The Washington Post - 19.09.2019

THURSDAY, SEPTEMBER 19 , 2019. THE WASHINGTON POST EZ RE A

Politics & the Nation

BY LENNY BERNSTEIN,

MATT ZAPOTOSKY

AND SCOTT HIGHAM

Federal authorities are con-
ducting a criminal investigation
of the former compliance officer
at a McKesson Corp. warehouse
in southern central Ohio, alleging
he conspired to illegally distrib-
ute powerful narcotics over eight
years, according to court records.
With no announcement, David
B. Gustin was indicted in March
by a grand jury in eastern Ken-
tucky on one count of conspiracy,
a charge that carries a penalty of
as much as 20 years in prison,
records show.
The court records reveal the
charges against Gustin stem from
his responsibility to detect
whether 13,000 pharmacy cus-
tomers in 15 states were allowing
drugs distributed by McKesson to
be diverted to the black market.
Two other people have been told
they are possible targets of the
probe, and subpoenas for infor-
mation have been issued to
McKesson, the largest drug dis-
tributor in the United States, doc-
uments show.
“The basis of the charge is Mr.
Gustin’s alleged conduct as a di-
rector of regulatory affairs,” Gus-
tin’s attorney, Brian Butler, wrote
in a motion he filed. “The United
States’ theory seems to be that Mr.
Gustin was so woefully negligent
in overseeing his compliance re-
sponsibilities that his conduct
was criminal.”
Similarly, the government said
in a motion that Gustin “knows
the charge pertains to the distri-
bution of controlled substances,
including oxycodone, hydro-
codone and alprazolam” from
May 2, 2008 to April 15, 2016.
“During that time, Gustin
worked for McKesson Pharma-
ceutical, a drug distributor sell-

ing controlled substances

throughout the country,” the mo-

tion said.

In a May filing, prosecutors

described the grand jury investi-

gation as “ongoing.”

The U.S. attorney’s office for

Eastern Kentucky — which al-

leges that illegal conduct oc-

curred in the state’s Clay County

and elsewhere — is overseeing the

investigation. Officials there de-

clined to discuss the case. The

Justice Department referred

questions to that office. The Drug

Enforcement Administration,

McKesson and Butler refused or

did not respond to requests for

information.

In a statement, McKesson

spokeswoman Kristin Chasen re-

ferred a reporter to federal au-

thorities. She said “the one-para-

graph indictment of Mr. Gustin,

who is a former employee, con-

tains no specific allegations, and

McKesson is not named.... We

have been responsive to the gov-

ernment’s inquiries.” She also ac-

knowledged that McKesson has

received subpoenas about Gus-

tin’s tenure at the company.

More than 21 million doses of

oxycodone and hydrocodone

were distributed in Clay County

between 2006 and 2012, accord-

ing to a government database.

With a population of about

20,000 people, that works out to

133 pills for every person each

year.

McKesson delivered 1.88 mil-

lion doses of narcotics in the

county over that seven-year peri-

od, making it the fourth-largest

distributor of pain pills during

that time. Community Drug of

Manchester received 5.7 million

pills, by far the most of any

drugstore. Manchester has a pop-

ulation of 1,331. A telephone call

to the drugstore came back as a

nonworking number. In 2013, the

owner of the pharmacy and his

wife pleaded guilty to federal

charges of conspiring to illegally

distribute oxycodone and were

sent to prison.

The Washington Post gained

access to the DEA’s A utomation of

Reports and Consolidated Orders

System under a court order. The

Post and HD Media, which pub-

lishes the Charleston Gazette-

Mail in West Virginia, waged a

year-long legal battle for access to

the database, which the govern-

ment and the drug industry had

sought to keep secret.

Since 2006, the DEA has been

enforcing laws against diversion

of legal painkillers by bringing

administrative and civil cases

against drug wholesalers such as

McKesson, often in the face of

stiff opposition from them. The

federal Controlled Substances

Act and regulations make these

distributors responsible for iden-

tifying, halting and reporting sus-

picious orders of opioid painkill-

ers from dispensers such as phar-

macies, hospitals, pain clinics

and others.

But in recent months, two U.S.

attorneys have stepped up that

effort by filing criminal charges

against two medium-sized drug

distributors — Ohio-based Mi-

ami-Luken and Rochester Drug

Cooperative of New York — and

four of their former executives.

Pursuing criminal charges

against a former manager for

McKesson — the seventh-largest

public company in the United

States, according to Fortune mag-

azine — could mark a significant

escalation of that effort.

Miami-Luken is out of business

and The Washington Post could

not reach its executives or identi-

fy their attorneys when they were

indicted in July. Rochester Drug

Cooperative and one executive

did not dispute the charges. The

lawyer for another said his client

was being framed and vowed to

fight the charges.

In 2017, The Washington Post

and “60 Minutes” revealed that

the DEA and federal prosecutors

conducted a two-year nationwide

investigation of McKesson drug

distribution warehouses. They

determined by 2014 t hat the com-

pany failed to report suspicious

orders of millions of painkillers

sent from 11 warehouses, from

Sacramento to Lakeland, Fla.

DEA investigators said they

were convinced they had enough

evidence to bring the first-ever

criminal charges against McKes-

son and to seek a $1 billion fine.

But attorneys at the DEA and

Justice Department did not agree

and struck a deal with the compa-

ny i n 2017 t hat required it to pay a

$150 million fine and temporarily

halt shipments of controlled sub-

stances from four warehouses,

including the one where Gustin

worked in Washington Court

House, Ohio, in the south-central

part of the state.

Under the terms of the 20 17

settlement, shipments of con-

trolled substances are suspended

at that warehouse. Though the

two sides settled out of court, the

agreement does not prevent au-

thorities from bringing criminal

charges.

Other than the one-paragraph

indictment of Gustin himself, the

court record in his case largely

consists of legal sparring between

U.S. Attorney Robert M. Duncan

Jr.’s office and Butler over Gustin’s

demand for a “bill of particulars”

that would provide more details

of the case against him.

The documents also show that

Gustin and McKesson have an

agreement to work together on

the legal case and that nearly

190,000 pages of documents have

been turned over to him. But the

government wants to limit how

much of that material — includ-

ing grand jury information —

Gustin can share with his former

employer. Prosecutors suggest

that McKesson’s “interests could

conflict with those of Gustin and

could potentially jeopardize the

ongoing grand jury investiga-

tion.”

Gustin has asked to know who

his alleged co-conspirators are,

and which pharmacies partici-

pated in the alleged conspiracy.

In an April filing, Butler said

the case “appears to raise novel

questions of fact and law” be-

cause they focus on the way Gus-

tin performed his duties for

McKesson. He a lso said there may

be “statute of limitations issues”

with an indictment that came

nearly five years after Guston left

McKesson.

He suggested the case “may be

the first time a mid-level compli-

ance manager has been pros-

ecuted for allegedly failing to

properly do his compliance job.”

[email protected]

[email protected]

[email protected]

Feds probe ex-manager of McKesson warehouse in Ohio

PATRICK SISON/ASSOCIATED PRESS

Federal authorities are investigating former McKesson compliance officer David B. Gustin, alleging

that he conspired to illegally distribute opioids over eight years.

Subpoenas for data have

also been issued to the

giant drug distributor

“The United States’

theory seems to be that

Mr. Gustin was so

woefully negligent...

that his conduct

was criminal.”

Brian Butler, attorney for David B.

Gustin, wrote in a motion he filed

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