the active pharmacies in the United States, only three bought more opioid doses per capita than the pharmacies at issue. Data analytics were also used by the Massachusetts U.S. Attorney’s Office to issue a recent warning to a number of medical professionals whose opioid prescriptions raised red flags.

The DOJ’s enforcement efforts have expanded in other directions as well. In August 2018, the DOJ indicted two ringleaders of the Zheng drug trafficking organization, based out of Shanghai, China. The two individuals were indicted for running an organized crime ring that manufactured fentanyl in China and then imported and distributed it in the United States. This followed the first-ever indictment, months earlier, of Chinese nationals for fentanyl trafficking, when 32 defendants were charged in connection with the Zheng organization.

Federal prosecutors also indicted several high level pharmaceutical executives, including the founder of Insys Therapeutics, John Kapoor, on charges that Insys offered millions of dollars in illegal kickbacks to doctors who prescribed their fentanyl-based pain medication. Another high level Insys executive, Alec Burlakoff, has already pleaded guilty to a racketeering conspiracy in connection with the kickback scheme and is currently cooperating with the prosecution. Four doctors have also been imprisoned for taking kickbacks, disguised as speaker fees and other perks, from Insys in exchange for prescribing the pain killers to patients without regard to the actual needs or health of the patients.

The message the DOJ is sending with these indictments is that, when it comes to the opioid crisis, the DOJ has a hardline approach. Pharmaceutical executives, doctors, pharmacists, and others involved in the sale or manufacture of opioids should take note.

Visit our website to learn more about V&E’s Government Investigations & White Collar Criminal Defense practice. For more information, please contact Vinson & Elkins lawyers Jennifer Freel or Casey Downing.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.