[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
COMBATING THE OPIOID EPIDEMIC: EXAMINING CONCERNS ABOUT DISTRIBUTION
AND DIVERSION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
MAY 8, 2018
__________
Serial No. 115-124
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
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COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Ohio YVETTE D. CLARKE, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
SUSAN W. BROOKS, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, California
RICHARD HUDSON, North Carolina RAUL RUIZ, California
CHRIS COLLINS, New York SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
7_____
Subcommittee on Oversight and Investigations
GREGG HARPER, Mississippi
Chairman
H. MORGAN GRIFFITH, Virginia DIANA DeGETTE, Colorado
Vice Chairman Ranking Member
JOE BARTON, Texas JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas KATHY CASTOR, Florida
SUSAN W. BROOKS, Indiana PAUL TONKO, New York
CHRIS COLLINS, New York YVETTE D. CLARKE, New York
TIM WALBERG, Michigan RAUL RUIZ, California
MIMI WALTERS, California SCOTT H. PETERS, California
RYAN A. COSTELLO, Pennsylvania FRANK PALLONE, Jr., New Jersey (ex
EARL L. ``BUDDY'' CARTER, Georgia officio)
GREG WALDEN, Oregon (ex officio)
(ii)
C O N T E N T S
----------
Page
Hon. Gregg Harper, a Representative in Congress from the State of
Mississippi, opening statement................................. 2
Prepared statement........................................... 3
Hon. Diana DeGette, a Representative in Congress from the State
of Colorado, opening statement................................. 4
Prepared statement........................................... 6
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 7
Prepared statement........................................... 9
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 10
Prepared statement........................................... 11
Witnesses
Joseph R. Mastandrea, D.O., Chairman, Miami-Luken, Inc........... 13
Prepared statement........................................... 16
Answers to submitted questions............................... 124
John Hammergren, Chairman, President, and Chief Executive
Officer, McKesson Corp......................................... 20
Prepared statement........................................... 22
Answers to submitted questions............................... 131
George S. Barrett, Executive Chairman, Cardinal Health........... 31
Prepared statement........................................... 33
Answers to submitted questions............................... 165
Steven H. Collis, Chairman, President, and Chief Executive
Officer, AmerisourceBergen Corp................................ 43
Prepared statement........................................... 45
Answers to submitted questions............................... 173
James Christopher Smith, Former President and Chief Executive
Officer, H.D. Smith, LLC....................................... 57
Prepared statement........................................... 59
Answers to submitted questions............................... 187
Submitted Material
Subcommittee document binder \1\
Slide, ``Fatal Prescription Opioid Overdose 2017,'' Virginia
Department of Health, submitted by Mr. Griffith................ 78
Subcommittee memorandum.......................................... 107
Reports, chief executive officer salaries and compensation,
submitted by Ms. Castor........................................ 116
----------
\1\ The information has been retained in committee files and also
is available at https://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=108260.
COMBATING THE OPIOID EPIDEMIC: EXAMINING CONCERNS ABOUT DISTRIBUTION
AND DIVERSION
----------
TUESDAY, MAY 8, 2018
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in
room 2123, Rayburn House Office Building, Hon. Gregg Harper
(chairman of the subcommittee) presiding.
Members present: Representatives Harper, Griffith, Burgess,
Brooks, Collins, Barton, Walberg, Walters, Costello, Carter,
Walden (ex officio), DeGette, Schakowsky, Castor, Tonko, Ruiz,
Pallone (ex officio).
Also present: Representatives Blackburn, Bilirakis,
McKinley, Johnson, Guthrie, Lance, and Welch.
Staff present: Jennifer Barblan, Chief Counsel, Oversight
and Investigations; Mike Bloomquist, Staff Director; Karen
Christian, General Counsel; Jordan Davis, Director of Policy
and External Affairs; David DeMarco, Deputy IT Director; Adam
Fromm, Director of Outreach and Coalitions; Ali Fulling,
Legislative Clerk, Oversight and Investigations, Digital
Commerce and Consumer Protection; Theresa Gambo, Human
Resources and Office Administrator; Brittany Havens,
Professional Staff, Oversight and Investigations; Zach Hunter,
Communications Director; Perry Lusk, Minority GAO Detailee;
Christopher Santini, Counsel, Oversight and Investigations;
Jennifer Sherman, Press Secretary; Alan Slobodin, Chief
Investigative Counsel, Oversight and Investigations; Hamlin
Wade, Special Advisor for External Affairs; Christina Calce,
Minority Counsel; Jeff Carroll, Minority Staff Director;
Tiffany Guarascio, Minority Deputy Staff Director and Chief
Health Advisor; Christopher Knauer, Minority Oversight Staff
Director; Miles Lichtman, Minority Policy Analyst; Perry Lusk,
Minority GAO Detailee; Kevin McAloon, Minority Professional
Staff Member; Andrew Souvall, Minority Director of
Communications; and C.J. Young, Minority Press Secretary.
OPENING STATEMENT OF HON. GREGG HARPER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MISSISSIPPI
Mr. Harper. I now call to order this hearing on ``Combating
the Opioid Epidemic: Examining Concerns About Distribution and
Diversion.''
One year ago today, on May the 8th, 2017, the committee
opened a bipartisan investigation into the distribution of
prescription opioids by wholesale drug distributors with a
specific focus on unusually large opioid shipments to small
pharmacies in West Virginia. The launch of this investigation
was spurred by press reports of astonishing levels of opioid
distribution to pharmacies in small, rural West Virginia towns.
Between 2007 and 2012, distributors sent more than 700
million hydrocodone and oxycodone pills to the State, or 433
pills for every man, woman, and child in the State. In that
timeframe, 1,728 West Virginians fatally overdosed on these two
drugs.
The numbers were eye-opening. The Sav-Rite pharmacy in
Kermit, West Virginia, population around 400, received nearly 9
million opioids in a 2-year period. Another pharmacy, in nearby
Oceana, West Virginia, received 600 times as many oxycodone
pills as the Rite Aid drugstore just eight blocks away.
This led the committee, on a bipartisan basis, to request
information from the Drug Enforcement Administration and the
so-called Big Three drug distributors: McKesson, Cardinal
Health, and AmerisourceBergen. These distributors delivered
more than 500 million opioids to West Virginia between 2007 and
2012, with Cardinal shipping 241 million opioids,
AmerisourceBergen shipping about 119 million opioids, and
McKesson shipping more than 150 million opioids.
Later in the investigation the committee also sent letters
to two regional distributors with a major presence in West
Virginia, Miami-Luken and H.D. Smith. We found that the
stunning numbers that led us to start this investigation were
much more common than we had hoped.
Among our discoveries are a single pharmacy in Mount Gay-
Shamrock, West Virginia, population 1,779, that received more
than 16.5 million hydrocodone and oxycodone pills between 2006
and 2016. In nearby Williamson, West Virginia, population
2,900, distributors sent almost 21 million opioids to two
pharmacies during the same period. And this is just within the
targeted areas that we reviewed.
We have learned much from the investigation but still have
many questions. For example, why did the distributors
repeatedly fail to report suspicious orders of opioids or
exercise effective controls against diversion?
By 2005, internet pharmacies had transformed the DEA
regulatory paradigm with unprecedented large volumes of
controlled substances being shipped to individual pharmacies.
Pill mill doctors and pharmacies began to proliferate. The
agency needed help, and given their position in the supply
chain and their legal obligations to identify and report
suspicious orders, identified the distributors as a main line
of defense against diversion.
Through meetings and letters over a period of years, the
DEA educated and coached the distributors on their
responsibilities. The distributors have contended that the DEA
provided insufficient communication and guidance. Distributors
have also said that only the DEA can see the full picture with
respect to pharmacy volume and that distributors are simply
privy to their own data.
But were distributors' capabilities that limited?
Distributors conduct due diligence, site visits, and can obtain
market data. They can request and analyze a pharmacy's
dispensing data, which provides the distributors with the
ability to see all the controlled substances being dispensed by
a pharmacy and the prescribers over a given period of time.
In some cases, such as what we have seen in West Virginia,
the volume of controlled substances a distributor sends on its
own should be cause for concern.
Distributors also contend that they do not set demand and
simply satisfy orders for prescriptions written by licensed
doctors and filled by licensed pharmacists. But what about the
distributor's legal responsibility to know their customer and
perform due diligence?
And what does our work mean for the rest of the country?
West Virginia is far from the only State heavily impacted by
the opioid epidemic. It has hit every State, and everyone in
this room has been affected in some way.
How many other communities across the country have received
millions more opioids than their communities could reasonably
sustain? How many other times did a distributor miss the red
flags of their own distribution, let alone what could be found
with due diligence? How many other Kermits and Williamsons are
out there?
It is my hope that we will see some answers today as to how
the drug distributors seemingly missed the red flags of
diversion.
I want to welcome the witnesses and thank each of you for
your participation to help us in this important investigation.
I also thank my colleagues from across the aisle for all of
their hard work on this bipartisan investigation.
And I now recognize the ranking member of the subcommittee,
Ms. DeGette.
[The prepared statement of Mr. Harper follows:]
Prepared statement of Hon. Gregg Harper
One year ago today, May 8, 2017, the committee opened a
bipartisan investigation into the distribution of prescription
opioids by wholesale drug distributors, with a specific focus
on unusually large opioid shipments to small pharmacies in West
Virginia.
The launch of this investigation was spurred by press
reports of astonishing levels of opioid distribution to
pharmacies in small, rural West Virginia towns. Between 2007
and 2012, distributors sent more than 780 million hydrocodone
and oxycodone pills to the State--or 433 pills for every man,
woman, and child in the State. In that timeframe, 1,728 West
Virginians fatally overdosed on those two drugs.
The numbers were eye-opening. The Sav-Rite pharmacy in
Kermit, West Virginia--population around 400--received nearly 9
million opioids in a 2-year period. Another pharmacy in nearby
Oceana, West Virginia, received 600 times as many oxycodone
pills as the Rite Aid drugstore just eight blocks away.
This led the committee on a bipartisan basis to request
information from the Drug Enforcement Administration, and the
so-called Big Three drug distributors: McKesson, Cardinal
Health, and AmerisourceBergen. These distributors delivered
more than 500 million opioids to West Virginia between 2007 and
2012, with Cardinal shipping 241 million opioids,
AmerisourceBergen shipping about 119 million opioids, and
McKesson shipping more than 150 million opioids. Later in the
investigation, the committee also sent letters to two regional
distributors with a major presence in West Virginia: Miami-
Luken and H.D. Smith.
We found that the stunning numbers that led us to start
this investigation were more common than hoped.
Among our discoveries are a single pharmacy in Mount Gay-
Shamrock, West Virginia-population 1,779-that received more
than 16.5 million hydrocodone and oxycodone pills between 2006
and 2016. In nearby Williamson, West Virginia--population
2,900-distributors sent almost 21 million opioids to two
pharmacies during the same period. And this is just within the
targeted areas that we reviewed.
We have learned much from the investigation, but still have
many questions. For example, why did the distributors
repeatedly fail to report suspicious orders of opioids or
exercise effective controls against diversion? By 2005,
Internet pharmacies had transformed the DEA regulatory
paradigm, with unprecedented large volumes of controlled
substances being shipped to individual pharmacies. Pill mill
doctors and pharmacies began to proliferate. The agency needed
help, and, given their position in the supply chain and their
legal obligations to identify and report suspicious orders,
identified the distributors as a main line of defense against
diversion. Through meetings and letters over a period of years,
the DEA educated and coached the distributors on their
responsibilities.
The distributors have contended that the DEA provided
insufficient communication and guidance. Distributors have also
said that only the DEA can see the full picture with respect to
pharmacy volume and that distributors are simply privy to their
own data.
But were distributors' capabilities that limited?
Distributors conduct due diligence, site visits, and can obtain
market data. They can request and analyze a pharmacy's
dispensing data, which provides the distributors with the
ability to see all the controlled substances being dispensed by
a pharmacy and the prescribers over a given period of time. In
some cases, such as what we have seen in West Virginia, the
volume of controlled substances a distributor sends on its own
should be cause for concern.
Distributors also contend that they do not set demand, and
simply satisfy orders for prescriptions written by licensed
doctors and filled by licensed pharmacies. But what about the
distributors' legal responsibility to ``know their customer''
and perform due diligence?
And what does our work mean for the rest of the country?
West Virginia is far from the only State heavily impacted by
the opioid epidemic. It has hit every State, and every one of
us in the room has been affected in some way. How many other
communities across the country have received millions more
opioids than their communities could reasonably sustain? How
many other times did a distributor miss the red flags of their
own distribution--let alone what could be found with due
diligence? How many other Kermits and Williamsons are out
there?
It's my hope that we will get some answers today as to how
the drug distributors seemingly missed the ``red flags'' of
diversion.
I welcome the witnesses and thank you for your
participation. I also thank my colleagues across the aisle for
all of their hard work on this investigation and now recognize
the ranking member of the subcommittee, Ms. DeGette.
Mr. Harper. And I now recognize the ranking member of the
subcommittee, Ms. DeGette.
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you so much, Mr. Chairman.
This investigation has been bipartisan. And as you
mentioned, it was a year ago today when we sent our first
letters to three of the drug wholesale distributors before us
today. Those letters described the devastation of the opioid
crisis, and they referenced a report that, over 6 years,
distributors showered the State with 780 million hydrocodone
and oxycodone pills while 1,728 West Virginians fatally
overdosed on those two painkillers.
Over the last year, we learned a lot more about the full
scope of the epidemic in West Virginia. As the chairman said,
we obtained data showing that pharmacies in tiny towns received
millions of pills in just a few years.
But our work is not finished. We want to know what these
companies knew about the rise of the opioid epidemic, when they
knew it, and whether it informed their distribution practices.
In fact, over a decade ago the DEA sent letters to all
registered distributors informing them that, quote, ``The abuse
of controlled prescription drugs is a serious and growing
health problem in this country,'' end quote.
In 2007, CDC reported that drug overdose deaths nationwide
increased by 276 percent between 1999 and 2014, and in West
Virginia, drug overdose deaths were up by 550 percent.
A well-publicized 2008 JAMA study specifically implicated
prescription opioids in the rise of overdose deaths.
In 2010, the New England Journal of Medicine article, ``A
Flood of Opioids, a Rising Tide of Deaths,'' showed that the
prescription opioids death toll continued to rise, particularly
in West Virginia.
In 2011, the Charleston Gazette published a major story
describing how residents began calling the town of Williamson,
quote, ``Pilliamson,'' because so many opioids had flooded that
town.
And this is just a small sampling of the articles that
highlighted the rise of this epidemic.
So yet, even as this information was coming out, it appears
that, over 3 years, distributors sent more than 11 million
pills to one pharmacy in a town of 400 and more than 12 million
total pills to two pharmacies in a town of 3,000. I mean, come
on.
I know we are going to hear from the distributors that they
had systems in place and that they only fill orders by
pharmacies that hold valid DEA licenses. At the end the day,
however, I think we can all agree, whatever systems were in
place did not prevent damage to these communities caused by
what appears to be the excessive supply of opioid pills.
Some of the counties that have been the focus of the
investigation have the highest death and overdose rates in the
Nation. The epidemic has devastated families throughout that
State, and it has placed huge burdens on the State's healthcare
system, its child welfare program, and its economy as a whole.
Now, we need to understand the root causes of how we let
this happen and why distributors apparently supplied so many
opioids to certain small town pharmacies. For example, how did
the tiny town of Kermit, with a population of 400, receive 9
million pills in just 2 years? Shouldn't the distributors'
suspicious order systems have immediately flagged and halted
shipment of this magnitude? And shouldn't the distributors have
examined them more closely to determine the appropriateness for
shipping them?
I also want to understand why major drug companies failed
to have adequate suspicious order reporting programs in place
and were forced to have to settle with the DOJ and the DEA not
once, but twice during this epidemic. Do the distributors
believe that any of their suspicious order reporting system
failed? And if so, how?
I hope what we learn today will help us inform
investigations all across the country, including in Colorado,
which has had similar concerns raised about overdistribution.
Mr. Chairman, let me conclude by saying we agree it is
critical that we understand what happened and how the Nation
has found itself in the grip of this opioid crisis. But at the
same time, I think that the overall committee needs to make
sure that we have adequate resources available to help those in
need and to get people like those in the hard-hit places we
will be talking about today the recovery that they need.
As we look back on what happened, we cannot turn our backs
on those who were devastated by this crisis.
Thank you, and I yield back.
[The prepared statement of Ms. DeGette follows:]
Prepared statement of Hon. Diana DeGette
Exactly 1 year ago today, this committee sent our first
letters to three of the drug wholesale distributors before us
today. Our letters described the devastation of the opioid
crisis, and referenced a report that over 6 years, distributors
``showered the State with 780 million hydrocodone and oxycodone
pills, while 1,728 West Virginians fatally overdosed on those
two painkillers.''
Over the past year, we have learned more about the full
scope of this epidemic in West Virginia. We have obtained data
showing that pharmacies in tiny towns received millions of
pills in just a few years.
But Mr. Chairman, our work is not finished. I want to know
what these companies knew about the rise of the opioid
epidemic, when they knew it, and whether it informed their
distribution practices.
In fact, over a decade ago, DEA sent letters to all
registered distributors, informing them that ``the abuse of
controlled prescription drugs is a serious and growing health
problem in this country.''
In 2007, CDC reported that drug overdose deaths nationwide
increased by 276 percent between 1999 and 2004, and that in
West Virginia, drug overdose deaths were up by 550 percent.
A well-publicized 2008 JAMA study specifically implicated
prescription opioids in the rise in overdose deaths.
In 2010, the New England Journal of Medicine article ``A
Flood of Opioids, a Rising Tide of Deaths,'' showed that the
prescription opioids death toll continued to rise, particularly
in West Virginia.
In 2011, the Charleston Gazette published a major story
describing how residents began calling the town of Williamson
[quote], ``Pill-iamson,'' because so many opioids had flooded
that town.
And this is just a small sample of the articles
highlighting the rise of this epidemic.
And yet, even as all of this information was coming out, it
appears that over 3 years, distributors sent more than 11
million pills to one pharmacy in a town of 400, and more than
12 million total pills to two pharmacies in a town of 3,000.
I know that we will hear from the distributors that they
had systems in place and that they only fill orders by
pharmacies that hold valid DEA licenses. At the end of the day,
however, whatever systems were in place did not prevent the
damage to these communities caused by what appears to be the
excessive supply of opioid pills.
Some of the counties that have been the focus of our
investigation have the highest death and overdose rates in the
Nation. The epidemic has devastated families throughout that
State and it has placed huge burdens on the State's health care
system, its child welfare program, and its economy as a whole.
We need to understand the root causes of how this happened,
and why distributors apparently supplied so many opioids to
certain small-town pharmacies.
For example, how did the tiny town of Kermit with a
population of 400 hundred receive 9 million pills in just 2
years? Should the distributors' suspicious order systems have
immediately flagged and halted shipments of this magnitude, and
examined them more closely to determine their appropriateness
before shipping them?
I also want to understand why major drug companies failed
to have adequate suspicious order reporting programs in place
and were forced to settle with DOJ and DEA not once, but twice
during this epidemic. Do these distributors believe that any of
their suspicious order reporting systems failed, and if so,
how?
I hope that what we learn today will inform investigations
in other States, including Colorado, which has had similar
concerns raised concerning over distribution, going forward.
Mr. Chairman, let me conclude by saying that it is critical
that we understand what happened and how the Nation has found
itself in the grip of this ongoing opioid crisis. But at the
same time, I also believe we commit to making adequate
resources available to help those in need, and get people, such
as those in the hard hit places we will be talking about today,
the recovery help they need. As we look back at what happened,
we cannot turn our backs on those who have been devastated by
this crisis.
Thank you.
Mr. Harper. The gentlewoman yields back.
The Chair now recognizes the chairman of the full
commitment, Mr. Walden, for the purposes of an opening
statement.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Thank you, Mr. Chairman.
Over the last few years, the Energy and Commerce Committee
has conducted multiple investigations, enacted major bipartisan
legislation, and helped authorize historic levels of funding to
help those battling this epidemic in our communities all across
America. But clearly we have much more work to do, including
two important hearings and a full committee markup this week on
this issue.
Our efforts continue on two tracks. One is to provide new
legislative solutions, new laws, new programs to combat the
crisis. And the second track is to continue our yearlong
investigation into its causes.
As you have heard before, today's hearing marks a 1-year
anniversary since we first asked the Drug Enforcement
Administration and the Nation's largest distributors of opioids
for information about the overwhelming amount of prescription
opiates that flooded into countless communities all across the
United States.
After hearing from the DEA in March, it is important that
today we hear from the executives who lead the most influential
pharmaceutical distribution companies in America. We have tough
questions for you today. You know that. But we ask you these
questions in order for all of us to find solutions.
Today, a thousand people will go into emergency rooms
overdosing on opioids. Today in America, 115 people will die
from opioid addiction and overdose. This is why we are moving
forward.
A decade ago, the DEA realized that its enforcement
strategy had to change to fight the rising tide of internet
pharmacies, internet pharmacies and pill mills. With more than
a million DEA registrants, the DEA simply could not fight this
only at an individual doctor and pharmacy level.
So to more effectively and efficiently combat this emerging
law enforcement challenge, the DEA asked the drug distributors
to play a more proactive role in identifying, analyzing, and
reporting and blocking suspicious orders of controlled
substances.
In 2005, the DEA started the Distributor Initiative
Program. That program had a goal of educating registrants on
maintaining effective controls against diversion and monitoring
for and reporting suspicious orders. DEA held individual
meetings in 2005 and 2006 with McKesson, with Cardinal Health,
and AmerisourceBergen, and instructed companies on how to
identify and submit reports of suspicious orders.
In 2006 and 2007, the DEA sent three letters to all DEA-
registered distributors to put them on notice about their legal
obligations. However, soon after the start of this initiative,
each of these three companies faced enforcement actions, in
2007 and 2008, for failures to maintain effective controls
against the diversion of controlled substances. Cardinal Health
and McKesson each paid civil penalties totaling millions of
dollars.
Meanwhile, the opioid crisis worsened over the next decade,
especially in ravaged communities like we have heard about this
morning and in our investigations in small towns in West
Virginia.
Even after the 2008 settlements, while concerns rose over
the opioid epidemic, some distributors were still failing to
exercise effective controls against diversion. This led to more
enforcement actions and more settlements, including a record-
setting $150 million civil penalty by McKesson in 2017. It
remains an open question today whether the distributors have
finally achieved effective DEA compliance programs.
Since the 1970s, distributors have had a statutory
responsibility under the Controlled Substances Act to exercise
due diligence to report and avoid filling suspicious orders.
This responsibility is due to their unique position in the
marketplace. They are the chokepoints in the U.S. prescription
drug supply chain.
Three of those that are before us today, McKesson, Cardinal
Health, and AmerisourceBergen, account for about 85 percent of
the drug supply. So it is not sufficient just to blame the DEA,
although we have our own issues with the DEA's role in this.
You have a unique set of resources and tools at your disposal
and a shared responsibility in flagging suspicious activity and
diversion. You are on the front lines of the defense in this
crisis.
Instead, the information uncovered by the investigation
over the last year is stunning. There is no logical explanation
that we can find for why a town of approximately 400 people
would receive 9 million opioid pills in 2 years or why a single
pharmacy in a town of 1,800 people would receive nearly 17
million opioid pills in a decade. Then there are two pharmacies
in a nearby town of 2,900 people which received nearly 21
million opioids in the same timeframe.
No matter how you cut these data, behind each of these
numbers was a pill mill, and they proliferated for far too
long.
So given what we know about the volume of opioid shipments
to small towns in West Virginia and the associated pill mills
and diversion schemes in those areas, it is difficult not to be
troubled by the compliance efforts by our Nation's
distributors.
So we look forward to getting a better understanding of the
facts and to finally have this necessary and frank
conversation. We owe it to the 115 Americans who will die today
and every day from opioid overdoses and to their loved ones to
understand what led to this crisis and to identify solutions to
stem the tide.
With that, Mr. Chairman, I yield back.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Mr. Chairman, thank you for holding this hearing. I also
want to thank you and Ranking Member DeGette for your work in
this bipartisan investigation.
This Energy and Commerce Committee is leading the national
fight to combat the opioid crisis. Over the past few years
we've conducted multiple investigations, enacted major
bipartisan legislation, and helped authorize historic levels of
funding--to help those battling this epidemic in communities
across the country. But clearly we have more work ahead of us,
including two important hearings and a full committee markup
this week. Our efforts continue on two-tracks, providing new
legislative solutions to combat the crisis and conducting
thorough investigations into its causes.
Today's hearing marks 1 year to the day since we first
asked the DEA and the Nation's largest opioid distributors for
information about the overwhelming amount of prescription
opiates that flooded countless communities. After hearing from
the DEA in March, it's important that today we hear from the
executives who lead the most influential pharmaceutical
distributors in the country. We have tough questions for you
today, but we ask you these questions in order for us all to
find solutions.
More than one decade ago, the DEA realized that its
enforcement strategy had to change to fight the rising tide of
internet pharmacies and pill mills. With more than one million
DEA registrants, the DEA simply could not fight this only at an
individual doctor and pharmacy level. To more effectively and
efficiently combat this emerging law enforcement challenge, the
DEA asked the drug distributors to play a more proactive role
in identifying, analyzing, reporting, and blocking suspicious
orders of controlled substances.
In 2005, the DEA started the ``Distributor Initiative
Program,'' with the goal of educating registrants on
maintaining effective controls against diversion, and
monitoring for and reporting suspicious orders. DEA held
individual meetings in 2005 and 2006 with McKesson, Cardinal
Health, and Amerisource Bergen, and instructed the companies on
how to identify and submit reports of suspicious orders. In
2006 and 2007, the DEA sent three letters to all DEA-registered
distributors to put them on notice about their legal
obligations.
However, soon after the start of this initiative, each of
these three companies faced enforcement actions in 2007 and
2008 for failures to maintain effective controls against
diversion of controlled substances. Cardinal Health and
McKesson each paid civil penalties totaling millions of
dollars.
Meanwhile, the opioid crisis worsened over the next decade,
especially in ravaged communities like the small towns in rural
West Virginia.
Even after the 2008 settlements, while concerns rose over
the opioid epidemic, some distributors were still failing to
exercise effective controls against diversion. This led to more
enforcement actions, and more settlements, including a record-
setting $150 million civil penalty by McKesson in January 2017.
It remains an open question today whether the distributors have
finally achieved effective DEA compliance programs.
Since the 1970s, you have had a statutory responsibility
under the Controlled Substances Act to exercise due diligence
to report and avoid filling suspicious orders. This
responsibility is due to your unique position in the
marketplace. You are the chokepoints in the U.S. prescription
drug supply chain. Three of you--McKesson, Cardinal Health, and
AmerisourceBergen--account for about 85 percent of the drug
supply.
It is not sufficient to simply blame the DEA. You have a
unique set of resources and tools at your disposal, and a
shared responsibility in flagging suspicious activity and
diversion. You are supposed to be one of the first lines of
defense in this crisis.
Instead, the information uncovered by this investigation
over the last year is stunning. There is no logical explanation
for why a town of approximately 400 people would receive 9
million opioid pills in 2 years. Or why a single pharmacy in a
town of about 1,800 people would receive nearly 17 million
opioid pills in a decade. Then there are the two pharmacies in
a nearby town of 2,900 people which received nearly 21 million
opioids in the same time frame. No matter how you cut this
data, behind each of these numbers was a pill mill. And they
proliferated for far too long.
Given what we know about the volume of opioid shipments to
small towns in West Virginia, and the associated pill mills and
diversion schemes in those areas--it is difficult to not be
troubled by your compliance efforts and the part you have
played in our Nation's opioid crisis.
We look forward to getting a better understanding of the
facts, and to finally have this necessary and frank
conversation. We owe it to the 115 Americans who die every day
from opioid overdoses, and their loved ones, to understand what
led to this crisis and to identify solutions to stem the tide.
Mr. Harper. The chairman yields back.
The Chair will now recognize the ranking member for the
full committee, Mr. Pallone.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
The opioid epidemic continues to devastate this country,
and virtually no community in America has been left untouched.
West Virginia in particular has been severely affected. For the
last several years, West Virginia has had the highest overdose
death rate in the country.
This committee's investigation has uncovered some very
troubling information about seemingly large shipments of
opioids from drug distributors to rural pharmacies in West
Virginia over the course of several years.
And I think it is important for us to understand what went
wrong and why, but we must also understand what needs to change
so that we do not ever find ourselves in this situation again.
For example, there is simply no excuse for distributors sending
more than 13 million doses of opioids to a single pharmacy in a
town of just over 400 people over a 6-year period.
Some of the distributors who supplied high amounts of pills
to this pharmacy appear not to have submitted suspicious order
reports to DEA even though the law requires them to do so. In
addition, some of the distributor's files are either sparse or
unavailable, raising additional questions about whether they
investigated the risk of diversion before shipping these pills.
In the end, Federal authorities raided and shut down this
pharmacy, and its owner went to jail. And we must understand
what went wrong here so that we can be sure that no town is
ever again flooded with pills.
In another case, two doctors in the town of Williamson
prescribed more opiates than entire hospitals did, according to
a Justice Department press release, and these doctors were in
fact the highest opioid prescribers in the entire State and
were widely known to be running pill mills. One of these
doctors ultimately went to jail; the other fled overseas.
It appears that certain distributor systems failed to
detect the volume of prescriptions these pharmacies were
filling for these doctors, which may have led to oversupply and
diversion of pills.
It is the distributors' responsibility to know their
customers, monitor orders, refuse suspicious orders, and report
those orders to DEA. Distributors must perform these functions
particularly when pharmacies order high volumes of opioids. But
our investigation has shown that this did not always happen.
In fact, some of these distributors paid large fines to DOJ
because their systems failed and because they did not report
suspicious orders to DEA as required. And these distributors
promised to clean up their act, but just a few years later,
they were again hit with multimillion-dollar fines for the very
same shortcomings.
So I want to know how we can be confident that distributors
have sufficiently improved their systems now so that going
forward we will not miss key indicators that may help uncover
diversion in other situations.
For example, one distributor told us that, with the benefit
of hindsight, they wished they had asked different questions of
at least two of the pharmacies we have examined. And I would
like to know what kind of questions they believe will make the
process more effective and reduce the possibility of diversion.
Mr. Chairman, this is a nationwide concern. The problems we
found in West Virginia have broader lessons for the rest of the
county.
I also want point out that this investigation focused on
the role the distributors played in this crisis, but we know
that there are many causes of this epidemic. This includes the
role of some manufacturers in manufacturing these drugs, the
role of some rogue physicians in overprescribing them, and the
failure of regulators at the State and Federal level to
adequately oversee the opioid supply chain.
But let me also highlight another important aspect of this
committee's work which I hope will not be lost as we look as
how events unfolded in the past, because this crisis is far
from over. Right now countless Americans, including those in
the hard-hit areas of West Virginia, still need to access
quality healthcare to help them recover from the opioid crisis.
In the past month, we have marked up a substantial number
of opioid-related bills, and I am still concerned that we have
made this push without taking the time to make sure we get it
right without much of an emphasis on treatment. It is not
enough to only look backwards at this crisis. We must take the
necessary steps to actually help those who are suffering by
providing comprehensive treatment to individuals and
communities in need.
Unless someone wants my minute, I will yield it back.
Thank you.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
The opioid epidemic continues to devastate this country,
and virtually no community in America has been left untouched.
West Virginia in particular has been severely affected. For the
last several years, the State has had the highest overdose
death rate in the country.
This committee's investigation has uncovered some very
troubling information about seemingly large shipments of
opioids from drug distributors to rural pharmacies in West
Virginia over the course of several years.
I think it is important for us to understand what went
wrong and why, but we must also understand what needs to change
so that we do not ever find ourselves in this situation again.
For example, there is simply no excuse for distributors
sending more than 13 million doses of opioids to a single
pharmacy in a town of just 400 people over a 6-year period.
Some of the distributors who supplied high amounts of pills
to this pharmacy appear not to have submitted suspicious order
reports to DEA, even though the law requires them to do so. In
addition, some of the distributors' files are either sparse or
unavailable, raising additional questions about whether they
investigated the risks of diversion before shipping these
pills. In the end, Federal authorities raided and shut down
this pharmacy and its owner went to jail. We must understand
what went wrong here so that we can be sure no town is ever
again flooded with pills.
In another case, two doctors in the town of Williamson
prescribed more opioids than entire hospitals did, according to
a Justice Department press release. These doctors were in fact
the highest opioid prescribers in the entire State, and were
widely known to be running ``pill mills.'' One of these doctors
ultimately went to jail; the other fled overseas. It appears
that certain distributors' systems failed to detect the volume
of prescriptions these pharmacies were filling for these
doctors, which may have led to oversupply and diversion of
pills.
It is the distributors' responsibility to know their
customers, monitor orders, refuse suspicious orders, and report
those orders to DEA. Distributors must perform these functions,
particularly when pharmacies order high volumes of opioids. But
our investigation has shown that this did not always happen.
In fact, some of these distributors paid large fines to DOJ
because their systems failed and because they did not report
suspicious orders to DEA as required. These distributors
promised to clean up their act. But just a few years later,
they were again hit with multi-million dollar fines for the
very same shortcomings.
I want to know how we can be confident that distributors
have sufficiently improved their systems now, so that going
forward we will not miss key indicators that may help uncover
diversion in other situations. For example, one distributor
told us that, with the benefit of hindsight, they wish they had
asked different questions of at least two of the pharmacies we
have examined. I would like to know what kind of questions they
believe will make the process more effective and reduce the
possibility of diversion.
This is a nationwide concern, and the problems we have
found in West Virginia have broader lessons for the rest of the
country.
I also want to point out that this investigation focused on
the role that distributors played in this crisis, but we know
that there are many causes of this epidemic. This includes the
role of some manufacturers in marketing these drugs, the role
of some rogue physicians in overprescribing them, and the
failures of regulators at the State and Federal level to
adequately oversee the opioid supply chain.
But let me also highlight another important aspect of this
committee's work, which I hope will not be lost as we look at
how events unfolded in the past, because this crisis is far
from over.
Right now, countless Americans, including those in the
hard-hit areas of West Virginia, still need access to quality
health care to help them recover from the opioid crisis. In the
past month, we have marked up a substantial number of opioid-
related bills. I am concerned that we have made this push
without taking the time to make sure we get it right or without
much of an emphasis on treatment.
It is not enough to only look backwards at this crisis. We
must take the necessary steps to actually help those who are
suffering by providing comprehensive treatment to individuals
and communities in need. I yield back.
Mr. Harper. The gentleman yields back.
I ask unanimous consent that the Members' written opening
statements be made a part of the record. Without objection, it
will be entered into the record.
Additionally, I ask unanimous consent that Energy and
Commerce members not on the Subcommittee on Oversight and
Investigations be permitted to participate in today's hearing.
Without objection, so ordered.
I would now like to introduce our witnesses for today's
hearing.
First today we have Dr. Joseph Mastandrea, chairman of the
board at Miami-Luken; John Hammergren, chairman, president, and
CEO of McKesson Corporation; George Barrett, executive chairman
of the board at Cardinal Health; Steven Collis, chairman,
president, and CEO of AmerisourceBergen Corporation; and
finally, J. Christopher Smith, former president and CEO, H.D.
Smith Wholesale Drug Company.
You are aware that the committee is holding an
investigative hearing. And when doing so, we have the practice
of taking testimony under oath.
Do any of you have any objection to testifying under oath?
Seeing none, the Chair then advises you that, under the
rules of the House and the rules of the committee, you are
entitled to be accompanied by counsel.
Do you wish to be accompanied by counsel during your
testimony today?
Seeing none, in that case, if you would please rise. Raise
your right hand, and I'll swear you in.
[Witnesses sworn.]
Mr. Harper. Each of you are now under oath and subject to
the penalties set forth in Title 18, Section 1001 of the United
States Code.
You may now give a 5-minute summary of your written
statement. We will begin first hearing from Dr. Joseph
Mastandrea.
You are recognized for 5 minutes.
I ask that everyone pull your microphone close to you, make
sure it's on.
And you're recognized for 5 minutes, Dr. Mastandrea.
STATEMENTS OF JOSEPH R. MASTANDREA, D.O., CHAIRMAN, MIAMI-
LUKEN, INC.; JOHN HAMMERGREN, CHAIRMAN, PRESIDENT, AND CHIEF
EXECUTIVE OFFICER, MCKESSON CORP.; GEORGE S. BARRETT, EXECUTIVE
CHAIRMAN, CARDINAL HEALTH; STEVEN H. COLLIS, CHAIRMAN,
PRESIDENT, AND CHIEF EXECUTIVE OFFICER, AMERISOURCEBERGEN
CORP.; AND JAMES CHRISTOPHER SMITH, FORMER PRESIDENT AND CHIEF
EXECUTIVE OFFICER, H.D. SMITH, LLC
STATEMENT OF JOSEPH R. MASTANDREA
Dr. Mastandrea. Good morning, Committee Chairman Walden,
Subcommittee Chairman Harper, Ranking Members Pallone and
DeGette, and distinguished members of the subcommittee. Thank
you for the invitation to testify before you today, and thank
you for your tireless efforts to address our Nation's ongoing
opioid epidemic.
I would like to share some background about Miami-Luken
with you. The company was originally cofounded by my father,
Robert E. Mastandrea, in 1962 as the Miami Valley Wholesale
Drug Company in Dayton, Ohio. Nine years later, in 1971, the
acquired the A.G. Luken Drug Company of Richmond, Indiana. It
was then that the company Miami-Luken was born.
Since then, the company has made additional acquisitions in
Ohio and West Virginia, yet has always remained a relatively
small regional distributors.
I first started working for the company at the age of 14
working in the warehouse. After graduating college, I worked a
short time with my father learning the day-to-day operations of
the business where I was involved in making sales calls,
deliveries, and various warehouse duties.
It was a wonderful place to work, and I was proud of my
father and what he had achieved. He was born in Italy and came
to this country at the age of 13. He subsequently graduated
from college and began a business career that would lead to the
formation of Miami-Luken. Through my father's leadership, the
company's culture was more like a family than just a place to
work.
I entered medical school in 1979 and after my residency
embarked on a full-time career as a physician in Dayton.
Several years later I was asked to serve on the board of
directors of Miami-Luken, which I accepted. Some years later, I
became the chairman of the board and have held that position
since that time.
Management of the company remained pretty much the same
until 2007 when a new president was appointed by the board.
This individual had extensive managerial experience in both the
wholesale drug business and the wholesale grocery business and
was more than qualified to lead the company. He was
knowledgeable, confident, and well-liked by the company's
employees.
It was not until several years later, in 2013, after the
board learned that the DEA had issued a number of subpoenas to
the company, that we realized the Government had concerns with
the company's compliance efforts.
In response, we retained the services of a prominent
attorney here in Washington who used to work for the DEA. This
attorney worked with management to assist the company in
fulfilling its DEA compliance obligations. We also instructed
the company's president to purchase a computer program to
better identify suspicious orders from customers, which he did.
When we subsequently learned that management was having
difficulties with the computer system they purchased, it was
apparent to us that we needed someone more capable in that
position. The board immediately began looking for a replacement
and after considering several individuals hired the company's
current president and CEO, Michael Faul.
In addition to hiring Mr. Faul, the company hired a new
director of compliance and security who worked with Mr. Faul to
implement a number of significant changes in the company's
compliance program.
These included more frequent and robust customer visits by
compliance staff, greater scrutiny of requests from customers
to increase purchase quantities, increased facility and
transportation security, implementation of compliance training,
purchase of the NTIS database, enhancing the controlled
substance profile that customers are required to complete
during the on-boarding process, and the complete overhaul of
Miami-Luken's standard operating procedures regarding DEA
compliance.
The compliance director also worked with the software
vendor to recalibrate the company's computerized suspicious
orders notification system, improved its effectiveness in
identifying suspicious orders on a daily basis, and started the
process of uploading all relevant data on shared computer
drives providing employees and DEA investigators easier access
to information pertaining to individual customers.
He also hired additional staff to assist the company in its
compliance efforts and created a new analytical tool on an
Excel spreadsheet to assist in conducting due diligence on
current and prospective customers. In fact, the compliance
director last year was recognized by the National Association
of Drug Diversion Investigators for his outstanding work in
drug diversion prevention.
As a result of new management's enhanced compliance
efforts, Miami-Luken terminated its relationship with multiple
customers, many of whom are still in business purchasing from
other sources. Since 2014, we have reduced the sale of
oxycodone by approximately two-thirds and the sale of
hydrocodone by a similar margin.
It is our understanding that former management took what
they believed to be sufficient steps at the time, believing
that the State medical boards and State pharmacy boards were in
a strong position to monitor the physicians and pharmacists
they licensed.
Former management also believed that since Miami-Luken
regularly provided the DEA with sales data for all its
customers, the Government would have advised us if they had any
concerns with sales to specific parties.
Unfortunately, we know that is not enough. And as you know
from the materials we have provided this committee last year,
Miami-Luken has taken aggressive action going back several
years to strengthen its compliance efforts and suspicious order
monitoring system and reporting. And as I sit here now, I can
assure you that our company employs a compliance program that
is second to none.
In closing, I welcome any questions you have and will
answer them to the best of my ability. Thank you again for this
opportunity and for all your efforts.
[The prepared statement of Dr. Mastandrea follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Harper. Thank you, Dr. Mastandrea.
The Chair will now recognize John Hammergren, chairman,
president, and CEO of McKesson Corporation, for 5 minutes.
STATEMENT OF JOHN HAMMERGREN
Mr. Hammergren. Mr. Chairman, Ranking Member DeGette, and
members of the subcommittee, my name is John Hammergren, and
for almost two decades I've had the privilege to serve as the
chief executive officer of McKesson Corporation.
The impact the opioid epidemic has had on our Nation is
devastating. Millions of Americans have been affected,
including employees of McKesson and their families. We
recognize the importance of this committee's investigation, and
I appreciate the opportunity to appear before you today to help
the committee address this crisis. I will also explain the
steps that we ourselves are taking.
Our company has over 70,000 employees worldwide. Our
distribution business receives 275,000 orders every day,
serving 40,000 pharmacies and hospitals. Like all distributors,
we have two critical priorities: to deliver medicines to
pharmacies and hospitals when and where they need them and to
help the protect the integrity of the supply chain.
As a distributor, we don't manufacture prescription drugs,
we don't market them to doctors or patients, nor do we market
any particular category of drugs, such as opioids, to
pharmacists. Distributors respond to pharmacy orders, which are
based on doctor's prescriptions.
For years we have reported every controlled substance
transaction that we have made in West Virginia and across the
country to the DEA. Other distributors provide similar
information so that only the DEA has an overall view of opioids
distributed in this country.
Distributing controlled substances represents a small share
of McKesson's total business. The two schedules of controlled
substances that include the most commonly abused prescription
opioids constitute approximately 3 to 4 percent of our total
revenue.
The committee has highlighted a large volume of opioids
distributed to pharmacies in West Virginia by McKesson and
other distributors. Over a 6-year period addressed by the
committee, McKesson distributed approximately 151 million doses
of oxycodone and hydrocodone there.
To put that into some perspective, if you look at all
prescription drugs of any kind that McKesson distributed, the
total number was nearly 2 billion doses in West Virginia during
the same period.
There is no question that a key driver of the crisis, as
the CDC has said, is the overprescribing of opioids by doctors
across the country. At the same time, there clearly were
certain pharmacies in West Virginia that were bad actors that
McKesson itself terminated. In hindsight, I would have liked to
have seen us move much more quickly to identify the issues with
these pharmacies.
We learned important lessons, so let me tell you how we're
applying those lessons today.
Over the last 5 years, we have successfully used the latest
technology and the best available expertise to strengthen
controls. We have invested millions of dollars in enhancing our
controlled substance monitoring program, or CSMP. A key part of
that is sophisticated data analytics designed by outside
experts which harness the power of advanced statistical models
to set caps on sales to individual pharmacies. And then we
block sales that exceed those caps, which are constantly
monitored and fine-tuned.
Our CSMP team is independent of the business and has
unilateral authority to deny a customer access to controlled
substances. Our team includes former DEA agents with more than
240 years of collective DEA enforcement experience.
And the CSMP is working. In fact, over the last decade, we
blocked and reported to the DEA over 1 million suspicious
orders nationwide.
With a strong program in place today to monitor sales of
opioids, we are extremely focused on advancing solutions to the
country's opioid crisis more broadly.
First, we are moving forward with the development of a
prescription safety alert system. This would be an electronic
system to provide doctors and pharmacies with real-time red
flags based on a patient's nationwide prescription history.
Congress and the FDA can help make this a reality.
Second, we are requiring our customers to accept electronic
prescriptions in 2019. Handwritten prescriptions are more prone
to fraud.
Third, we're pushing for opioid manufacturers to use
limited dose packaging, such as blister packs, to facilitate
smaller prescription sizes.
And fourth, we've announced the formation of a foundation
to fight the opioid epidemic and committed $100 million dollars
to launch its mission.
McKesson and I personally fully understand the gravity of
this crisis and our essential role in helping to address it.
Thank you again for the opportunity to testify today. I
would be happy to address your questions.
[The prepared statement of Mr. Hammergren follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Harper. Thank you, Mr. Hammergren.
The Chair will now recognize George Barrett, executive
chairman of the board at Cardinal Health.
Thank you.
STATEMENT OF GEORGE S. BARRETT
Mr. Barrett. Chairman Harper, Ranking Member DeGette, and
members of the subcommittee, Chairman Walden, Ranking Member
Pallone, and other members of the full committee, thank you for
the opportunity to be here today. I also want to extend my
thanks to your staff for their professionalism and courtesy.
My name is George Barrett, and I have committed my
professional career to healthcare in a wide range of roles for
over three decades. Between 2009 and 2017, I was privileged to
serve as CEO and chairman of Cardinal Health, which today is
composed of more than 50,000 dedicated men and women.
We simply cannot look at the impact of opioid abuse on so
many lives and not feel sorrow. I speak for the entire Cardinal
Health team when I say that we care deeply about the
devastation that opioid abuse is causing families and
communities around our country. We are resolved to be a
constructive part of the effort to alleviate this complex
national public health crisis.
Some of the issues we will discuss today involve the
healthcare system in our neighboring State of West Virginia
where hundreds of our employees live and work. The people of
West Virginia are not just the recipients of the medicine and
the medical products we distribute to hospitals and pharmacies,
they are our coworkers, friends, neighbors, and family members.
I have visited the State to hear firsthand about the
challenges of opioid abuse and how Cardinal Health can play a
constructive role in addressing these challenges.
To the people of West Virginia, I want to express my
personal regret for judgments that we'd make differently today
with regard to two pharmacies that have been a particular focus
of this subcommittee. With the benefit of hindsight, I wish we
had moved faster and asked a different set of questions. I'm
deeply sorry that we did not.
Today I'm confident that we would reach different
conclusions about opioid orders from those two pharmacies.
We've taken responsibility with our regulators. Cardinal Health
has not distributed oxycodone or hydrocodone to either of these
two pharmacies for years.
We understand that no antidiversion program is perfect,
which is why we are so focused on continuous improvement. We
are at the table focused on alleviating this critical national
health problem. We are committed to working with Congress,
regulators, and others in the healthcare system to combat this
crisis and address its effects.
There is no single root cause of the crisis, and addressing
it requires that all healthcare participants work together, and
we have to do it now.
We recognize the challenge posed by lawful yet high-volume
prescribing of opioids. On the one hand, we know there are many
individuals who rely on these medications to address suffering
associated with terminal illnesses, painful neurological
conditions, severe injuries, and other medical conditions.
On the other hand, we share the recent judgments of
policymakers, including senior leadership at HHS, the FDA, the
surgeon general, the CDC, and others, that there have been too
many prescriptions for too many pills.
As a pharmaceutical wholesale distributor, we have a dual
responsibility: to ensure that prescription medications are
available for healthcare providers and their patients when
needed while working to limit the potential for those
prescription medicines to fall into the wrong hands.
Pharmaceutical wholesale distributors do not and should not
have visibility into the medical judgment or the patients for
whom prescriptions are written. However, we can play a role by
raising awareness of the dangers of overprescribing, which we
are doing.
Our antidiversion tools are built around a core commitment
to spot, stop, and report potential diversion. Our program is
supported by a dedicated antidiversion team of investigators,
auditors, analysts, former law enforcement officers, compliance
officers, and pharmacists deployed nationwide and augmented by
substantial external resources and technology.
From 2008 to the present, we have stopped suspicious orders
for the shipment of hundreds of millions of opioids. We will
not ship an order for hydrocodone or oxycodone to pharmacies
that do not meet our standards. We have refused to onboard
pharmacies that cannot pass our rigorous screening, and we have
cut off existing customers that do not have effective controls.
But with a problem as large and complex as opioid
addiction, we know there is always room to do better, and we
will never stop working to continuously improve and refine our
systems.
For over a decade, we have funded education and prevention
programs that have been used in every State and more than 100
colleges and pharmacies. We have also launched an opioid action
program including the free distribution of opioid reversal
medication to law enforcement and first responders beginning in
four of the Nation's hardest-hit States across Appalachia.
As I indicated earlier, Cardinal Health is at the table and
intends to be here for as long as the problem persists. Today
I'll do my best to answer your specific questions and hope that
our dialogue will continue.
Thank you.
[The prepared statement of Mr. Barrett follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Harper. Thank you, Mr. Barrett.
The Chair will now recognize Steven Collis, chairman,
president, and CEO of AmerisourceBergen Corporation.
Mr. Collis.
STATEMENT OF STEVEN H. COLLIS
Mr. Collis. Thank you. Thank you, Chairman Walden,
Subcommittee Chairman Harper, Ranking Member Pallone, Ranking
Member DeGette, and distinguished members of the committee. On
behalf of AmerisourceBergen's over 21,000 associates, thank you
for the opportunity to be here today. We are committed to
working with you and all stakeholders to help combat the tragic
opioid abuse epidemic.
I will begin today by sharing three distinct perspectives
that have shaped my thinking on this urgent issue.
First, like so many others, I have been touched and
saddened by the excruciating stories that demonstrate the
destruction wrought by the disease of addiction, many shared by
your colleagues as they relayed the devastation that opioids
have left in their States. Some time ago, a Member shared a
story of a mother who overdosed, leaving her two children
starving and unattended for several days. Stories like this,
and sadly so many that tell similar tragic tales, are always on
my mind.
Second, I have seen friends, family, and those in my
community fight through uncontrolled pain and have experienced
firsthand the sad necessity of pain medications. This topic is
frequently brought up in my conversations with doctors and
healthcare professionals and was the focus of a recent
discussion I had with the CEO of a world-class cancer treatment
center in which he articulated his concern that the reaction to
the opioid crisis would prevent his team from providing
necessary and appropriate end-of-life care.
Lastly, I have spent the majority of my 30-plus-year career
in healthcare providing services surrounding the pharmaceutical
industry with a focus on working to enable patient access to
the medications they need.
As you all know, AmerisourceBergen's role in regard to
prescription opioid medications is one of a logistics provider
and distributor. We are responsible for getting FDA-approved
drugs from pharmaceutical manufacturers to DEA-registered
pharmacies that dispense them based on prescriptions by
licensed healthcare providers.
We have no ability and no desire to encourage the
prescribing or dispensing of pain medication. We do not
manufacture or promote the prescribing of these medications.
And we are not qualified to interfere with the very personal
clinical decisions made between patients and their physicians.
Here are some things that AmerisourceBergen does do. For
more than a decade, we've reported every opioid order we
distribute on a daily basis to the DEA. So every order, every
shipment, every day. We use statistical-based algorithms and
data analytics tools to monitor and assess every order we
receive in an effort to identify, stop, and report suspicious
orders.
Just as importantly, we continuously focus on enhancing our
diversion control efforts. And our best-in-class diversion-
control team endeavors to track patterns and behaviors beyond
just individual suspicious orders that have led us to refuse
service or terminate service to pharmacies we've identified as
problematic, including several of the pharmacies we have all
heard about today in West Virginia.
And we collaborate with and support others who are also
working hard to address the crisis, partnering with others
across the country to provide drug deactivation and disposal
resources, and with our customers, not-for-profits, and
innovators to support take-back programs and advance ideas that
could help combat the opioid abuse epidemic.
We believe we've taken meaningful action, but this epidemic
cannot be solved unless we improve the ways we work together.
Communication and technology between the DEA and pharmaceutical
distributors should be enhanced. Specifically, the sharing of
the DEA's comprehensive data of all opioid sales to all
pharmacies on a de-identified basis would alert distributors if
pharmacies are receiving controlled substances from other DEA
registrants.
Beyond improved data sharing, additional DEA guidelines for
distributors with uniform standards for suspicious ordering
monitoring programs would create a more consistent approach
across the more than 900 registered distributors in the
industry and, in turn, more actionable input for law
enforcement professionals.
We also support a number of solutions that are not specific
to distributors, including revising prescriber guidelines,
mandatory e-prescribing for controlled substances, enhanced
prescription drug monitoring programs to enable physicians and
regulators to determine if patients are obtaining prescriptions
in more than one State, and a number of the proposals the
subcommittee considered just last week.
Our work to play a role in combating abuse while supporting
clinically appropriate access will never be complete. We always
strive to be better. I join you today with an open mind and a
sincere desire for additional guidance and ideas from this
committee.
Thank you.
[The prepared statement of Mr. Collis follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Harper. Thank you, Mr. Collis.
The Chair will now recognize J. Christopher Smith, former
president and CEO of H.D. Smith Wholesale Drug Company.
Mr. Smith.
STATEMENT OF JAMES CHRISTOPHER SMITH
Mr. Smith. Good morning, Chairman Walden, Chairman Harper,
Ranking Member DeGette, and members of the subcommittee. Thank
you for inviting me here today.
I would like to start by telling you a little bit about
H.D. Smith, how it began, and the vision that guided it from
the very beginning.
My grandfather, who was a pharmacist, had the idea for it.
And with that idea from his own father, my father founded H.D.
Smith in Springfield, Illinois, in 1954, because he saw that
there was a true need for a wholesale drug distributor that
would commit to serving small town and rural independently
owned mom-and-pop pharmacies and downstate hospitals as there
was no other wholesale drug distributor like that in
Springfield.
My father's vision in starting the company was to make
certain that a wholesale drug distributor would not only commit
to serving these underserved communities, but he did so with
the mission that patient care should never be disrupted because
a rural small town pharmacy, hospital, or later, inner-city
pharmacy, could not quickly and reliably supply the medicines
that the patients in these communities needed right when they
needed them.
This is the mission and vision he taught to me and my
brother as we later joined the company and rose through its
ranks over time. As a child, I sometimes accompanied my father
when he, himself, would make emergency deliveries at night or
over weekends. And as an employee of H.D. Smith, I did the same
as well, along with many others. That is and always was our
legacy.
I first began working for H.D. Smith full-time in 1980 as a
buyer and gradually moved my way up through the ranks over the
years. In September 2007, I was appointed president and COO. In
March 2015, I became president and CEO.
In January 2018, H.D. Smith was acquired by
AmerisourceBergen, and I no longer hold any office, position,
or employment with H.D. Smith.
But it is important to remember that since its founding in
1954 until its acquisition in 2018, H.D. Smith always remained
a family-owned business, which I am very proud to have served.
I am certain, absolutely certain, that H.D. Smith's new
management will observe my family's guiding principles just as
loyally as I tried so hard to do myself.
I share the committee's grave concern about the opioid
crisis and am committed to doing all we can to address it. We
always took seriously our responsibilities to distribute
controlled substances appropriately. We had a DEA license. We
sold only to DEA- and State-licensed pharmacies and hospitals.
We followed DEA regulations in handling controlled substances.
We reported all our purchases and sales of controlled
substances to the DEA.
My company distributed all kinds of pharmaceutical
products. Only a small percentage were controlled substances,
including pain medication. We didn't advertise or promote the
medication or do anything else to encourage doctors to
prescribe them or pharmacies to dispense them. Our job as a
distributor was to fill orders that pharmacies sent us.
In fact, as a distributor, we could only see part of the
distribution chain--the pharmacy that we supply. We didn't see
the prescriptions the pharmacy filled or know the doctors who
wrote them or have any contact with knowledge of the patients.
As a distributor, we had to manage to the twin imperatives
of ensuring that we distributed pharmaceuticals appropriately,
for legitimate purposes, and ensuring the pharmacies that they
had the products they needed when the patient arrived with a
prescription so as to ensure undisrupted patient care.
To meet this challenge, we created strong diversion control
systems and continually improved them overtime. We always did
our very best to make sure that all orders we shipped went to
pharmacies that dispensed medications only on legitimate
prescriptions for legitimate medical reasons.
I am certain AmerisourceBergen will continue my company's
proud tradition and do everything that can be done to help with
the solutions to the opioid crisis in this country.
Thank you.
[The prepared statement of Mr. Smith follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Harper. Thank you, Mr. Smith.
I ask unanimous consent that the contents of the document
binder be introduced into the record and to authorize staff to
make any appropriate redactions. Without objections, the
documents will be entered into the record with any redactions
that staff determines are appropriate.\1\
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\1\ The information has been retained in committee files and also
is available at https://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=108260.
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At this point, each Member will have the opportunity to ask
questions, and I will recognize myself first for 5 minutes.
I want to thank you all for participating in today's very
important hearing. As the subcommittee closely examines this
very serious opioid crisis, I think it would be helpful at the
outset to help establish a baseline of understanding. And I
would like for each of you to answer each question that I am
going to ask now.
First, do you believe that the actions that you or your
company took contributed to the opioid epidemic?
Mr. Barrett.
Mr. Barrett. Thank you, Mr. Chairman.
Mr. Harper. We're really looking here, because I've got a
lot of questions, ``yes'' or ``no.'' And if it is not either
one----
Mr. Barrett. No. No, sir, I do not believe that we
contributed to the opioid crisis.
Mr. Harper. We'll come back to you then.
Dr. Mastandrea.
Dr. Mastandrea. Yes.
Mr. Harper. Mr. Hammergren.
Mr. Hammergren. No.
Mr. Harper. Mr. Smith.
Mr. Smith. I believe H.D. Smith conducted itself
responsibly and discharged its obligations.
Mr. Harper. Is that a no?
Mr. Smith. That is a no.
Mr. Harper. OK.
Mr. Collis.
Mr. Collis. No. I believe we--it's a no for
AmerisourceBergen.
Mr. Harper. Do you acknowledge--another question for each
of you--do you acknowledge that your company had past failings
in maintaining effective controls to prevent the diversion of
opioids?
Mr. Barrett.
Mr. Barrett. I believe that our organization understood the
responsibilities and conducted them as best they could with the
understanding at that time. I have no reason to challenge the
good faith of the decisions made by people many years ago. But
I can say that the decisions, as I mentioned in my commentary
today, that we might have made on some of those pharmacies
would look differently today.
Mr. Harper. Is that a no?
My question was, do you acknowledge that your company had
past failings in maintaining effective controls to prevent the
diversion of opioids?
Mr. Barrett. I think our organization understood its
obligations. We did resolve with regulators where we had areas
where we thought we could have done better, and I think those
resolutions satisfied the right balance of serving patients and
satisfying those controls, sir.
Mr. Harper. So is that a yes, it's now a no? I'm trying--I
mean, I'm a little----
Mr. Barrett. I am looking back on history. And what I'm
describing is an organization that I believe did its job at the
time understanding its responsibilities to address the
responsibilities of controlled drugs.
Mr. Harper. Dr. Mastandrea, the question is, do you
acknowledge that your company had past failings in maintaining
effective controls to prevent the diversion of opioids?
Dr. Mastandrea. Yes.
Mr. Harper. Mr. Hammergren.
Mr. Hammergren. Our organization has worked for decades to
try to meet our obligations under the DEA regulations. And we
continue to work today to evolve our processes to understand
what they're asking us to do and make sure that we have state-
of-the-art capabilities in place.
Mr. Harper. It seems like a pretty simple question. Do you
acknowledge that your company had past failings in maintaining
effective controls to prevent the diversion of opioids?
Mr. Hammergren. In the past we've had challenges
understanding the expectations that our regulator would like us
to follow.
Mr. Harper. Mr. Smith.
Mr. Smith. Again, I believe H.D. Smith has acted
responsibly. So the answer would be no.
Mr. Harper. Mr. Collis.
Mr. Collis. I believe we've always discharged our duties
effectively and responsibly and have maintained an adequate
diversion program.
Mr. Harper. The number of opioids shipped to pharmacies in
small towns of West Virginia has been astonishing: nearly 800
million opioids in total distributed to West Virginia in just a
5-year period, 20.8 million opioids to Williamson, and nearly
17 million opioids to a single pharmacy in Mount Gay-Shamrock
over a decade, 9 million opioids in just 2 years to Kermit.
Do the extraordinary volume of opioid shipments to
pharmacies in small towns of West Virginia indicate a breakdown
in the suspicious order monitoring system?
Mr. Barrett.
Mr. Barrett. Mr. Chairman, it is a very important question.
I don't believe that the volume in relation to the size of the
population is a determining factor. We often know that there's
a small population, a town, which serves a large service area
that may have a medical center or a cancer institute in the
nearby area.
I have said, and I said in my statements, and I repeat
here, that I think some of the decisions on particular
pharmacies in West Virginia, knowing what we know today, we
would have made different decisions, sir.
Mr. Harper. Dr. Mastandrea.
Dr. Mastandrea. Yes.
Mr. Harper. Mr. Hammergren.
Mr. Hammergren. We had a pharmacy in Kermit, West Virginia,
called Sav-Rite that we actually terminated in that period of
time.
What I can say is that, knowing what we know today, in
hindsight, we wish we would have terminated that relationship
sooner.
Mr. Harper. Mr. Smith.
Mr. Smith. Can you repeat the question?
Mr. Harper. The question is, do the extraordinary volume of
opioid shipments to pharmacies in small towns of West Virginia
indicate a breakdown in the suspicious order monitoring system?
Mr. Smith. I don't believe we had a breakdown in our
system.
Mr. Harper. Mr. Collis.
Mr. Collis. If you're talking specifically about
AmerisourceBergen, we didn't ship to any of those pharmacies.
If you're talking about the industry, I believe it probably
did.
Mr. Harper. My time has expired.
The Chair will now recognize the ranking member of the
subcommittee, Ms. DeGette, for 5 minutes.
Ms. DeGette. Thank you, Mr. Chairman.
Gentlemen, each of you in your own way spent time very
carefully telling this committee what your companies do not do
in terms of prescribing or things like that. But in fact each
of your companies, under the Controlled Substances Act, has a
duty to make sure that that controlled substances are
distributed correctly.
Would you agree with that statement, Mr. Barrett, yes or
no?
Mr. Barrett. Yes, we do.
Ms. DeGette. And, Dr. Mastandrea.
Dr. Mastandrea. Yes.
Ms. DeGette. Mr. Hammergren.
Mr. Hammergren. We have a duty to support----
Ms. DeGette. ``Yes'' or ``no'' will work.
Mr. Hammergren. We have a duty to support the----
Ms. DeGette. You have a duty to make sure that controlled
substances are distributed appropriately, correct?
Mr. Hammergren. We have a responsibility to----
Ms. DeGette. OK.
Mr. Smith.
Mr. Smith. Yes, we have a responsibility.
Ms. DeGette. Mr. Collis.
Mr. Collis. Yes, we have a responsibility.
Ms. DeGette. And in fact I would direct your gentlemen's
attention to exhibit 59 in the binder, which was a letter dated
September 27, 2006, which was sent to every commercial entity
in the United States registered with the DEA to distribute
controlled substances.
And on page 3 of that letter, it lists an entire panoply of
things that your companies are supposed to do. The letter was
then followed up on two times in 2007.
I want to start with you, Dr. Mastandrea, and I want to ask
you, Federal regulations require you to design and operate a
system to disclose Federal operators from pharmacies. Is that
correct?
Dr. Mastandrea. I'm sorry. I really don't understand----
Ms. DeGette. Federal regulations require you to design and
operate a system to disclose suspicious orders from pharmacies.
Dr. Mastandrea. Yes, I believe that to be correct.
Ms. DeGette. Yes, they do. OK.
And according to--and I want to focus a little bit on
Kermit, which is a town of 600--I'm sorry, 400.
According to data that Miami-Luken provided to the
committee, in 2007 your company supplied Sav-Rite pharmacy in
Kermit with nearly 1.5 doses of opioids. Is that correct?
Dr. Mastandrea. I believe so.
Ms. DeGette. In 2008 your company supplied Sav-Rite with
nearly 2 million doses of opioids. Is that correct?
Dr. Mastandrea. It's my understanding that is correct.
Ms. DeGette. And then in 2009 you supplied Sav-Rite with
another 800,000 pills. Is that correct?
Dr. Mastandrea. I believe so.
Ms. DeGette. Now, in fact you continued supplying Sav-Rite
until 2011 even though the pharmacy was actually raided by
Federal authorities in early 2009. Is that correct?
Dr. Mastandrea. I believe so.
Ms. DeGette. Now, Dr. Mastandrea, we asked Miami-Luken to
provide us with its entire due diligence file on the Sav-Rite
pharmacy, and this is what we got from you.
Do you recognize these documents?
Dr. Mastandrea. No.
Ms. DeGette. OK. We can have somebody hand them to you, but
I will assure you it's about 15 pages of purchase orders and
sales orders.
Do you think this is a sufficient due diligence file for
all of the number of opioids that you were sending to this one
Sav-Rite pharmacy in Kermit, West Virginia?
Dr. Mastandrea. No.
Ms. DeGette. OK. Thank you. And you know what, thank you
for your honesty today. I appreciate it.
I want to ask you now, Mr. Hammergren, a question. Now, in
2006, McKesson supplied Sav-Rite pharmacy with nearly 2.3
opioid pills, which is more than 190,000 a month. Is that
correct?
Mr. Hammergren. I believe so.
Ms. DeGette. And in 2007, McKesson again supplied Sav-Rite
with over 2.6 million opioid pills, or more than 222,000 pills
per month. Is that correct?
Mr. Hammergren. I believe so.
Ms. DeGette. Now, in your written testimony, Mr.
Hammergren, you put a lot of thought into using population
statistics and other arguments to justify your shipments to
Sav-Rite and other pharmacies. We just heard Mr. Barrett
talking about that, too. But when the committee asked you to
provide McKesson's due diligence file for Sav-Rite, you gave us
a single document from 2007.
Do you recognize this document, sir?
Mr. Hammergren. No, I don't.
Ms. DeGette. OK. It's exhibit 3 in the binder.
Do you recognize that document now? You don't.
Mr. Hammergren. This is first time I've seen this document.
Ms. DeGette. OK. Well, I will tell you for the record that
this document, which says, ``Declaration of Controlled
Substances Purchases,'' which is a two-page document, is the
only documentation that McKesson gave to this committee when we
asked for the due diligence file for Sav-Rite.
Do you think that this fulfills the requirements of the DEA
that your company do due diligence for distribution of opioids
to this city?
Mr. Hammergren. I believe our relationship with Sav-Rite
should have been terminated immediately.
Ms. DeGette. Yes or no, do you think this is sufficient
documentation to show compliance with the rules of the DEA?
Mr. Hammergren. We continue to evolve our diligence----
Ms. DeGette. ``Yes'' or ``no'' will work, sir.
Mr. Hammergren. I've not reviewed the document. I can't
provide an answer to that.
Ms. DeGette. OK. Thank you very much.
Thank you, Mr. Chairman.
Mr. Harper. At this time, the Chair will recognize Chairman
Walden, chair of the full Committee for Energy and Commerce,
for 5 minutes.
Mr. Walden. Thank you, Mr. Chairman.
And I appreciated the opportunity I had yesterday to meet
with several of you and talk about how we work together going
forward as a country to prevent this kind of disaster from
continuing or ever happening again.
Mr. Hammergren, between 2006 and 2007 McKesson supplied
Sav-Rite pharmacy in Kermit, as you've heard, a town of 400,
5.6 million opioids. Our research has indicated this pharmacy
was fueled by prescriptions from a pill mill. This was widely
known in the community.
In fact, our investigators have uncovered that the pill
mill was widely known, and there were reports even in the media
over years that indicated customers were selling pills in the
parking lot, and that the cash drawer was so full it could not
be shut.
Now, McKesson started a program in 2007, I think you called
it the Lifestyle Drug Monitoring Program, under which McKesson
reviewed every single customer for high-volume orders for
certain drugs. Is that correct?
Mr. Hammergren. That's correct.
Mr. Walden. Including hydrocodone and oxycodone. I think we
referenced that in tab 1 in the binder.
So the initial threshold, as I understand it, set by
McKesson was 8,000 pills a month. The document indicates that
you picked that number as a reasonable monthly threshold,
correct?
Mr. Hammergren. That's correct.
Mr. Walden. And so do you know the average number of
hydrocodone dosage units or pills McKesson distributed to that
Sav-Rite pharmacy that you terminated a relationship with back
in 2007?
Mr. Hammergren. I do not.
Mr. Walden. So we did some research. It appears it's 9,650
pills a day, which averages to 289,500 hydrocodone pills in a
30-day month, which is more than 36 times the initial monthly
threshold set by the program.
The program required distribution centers to review any
order in excess of the threshold and document why orders above
the threshold were shipped.
Now, according to a document produced by McKesson, all
customers had been reviewed by June 12, 2007. This clearly
should have identified Sav-Rite, considering your own
distribution was 36 times higher than the threshold you set. I
think that document's in tab 2.
So did this program identify the Sav-Rite pharmacy?
Mr. Hammergren. It did not, sir. It should have been
terminated sooner.
Mr. Walden. And if so, on what basis did McKesson decide to
continue supplying hydrocodone far above your own threshold?
This is what we're trying to figure out.
Mr. Hammergren. Our systems at the time were not automated
enough, certainly, and we didn't flag it fast enough and get it
fast enough.
Mr. Walden. So are there any documents justifying the
continued distribution to Sav-Rite?
Mr. Hammergren. I don't know, sir. But, as I've testified,
we terminated that relationship as soon as we became aware that
the purchases were as you described.
Mr. Walden. In your testimony you note that the large
distribution figures highlighted by the press in this
investigation reflect a volume of opioid orders ``not
inconsistent'' with the rate at which opioids were prescribed.
If this is the case and 9,600 pills a day distributed by
McKesson to Sav-Rite in 2007 is reasonable, then why set the
initial monthly limit at 8,000 per month? Or is this something
you just--the system did not catch?
Mr. Hammergren. We did not properly manage that Sav-Rite
relationship and certainly didn't do it soon enough.
Mr. Walden. I see. So what we're trying to figure out is,
are there other Sav-Rites out there today? And this would apply
to everybody on the panel. What is it in the systems you have
or the DEA have that allowed this to happen then, and are they
in place today to prevent this from happening? How do we shut
down these pill mills?
Mr. Hammergren. We certainly learned, Mr. Chairman, from
that experience at Sav-Rite, and we realized that we needed
automated systems that don't allow any order to ship out of our
facilities that are past those thresholds.
So today Sav-Rite pharmacy wouldn't get a single order from
McKesson. Our systems block those orders as they're inbound.
And if they want to have that order shipped, we have to go out
and do an investigation at that pharmacy to justify any
increase.
So if they open--if a pharmacy somewhere was going to open
a new relationship with a hospice, our people would go out and
view that and understand whether that is a legitimate business
reason, exactly for your purpose.
Mr. Walden. And are your systems in place today that would
identify an overprescribing physician or facility that is
driving too many pills? How does that work?
Mr. Hammergren. That's one of the challenges, frankly, with
the systems that McKesson has. We don't see the prescribing
systems that are reported out of the pharmacy. So the way we
have to manage it is to determine a suspicious order based
primarily on quantities compared to average pharmacies that are
similar.
And clearly, the challenge in that is that suspicious is
really an isolated individual customer-by-customer evaluation
that isn't informed by the physician population, the
prescribing habits, et cetera.
Mr. Walden. Unfortunately, my time has expired. I'm sure
we'll have questions for the record. I'd appreciate the
feedback from all of you on that topic, because we're trying to
find solutions here.
Thank you, Mr. Chairman.
Mr. Harper. Thank you, Chairman Walden.
The Chair will now recognize the ranking member of the full
committee, Mr. Pallone, for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman.
I'm trying to run through this quickly, so I may have to
try to have you summarize.
This committee's investigation has uncovered a number of
shortcomings in the way that some distributors handled the
distribution of opioids as this horrible epidemic unfolded. But
what I really want to know is, moving forward, how do we ensure
that adequate systems are in place to detect the kinds of
problems that have clearly led to the oversupply and diversion
problems we've seen in West Virginia?
For example, in Kermit, population 400, several
distributors each sent millions of pills to a single pharmacy,
and it's hard to understand why certain distributors didn't
have systems to flag and prevent some of these shipments.
Another example, Miami-Luken alone sent almost 1.5 million
pills to Sav-Rite in 2007 and almost 2 million pills in 2008,
and on its face these levels seem ridiculous. At the end of the
day, this pharmacy was raided and its owner was sentenced to
prison.
So let me start with Dr. Mastandrea.
Have you made changes to your system to compare the number
of pills you send a pharmacy against the population of that
region to catch something like this before it gets out of
control? Quickly, because I have more questions.
Dr. Mastandrea. Thank you, Congressman.
Yes, we have made changes. We've made significant changes.
We have a full-time compliance officer that monitors all--we're
not that big, so it's not that hard to monitor our opioid
distribution.
We have purchased a commercial algorithm-based system that
stops the suspicious order in real time, is reported to the DEA
in real time. We have site visits. We have an investigator that
makes site visits. We review the accuracy and timeliness----
Mr. Pallone. I'm going to have to cut you off, only because
I want to ask Mr. Barrett a question.
Cardinal provided two pharmacies, Hurley Drug and Family
Discount, which filled prescriptions for Dr. Katherine Hoover,
and her clinic was widely known as the pill mill and Federal
authorities closed it in 2010. Dr. Hoover was the number one
prescriber in the entire State, yet she seemed to be able to
write scripts for local pharmacies for years before her clinic
was shut down.
One of your fellow distributors reported that Dr. Hoover
alone was responsible at one time for 69 percent of the
hydrocodone prescriptions at Hurley Drugstore in Williamson and
more than half of the hydrocodone prescriptions at Family
Discount.
So, Mr. Barrett, are there lessons that you believe can be
taken from what happened with Dr. Hoover that will change how
you conduct due diligence going forward?
Mr. Barrett. Ranking Member Pallone, thank you. And the
answer is yes, I think we would do things very differently
today. That kind of order volume would have been picked up and
stopped just statistically by our algorithms.
I think the subjectivity of judgment of whether a pharmacy
is legitimate or not legitimate today is really not the
question. We look at data, and if the data tells us there is an
aberrant pattern, we simply stop.
In this case, as it turned out, there was a bad actor in
the area, a doctor, which we later found out, which is why we
shopped shipment. But today's systems would simply stop that.
Mr. Pallone. All right. Let me go to McKesson.
McKesson has reached two settlements with DOJ about alleged
failures to monitor for suspicious orders.
So, Mr. Hammergren, how will it be different this time?
What serious changes have you made to your systems to flag
suspicious orders?
Mr. Hammergren. We certainly have learned lessons from our
experience in the past. And our systems today are automated and
not subjective. As Mr. Barrett just said, we shut those orders
off inbound in the door.
We also have hired very experienced, DEA experienced people
to come out and help us investigate facilities before we bring
them online and to make sure that we've not brought a bad actor
on at any point in the process.
I think the thing that would continue to help us is if we
can put physicians in a place where they have more information
when they're prescribing, and certainly at the pharmacy level
help the pharmacies understand red flags of patients that may
be getting multiple doses in different directions.
So I think there's more that we can do as an industry.
Blocking the orders is certainly important, but you can imagine
every time we block an order, there are legitimate patients in
some of those pharmacies looking for their medications. So it's
a little bit of a blunt force.
Mr. Pallone. Last question, going back to Mr. Barrett.
Cardinal also reached two settlements with DOJ over these
same issues, and it's only fair I ask you the same question.
How will this time be different? How can you assure us that
you've addressed the issues raised in the settlement
agreements? What specific enhancements have you made to your
system?
Mr. Barrett. Thank you for the question.
The settlement in 2008 reflected the rising of what was
internet pharmacy. Our organization I think was doing what it
thought was right to adapt to that.
At the same time, we saw emergence over the next few years
of pain clinics, many of which were legitimate, by the way, but
as it turns out some were not.
And I think we had to learn during that process of the
shift of this crisis. I think we've learned that and our
systems today reflect that learning.
Mr. Pallone. Thank you.
Thank you, Mr. Chairman.
Mr. Harper. The Chair will now recognize Mr. Barton for 5
minutes.
Mr. Barton. Thank you, Mr. Chairman.
And thank each of you for attending voluntarily. We didn't
have to subpoena you. We appreciate that.
And, Mr. Collis, I understand that you forego back surgery
to appear today, so we really appreciate you. I noticed you
stood up a little bit ago and walked. Dr. Burgess will
prescribe an opioid if you don't make it through the hearing.
This is an unusual hearing because each of you provides a
much-needed list of products that are legal, and all of you
represent corporations that have generally had a very positive
record in your industry. And yet, we have a huge problem, 115
people a day are dying of opioid overdoses, and most of those
are from legally prescribed opioids.
I'm an industrial engineer. I'm kind of a simplistic
person. Our system that we're looking at starts with the
patient and the doctor relationship. The doctor prescribes an
opioid. It's sent to a pharmacy. The pharmacy accumulates
orders and sends to a wholesale distributor, which is one of
your companies in most cases. You get your drugs from a
manufacturer.
The whole system is overseen by the DEA and is a part of a
culture which has evolved that pain is something that should be
addressed in any way possible. And at the time the epidemic
really took off, there wasn't a huge public outcry over opioid
prescriptions. It's different today. The culture today is
looking at the problem differently than it did 10 years ago or
15 years ago.
My first question, since you folks are part of the legal
distribution system, is the overuse of legal opioids a solvable
problem, yes or no? Legal opioids.
Let's start with the gentleman down at the end and work our
way down.
Mr. Barrett. Yes, Congressman. Thank you for the question.
I think the practice of medicine is evolving, and I think
that we know more than we did today. And I think, in fact, the
prescribing of legal opioids, high-potency opioids, is
declining.
Mr. Barton. I really just need----
Mr. Barrett. I think the answer is yes, it can be solved.
Mr. Barton. Yes or no?
Dr. Mastandrea. Yes, sir.
Mr. Hammergren. Yes, better informed physicians will solve
the problem, I think.
Mr. Barton. Mr. Smith.
Mr. Smith. The use of drugs always come with a risk-return
tradeoff. So I think there will always be some risk-return
tradeoff to this category of drugs and any other. So I'm not
exactly sure what you mean by solve.
Mr. Barton. Well, I think ``solve'' is a pretty common
term.
Mr. Smith. But I think we can greatly improve the
situation.
Mr. Barton. You know, fixed.
Mr. Smith. I think that we can bring it back into much more
acceptable levels.
Mr. Barton. I've got a minute and a half left.
Mr. Collis. There are already significant changes in
prescription trends for legal opioids, but I think it can be
vastly improved. I don't know if completely solved.
Mr. Barton. Generically, everybody said yes, with some
modification. I think it can be, too.
Now, this is a little bit trickier question. What percent
responsibility do you believe your part of the chain of the
industry have in solving the problem, from zero percent, we
have no responsibility, to 100 percent, it's all our
responsibility?
You just all said that it is solvable. Now, what percent of
responsibility do you think the distribution, wholesale
distribution system has in solving the problem?
Again, we'll just start at one end and go to the other.
Mr. Barrett. Congressman, I don't feel qualified to give a
percentage of responsibility. I think all of us in the
healthcare system have to work together to address this, and I
think we should.
Mr. Barton. Do you agree that you have some responsibility?
Mr. Barrett. I believe that we've got a role in an
integrated healthcare system.
Mr. Barton. So you have some responsibility.
Dr. Mastandrea. Congressman, I believe that it's a shared
responsibility among many different players, physicians,
pharmacists, State medical boards, State pharmacy boards, DEA.
Mr. Barton. But you agree you have some responsibility?
Dr. Mastandrea. I have said that, yes.
Mr. Barton. Your company, your industry, not you
personally.
Dr. Mastandrea. The percentage is shared.
Mr. Hammergren. We have a role to play, Congressman,
certainly. And in your example, one of the most important roles
we play is to make sure we find suspicious customers and
suspicious orders and cut off the supply to those customers.
Mr. Barton. My time has expired, but I'll let each of you
two.
Mr. Smith. Well, I would just say that H.D. Smith had its
role as a distributor to play and did so.
Mr. Collis. I get the benefit of going last, so I just
would say it's very difficult to ascribe a percentage, given
the shared responsibility.
Mr. Barton. Well, I think you do have a responsibility, I
think it's a significant responsibility, but I don't think you
have a majority of the responsibility. And hopefully, by the
time we end these hearings, we'll get all the players in here.
Thank you, Mr. Chairman.
Mr. Harper. The Chair now recognizes the gentlewoman from
Florida, Ms. Castor, for 5 minutes.
Ms. Castor. Well, thank you, Mr. Chairman.
This committee's investigation has made plain that drug
wholesale distributors flooded areas of West Virginia and other
parts of the country with massive amounts of opioids. This has
fed into the public health epidemic that is costing us at least
$8 billion per year nationwide and costing lives, 116 deaths
every day. We focused on West Virginia because it has the
highest opioid death rate in the country.
Mr. Barrett, your company Cardinal shipped 1.5 million
opioid pills each year from 2009 to 2011 to a single pharmacy,
Family Discount, in the small town of Mount Gay. That is an
average of about 4,000 pills per day.
At the subcommittee's March 20 hearing, DEA testified that
that amount shipped to that single pharmacy was, indeed,
excessive. And this was after Cardinal had been sanctioned by
the DOJ through a settlement agreement for not following the
law.
Mr. Barrett, you've said that the wholesalers don't control
demand, but clearly you have a responsibility under the law to
highlight and flag these suspicious orders. How did Cardinal
estimate what was appropriate for a given pharmacy?
Mr. Barrett. Congresswoman, thank you for your question.
I think our organization recognizes it as a dual
responsibility. One is to provide medicine to a system
requiring it as prescribed, and the other is to do what we can
to prevent those from falling in the wrong hands.
We've evolved over the years. We've become more attuned to
the changes. I think today----
Ms. Castor. But this kept happening even after DOJ had
warned you and you had accepted responsibility and said you
would do a better job.
In more recent years, this pharmacy's total purchases of
these drugs declined dramatically. In 2015 and 2016, it was
down to about 500,000 pills. And that wasn't just from
Cardinal, that was from everyone, from all distributors. That
was but a fraction of what Cardinal alone had shipped them in
earlier years.
So isn't this a clear reflection that that was not the
medical need in the community? The amount being shipped didn't
reflect what could have been appropriately used in rural West
Virginia, especially after DOJ had already warned you.
Mr. Barrett. Congresswoman, let me make two points about
that, if I may.
One is, I've acknowledged earlier that I had wished that we
had moved earlier to stop shipping to that pharmacy, which we
have many years ago.
Second, I think the evolution was of our looking at a
system that was focused on the legitimacy of a pharmacy--which,
by the way, is still in business--and the awareness of
something happening in the system, which was a bad doctor. And
we should have moved more quickly on that.
Ms. Castor. I'd now like to turn to McKesson.
Mr. Hammergren, your company McKesson distributed over 1.8
million opioid pills each year in 2006 and 2007 to Family
Discount Pharmacy. That's an average of about 5,000 pills per
day in this rural small town. Based upon a figure cited by DEA,
McKesson shipped Family Discount roughly six times the amount
of hydrocodone that an average pharmacy in rural West Virginia
would have received during those years.
So a similar question to you. McKesson delivered millions
of pills to the single pharmacy. Clearly, that's not reasonable
and you should have flagged that and stopped that right away.
Why didn't you?
Mr. Hammergren. We did terminate the relationship with that
pharmacy. And like Mr. Barrett, I would have liked us to have
made a decision faster. That's the answer. We caught a bad
pharmacy and shut it down.
Ms. Castor. And as I mentioned, this pharmacy's total
purchases of oxycodone and hydrocodone dropped dramatically,
but that wasn't until 2015, 2016. And that means the amount of
opioids your company alone shipped back in 2006 was over three
times as much as the pharmacy got from all distributors in
2016.
Now, you in your testimony, you pointed to, well,
overprescribing by doctors, maybe the DEA should have done
more, pharmacy bad actors. But you can't reasonably claim that
this pharmacy's dispensing filled the medical need. I mean, it
took you years to respond. Why was that?
Mr. Hammergren. I can't comment on the medical need,
Congresswoman. What I can say is that today in our systems, any
shipment that was outside those boundaries would never have
happened. It would have been shut down and reported
immediately.
Ms. Castor. Why didn't you address--given that this
community was ravaged by opioid deaths and addiction, and the
town of Williamson was even nicknamed Pilliamson, don't you
take responsibility for what was happening back then? Was it
the profit motive simply overcame the--you saw that paying the
penalties under settlement agreements was a cost worth paying
because you were making so much money?
Mr. Hammergren. Congresswoman, we take all of these matters
very seriously. Any settlement with a regulator we take very
seriously. Our systems have evolved, and we continue to invest
heavily to make sure that situations like that don't happen
again.
Ms. Castor. I think this was the opposite of due diligence
that was required under the law, and we're going to be looking
for greater accountability.
Thank you, and I yield back.
Mr. Harper. The Chair now recognizes the vice chairman of
the subcommittee, Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman.
Mr. Hammergren, in the limited time I have, I'm going to
ask you a series of yes/no questions. But first, as background,
my district borders southern West Virginia. McKesson was a
major supplier of pharmacies there, as were some of the others,
distributing millions of pills, most into West Virginia in
towns that were between 30 and 60 miles from my district.
And last week, I was at an opioid conference, and look at
this map that they gave us.
[Slide follows.]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Mr. Griffith. That dark brown area are the deaths per
capita in the Commonwealth of Virginia, and you will note
there's a correlation with the dark brown areas most common to
the border with West Virginia.
And so, gentlemen, when you say that, you know, you're not
sure that you have a role--not all of you have said that--it
flies in the face of that map and the people of my district.
So, Mr. Hammergren, in May of 2008 McKesson Corporation and
the Justice Department and DEA entered into a memorandum
agreement, tab 4 in the binder there. You signed on behalf of
McKesson Corporation on page 10 of the settlement and release
agreement and page 7 of the settlement agreement.
Do you recall signing the document, yes or no?
Mr. Hammergren. Yes.
Mr. Griffith. The conduct at issue in this first settlement
with the DEA was that the DEA believed certain McKesson
distribution centers did not report suspicious orders and did
not have effective controls against diversion. Because of the
serious commitments that McKesson made to the U.S. Government
and the $13.25 million civil penalty--you recall that, don't
you?
Mr. Hammergren. I do.
Mr. Griffith. Two months later, you presided over a July
23, 2008, board of directors meeting. And according to the
board minutes at tab 12 in the binder, public policy issues
were discussed affecting the corporation. In an accompanying
slide at tab 13, DEA suspicious orders, defined as orders of
unusual size, orders deviating substantially from a normal
pattern, and orders of unusual frequency were categorized as
high, in terms of the degree of political urgency, and impact
to, and the level of engagement of the corporation.
The urgency of the DEA suspicious orders issue was tied to
the May 2008 settlement, wasn't it, yes or no?
Mr. Hammergren. We certainly took the settlement,
Congressman, very seriously.
Mr. Griffith. The corporation's high level of engagement
meant McKesson management would put in a high level of effort
to carry out the promises made in your 2008 memorandum of
agreement. Isn't that correct?
Mr. Hammergren. It is correct that it was a top priority
for us.
Mr. Griffith. In your experience as an executive at
McKesson Corporation, when the company makes a legal
commitment, especially one with a high level of engagement, the
corporate leadership gives a directive and the appropriate
personnel carry it out. Isn't that correct?
Mr. Hammergren. Congressman----
Mr. Griffith. Yes, correct?
Mr. Hammergren. Congressman, we took it very seriously.
Mr. Griffith. Yes. However, according to media reports,
from 2008 to 2013, the McKesson Aurora, Colorado, warehouse
filled 1.6 million orders, but only reported 16 suspicious
orders. The Landover, Maryland, warehouse, which supplied West
Virginia, routinely failed to report and fulfilled suspicious
orders placed by numerous pharmacies in West Virginia.
While the Landover facility was closed in 2012, the serious
lack of suspicious order reporting does not show a high level
of engagement by McKesson, does it, yes or no?
Mr. Hammergren. We took our responsibilities very
seriously.
Mr. Griffith. Yes or no? Failing to live up to the 2008
agreement does not show a high level of commitment, does it?
Mr. Hammergren. That's not true. We had a high level of
commitment, Congressman.
Mr. Griffith. And you failed. The DEA alleged that McKesson
distribution centers ignored thresholds and supplied pharmacies
volumes of controlled substances that exceeded their assigned
amount without a proper review. That also does not show a high
level of engagement, does it, yes or no?
Mr. Hammergren. Congressman, we had a high level of
engagement.
Mr. Griffith. Were any McKesson personnel fired in
connection with any of the failures noted in the 2017
memorandum of agreement? That's at tab 5.
Mr. Hammergren. Congressman, the people involved today in
the CSMP are vastly different than the people in 2008.
Mr. Griffith. Was anybody fired?
Mr. Hammergren. Congressman, the people are different
today. Many of them have left the corporation.
Mr. Griffith. But they weren't fired.
Mr. Hammergren. We don't talk about specific----
Mr. Griffith. I'm not asking you to talk about specifics.
I'm asking you to tell me if anybody got fired. Did you hold
anybody personally responsible for what was happening in West
Virginia and in Colorado and other parts of the country?
Mr. Hammergren. Congressman, everybody at the company is
accountable to do what's right.
Mr. Griffith. But no one was fired. All right.
In January 2017, McKesson Corporation and the Justice
Department and the DEA entered into another memorandum of
agreement, because you didn't live up to 2008. As a result of
this agreement, McKesson paid a record-setting $150 million
fine.
In this memorandum of agreement, in section 2, acceptance
of responsibility, McKesson acknowledged it failed to identify
or report to DEA certain orders by certain pharmacies which
should have been detected by McKesson as suspicious. This
involved 12 out of 30 McKesson distribution centers. More than
a third of your distribution centers were involved in these
failures.
That is a widespread systemic failure. Wouldn't you agree?
Mr. Hammergren. Congressman, our organization in 2008 was
working closely with the DEA.
Mr. Griffith. This is 2017.
Mr. Hammergren. I understand. And we have created a program
that really we believe is meeting their needs, focused on
suspicious customers and knowing our customers.
Mr. Griffith. And a third of them were out of compliance.
Mr. Chairman, I yield back.
Mr. Harper. The gentleman yields back.
Before I recognize the next person, Mr. Hammergren, it
seems like a pretty easy question to answer if anyone was fired
in response to Mr. Griffith's question. And the answer is yes,
no, I don't know, or I refuse to answer. What is your answer?
Mr. Hammergren. Yes, people were fired as a result of this.
Mr. Harper. Thank you very much, Mr. Hammergren.
I'll now recognize the gentlewoman from Illinois, Ms.
Schakowsky, for 5 minutes.
Ms. Schakowsky. I have to say that I'm pleased that you're
all with us today to discuss the role your companies played in
supplying the opioid epidemic, but I have to also say that this
reluctance even to answer that simple question, or reluctance,
always qualifying your responsibility--clearly, you had a
responsibility.
And, Mr. Hammergren, you acknowledge that you wish you had
terminated your relationship with Sav-Rite earlier and that you
did end that relationship. But why did you then--why did you
ship 5 million pills before you shut it down?
Mr. Hammergren. Congresswoman, thank you for the question.
Certainly, we've learned from our experience during the 2006,
2007, over a decade ago, and today's systems are much more
robust than they were then. Our orders actually aren't even
processed today if they're above thresholds. In those early
phases of 12 years ago, our systems weren't as automated as
they are today.
Ms. Schakowsky. You know, all of you, I hope, will
acknowledge that since 1971, your companies are required by
Federal law to halt and report suspicious orders of
prescription opioids.
Did you, before all of this broke, have a process to do
that, if I could just go down, to obey the 1971 law?
Mr. Barrett. Yes. Our organization, Congresswoman, has had
a clear sense of the Controlled Substance Act and reported all
orders to the DEA of narcotics.
Ms. Schakowsky. OK.
Mr. Mastandrea?
Dr. Mastandrea. Yes, we did have a system in place,
Congresswoman.
Mr. Hammergren. Congresswoman, we also reported all orders
required.
Ms. Schakowsky. Mr. Smith.
Mr. Smith. At different points in time, the expectations of
the DEA were different.
Ms. Schakowsky. Microphone, please.
Mr. Smith. At different points in time, the expectations of
the DEA were different. Up till about 2007, the DEA expectation
was for us to report suspicious orders after the fact with
monthly reporting, and we did so.
It was in 2007 that the DEA expressed a very different
expectation concerning controlled substance orders and that if
it was suspicious they asked that we develop a system to hold
those orders at the time they were received.
Ms. Schakowsky. OK, I'm going to move on.
Mr. Smith. We implemented that system in 2008.
Ms. Schakowsky. Sir.
Mr. Collis. Congresswoman, AmerisourceBergen didn't exist.
There were many predecessor companies. I'm not aware of any of
them that weren't committed to compliance with all Federal
statutes.
Ms. Schakowsky. I just think it's really important to put
on the record that this is not a new requirement, that yes,
maybe there wasn't the kind of enforcement, but nonetheless,
your companies had a responsibility.
I also want not only to look back and see what went wrong,
but also to look forward to see how to do better. And it is
apparent now that pharmaceutical corporations are taking
advantage of the opioid epidemic by spiking the price of life-
saving drugs like naloxone, and that that, in my view, is
unacceptable. Pharmaceutical corporations can't start this
epidemic with irresponsible and reckless on day--recklessness
one day--and then turn around and profit the next.
So I wanted to again ask Mr. Hammergren, McKesson
distributes Evzio, which has raised its price from $690 to
$4,500. So what does McKessonearn net per unit for Evzio?
Mr. Hammergren. I can't answer that question, Ms.
Congresswoman. I would say that we don't set the prices for
branded drugs. Those are set by the manufacturers.
Ms. Schakowsky. And how much does McKesson net annually for
the distribution of Evzio?
Mr. Hammergren. Congresswoman, I don't have that
information. I'd be happy to get it for you.
Ms. Schakowsky. McKesson also distributes Narcan. What does
McKesson earn net per unit for Narcan?
Mr. Hammergren. Congresswoman, I don't know the answer to
that question.
Ms. Schakowsky. And how much does McKesson earn net
annually for its distribution of Narcan?
Mr. Hammergren. I don't know that question.
Ms. Schakowsky. So I would expect that we'll put that in
writing and that we'd get this information. Because, you know,
you can't have it both ways, fellas. You know, the opioid
epidemic is there, and now for life-saving drugs those prices
are going through the roof.
And I yield back.
Mr. Griffith [presiding]. I thank the gentlelady and now
recognize the gentleman from Texas, Dr. Burgess.
Mr. Burgess. Thank you, and thanks for having the hearing.
Mr. Hammergren, let me just continue on that line for a
moment, because I think this is an important point. You as a
distributor do not set the list price of the compounds that you
were being questioned about. Is that correct?
Mr. Hammergren. I don't believe so. If they're branded
patented drugs, we don't set the price.
Mr. Burgess. So you receive an order and you fill an order.
You're agnostic as far as the price. That is set by the person
selling the product. Is that correct?
Mr. Hammergren. Congressman, the manufacturer sets those
prices, to the best of my understanding.
Mr. Burgess. Mr. Collis, you mentioned--it was almost an
offhanded mention, but it is important--one of the first
hearings that I sat through in this subcommittee in 2005 was a
hearing on why don't doctors prescribe enough pain medicine.
And you referenced that there are some people who are watching
this debate who are concerned are they going to be able to get
the medicines for the treatments for which they are being
treated.
And I think that is a legitimate concern and we do need to
be mindful. We cannot overlook the fact that there are serious,
serious problems that need to be fixed. But I thank you for
bringing that up, because that is an important reference point
that we sometimes overlook.
Mr. Smith, let me just ask you, we've actually heard some
back-and-forth, and I think there was a question on the other
side dealing with a document or a letter from Mr. Rannazzisi at
the DEA, Drug Enforcement Administration, that said, don't just
report to us the total sales.
Mr. Collis, I think you said, we just report, we're not
making a judgment whether it's suspicious, this is what we
deliver to place A, B, or C. Is that correct?
Mr. Collis. We do report every day, and we also report on a
monthly basis all cost data, but we do make determinations of
what is a suspicious order and we hold them.
Mr. Burgess. Sure, and I appreciate that. This is what is
so frustrating to me for an all-hands-on-deck situation. The
DEA says, don't just report your raw data. But you have
algorithms. The DEA should have algorithms. I think the Center
for Medicare and Medicaid Services probably should have
algorithms in their database so that they can identify who are
the outliers.
Not saying that someone is doing something wrong, it may be
a pain clinic, it may be a cancer clinic, but let's afford some
extra scrutiny if this is the amount of product that's going
out so we don't end up with a situation such as in Kermit.
Now, Mr. Smith, let me ask you, your company, and I think
you testified to this, your company reports suspicious orders.
What does the DEA do with that information when you report it?
Mr. Smith. I don't really know.
Mr. Burgess. You've sold your company, I understand that.
Mr. Smith. But I don't really know. And the DEA, as we talk
about the DEA, the DEA has not been the same in their outlook,
attitude, and interaction with the industry over my career. For
most of my career, the interactions with the DEA were very
collaborative and very purposeful, in terms of working with
them to try to control controlled substance distribution.
Back about 10 years ago, with the advent of this
expectation of holding orders, it became very, very difficult
to interact with the DEA and to get feedback. They were, in
fact, as evasive as possible in the midst of this crisis to us,
in terms of giving us guidance. More recently, that attitude
has been changing and improved.
Now, as you point out, as of 2018, I was pretty much out of
the picture. I can only hope that the DEA will continue to work
collaboratively with the industry going forward.
Mr. Burgess. And what you have just related is information
that independently I and my staff have acquired, that the
number of administrative actions against registrants by the
DEA--now I'm merely talking about doctors, because that was my
focus when I began this--but when you look at the numbers in
the committee's memo, how things have just been going up
through the roof, the number of administrative actions, I'm not
talking about for West Virginia, I'm talking about for the
whole country, 21 in 2014, at the same point that point in the
graph was probably at its apex.
I've got to believe that the DEA--I'm not saying that
everything that you've reported--I want you to do your job, but
I want the DEA to do their job, and it doesn't look like they
have been. And I'll just share with you, they've been very,
very difficult to get information out of the agency.
I hope you're right, Mr. Smith, I hope it is changing. But
we cannot fix this problem if the agency required to be in
charge simply is insensitive to our requests for information.
I thank all of you for being here today.
Mr. Chairman, I yield back.
Mr. Griffith. I thank the gentleman, and now recognize the
gentleman from New York, Mr. Tonko, for 5 minutes.
I understand you have a UC request.
Mr. Tonko. I'll yield to Ms. Castor.
Ms. Castor. Thank you, Mr. Chairman.
I'd like to ask unanimous consent to submit for the record
information relating to the salaries of the CEOs of the Big
Three drug wholesalers, including the McKesson CEO, who made
over $692 million in the 10 years leading up to 2017.
Mr. Harper [presiding]. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Ms. Castor. I yield back.
Mr. Tonko. Thank you, Mr. Chair.
Mr. Barrett, I asked about Cardinal's sales to pharmacies
that filled prescriptions written by two doctors, Katherine
Hoover and Diane Shafer. Federal law enforcement put both of
these doctors out of business around 2010.
Dr. Shafer was sentenced to 6 months in prison after she
admitted to writing illegal opioid prescriptions. According to
the United States Attorney's Office for the Southern District
of West Virginia, she wrote more prescriptions than entire
hospitals did between 2003 and 2010.
Dr. Hoover was the single largest prescriber of controlled
substances in West Virginia between 2002 and 2010. When her
clinic was raided, she fled to the Bahamas.
Cardinal served two pharmacies, Hurley Drug and Family
Discount, which filled prescriptions from Dr. Hoover. In
September 2008, a Cardinal employee raised an alarm about
Hurley Drug in a memo, which noted that Hurley filled
prescriptions from Dr. Katherine Hoover even though other
pharmacies refused to fill her prescriptions.
According to this document, another pharmacist stated that
he would not fill Hoover's prescriptions because, quote, ``He
had ridden by the office of Dr. Hoover and there are lines of
people standing outside waiting to get into the office,'' close
quote.
In fact, according to a 2011 news report in the late 2000s,
quote, ``Crowds of people filled the lot outside Dr. Hoover's
clinic,'' and it was, in quote, ``an open secret that it was
essentially a pill mill.''
Is that accurate? And did your employee observe the lines
of people outside that office as early as 2008, which could
indicate a possible pill mill?
Mr. Barrett. Congressman, I've been briefed on those memos.
Mr. Tonko. Pardon me?
Mr. Barrett. Yes, I've been briefed on that report.
Mr. Tonko. OK. So your employee's memo appears in
Cardinal's due diligence file for Hurley, but it is unclear
what actions Cardinal took based on it. For example, Cardinal
continued to supply Hurley for another 6 years.
So why? Do you know whether Cardinal ever followed up on
this memo?
Mr. Barrett. So we've not shipped that company high-potency
opioids for many years. I mentioned earlier that based on what
I've seen, I wish we had taken action earlier. I think we had a
system that allowed for too much subjectivity about the
legitimacy of a pharmacy.
Today's system simply would have taken the data, seen
outlier data, and shut it off. And, as I said earlier, I've
seen enough to know that I wish we would have acted earlier.
Mr. Tonko. Cardinal also supplied Family Discount Pharmacy,
sending it more than 5.5 million pills from 2009 to 2012, after
which you ended your relationship with them.
According to a document in another distributor's files, in
2009, 51 percent of Family Discount's hydrocodone prescriptions
came from Dr. Hoover. That distributor also reported to the
committee that Dr. Hoover was responsible for 69 percent of
Hurley Drug's hydrocodone orders, which the distributor
considered a, quote, ``cause of concern.''
Mr. Barrett, in your written testimony, you say you wish
you had asked a different set of questions before distributing
to this pharmacy. It appears that Cardinal may have missed the
red flags connecting Dr. Hoover to both Hurley Drug and Family
Discount. So I'd like to know how this will be fixed going
forward.
Mr. Barrett. Congressman, it is a great question. It is
fixed going forward. As I mentioned earlier, I think both of
the pharmacies to which you referred were influenced by this
same doctor who, as it turns out, was a bad doc.
Today's systems would not allow subjectivity. Today's
systems would simply say, we set thresholds or limits, based on
certain criteria, primarily relationship between controlled
drugs and on other drugs and the nature of the community. And
if it crossed those thresholds, we simply would shut the order
down, and that's what we do today.
Mr. Tonko. So is it your belief that these two situations
would have been caught much earlier?
Mr. Barrett. In today's system, absolutely.
Mr. Tonko. It's unbelievable that these numbers of pills
were being sold and that this pill mill was getting away with
activity.
I just hope that all of the distributors before us have
much more rigorous due diligence standards in place today that
can help them spot these red flags.
And with that, Mr. Chair, I yield back.
Mr. Harper. The gentleman yields back.
The Chair will now recognize Mrs. Brooks for 5 minutes.
Mrs. Brooks. Thank you, Mr. Chairman.
Mr. Smith, I'd like to talk about Family Discount Pharmacy
that has been mentioned here already. Your company terminated
Family Discount Pharmacy's ability to purchase controlled
substances in 2011. Is that correct?
Mr. Smith. I believe that we discontinued selling them
anything at that--around that time.
Mrs. Brooks. Correct, in 2011. But prior to that, was H.D.
Smith aware of the prescriber we've heard about, Dr. Katherine
Hoover, who was responsible for providing over 262,000
hydrocodone prescriptions to Family Discount Pharmacy as well
as other nearby pharmacies in February of 2008? Was H.D. Smith
aware of the Dr. Hoover problem?
Mr. Smith. I am not aware of the specific timing of when
our due diligence team became aware of that issue. I do know
that with Family Discount that when we implemented our
controlled substance ordering monitoring program, we began to
limit the controlled substances that we sent and----
Mrs. Brooks. Excuse me. Did Dominic Grant work for you.
Mr. Smith. I beg your pardon?
Mrs. Brooks. Did Dominic Grant for you? Did George Euson
work for you?
Mr. Smith. George Euson worked for me.
Mrs. Brooks. In 2008?
Mr. Smith. Uh-huh.
Mrs. Brooks. Where I have an email indicating that Dr.
Hoover had prescribed, had filled over 262,000.
Mr. Smith. OK.
Mrs. Brooks. So I do believe that your director of
corporate security was aware of that.
Mr. Smith. Thank you.
Mrs. Brooks. If you turn to tab 16 you'll see that over a
year later H.D. Smith noted in a November 12, 2009, report--
2009--that Dr. Katherine Hoover was responsible for 51 percent
of the hydrocodone scripts being filled by Family Discount.
Now, knowing that, was Family Discount Pharmacy--had that
become a concern for your company in November of 2009?
Mr. Smith. It appears that it was at that time.
Mrs. Brooks. And did H.D. Smith report this to the DEA?
Mr. Smith. I'm not sure what the timing of what we would
have reported to the DEA was.
Mrs. Brooks. Well, in fact, we know that Family Discount
did make some reports to the DEA between May of 2008 and May of
2009, but not at this time, in November of 2009.
In April of 2015 then, interestingly, did H.D. Smith--so
you then terminated with Family Discount in 2011, but then,
going to April of 2015, did H.D. Smith make the decision to
resume its business relationship with Family Discount Pharmacy?
Mr. Smith. That's possible. We have a robust program, and
that includes reviewing new data that comes along. It is
possible that we could reopen an account if we saw that there
were indications that the situation was different.
On the other hand, that doesn't end our robust due
diligence. We can continue to do that and can decide to close
it again.
Mrs. Brooks. Let's talk about the due diligence. Were you
aware that Family Discount had been dropped by some of the
other distributors here at the table when you renewed your
relationship? Were you aware of that?
Mr. Smith. No, I was not aware.
Mrs. Brooks. So please turn to tab 19, speaking of due
diligence. An email was sent by an H.D. Smith employee in
January of 2016 expressing concern that the company was
providing controlled substances to Family Discount's other
location, located just 3 miles away, despite the fact the
company, your company, had never performed any new customer due
diligence on that pharmacy. Were you aware of that?
Mr. Smith. No.
Mrs. Brooks. The employee's email also noted that this
pharmacy had reached its hydrocodone threshold only 12 days
into a month. Were you aware of that?
Mr. Smith. No.
Mrs. Brooks. And did you report the suspicious activity to
DEA?
Mr. Smith. I do not know.
Mrs. Brooks. I would assume you did not.
Following the January 2016 correspondence, did either
Family Discount location continue to place controlled substance
orders that exceeded the monthly thresholds established by H.D.
Smith, this new amazing system you put in place?
Mr. Smith. I do not know.
Mrs. Brooks. Well, you might want to take a look at emails
in June and October of 2016 showing that Family Discount had
placed orders in excess of established thresholds, that, in
fact, one of your employees indicated that the justification
was to meet our guideline to obtain our monthly discount. What
monthly discount?
Mr. Smith. I'm not sure what that refers to.
Mrs. Brooks. A monthly discount with the manufacturer?
Mr. Smith. No.
Mrs. Brooks. Monthly discount--no idea what monthly--what
deals were being cut?
Mr. Smith. I'm not sure what that refers to.
Mrs. Brooks. H.D. Smith then blocked Family--H.D. Smith
block Family Discount's ability to purchase controlled
substances on February 16 of 2018. Were you in charge at that
time of the company?
Mr. Smith. No. My managerial responsibilities ended at the
acquisition of H.D. Smith in January of 2018.
Mrs. Brooks. In January of 2018. Well, I will say that
according to a document we received, the committee, the company
cited its reason for taking this action and finally terminating
the relationship with Family Discount was due to reference
negative news articles.
With that, I yield back.
Mr. Harper. The Chair will now recognize Mr. Ruiz for 5
minutes.
Mr. Ruiz. Thank you, Mr. Chairman.
This crisis continues to overwhelm our healthcare system,
and as an emergency physician I have been involved in the front
lines taking care of opioid-addicted and overdosed patients way
before it made national headlines. Doctors struggle with
treating pain adequately and identifying drug seekers.
Hospitals in my district are seeing an increase in
uncompensated care, because they are seeing more and more
patients with chronic opioid-related kidney, heart, and lung
complications, not to mention overdoses.
It is good that more funds are going to fight the opioid
epidemic. I agree with that. I encourage that. But if you
eliminate mental health coverage, emergency care coverage as an
essential health benefit, or if you repeal Medicaid expansion,
then you actually are taking 1 step forward and 10 steps back
and are actually hurting patients and making the problem worse.
Moving forward, I think it is critical that the various
players--DEA, hospitals, physicians, pharmacists,
manufacturers, and distributors--work together to identify and
implement systems and processes that move us forward to
identify and implement solutions.
I understand that as this crisis has continued to escalate,
many of you have put internal systems in place to increase
accountability, but we have been told that before and it turned
out to be untrue. And there's a difference between what you
have on paper and what you are actually implementing.
At our March 20 hearing, members of this committee
described the quantity of opioid pills sent to particular
pharmacies in this region and asked DEA Administrator Patterson
whether those amounts were excessive and whether the
distributors failed to adequately exercise due diligence. The
DEA agreed on both counts.
So I'd like to quickly go down the line and find out
whether the problems that led to this overdistribution have
been fixed.
Dr. Mastandrea, Miami-Luken distributed substantial
quantities of pills to certain places in West Virginia. For
example, your company sent Sav-Rite pharmacy in Kermit, a
population of only 400, nearly 2 million pills in just 1 year.
Would Miami-Luken's current system discover these large
shipments and more closely examine them to determine if such a
large volume was appropriate and not going to a rogue
operation, such as a pill mill?
Dr. Mastandrea. Yes, sir.
Mr. Ruiz. And how can you guarantee us that that system
will be implemented?
Dr. Mastandrea. It's already implemented.
Mr. Ruiz. So you're saying that there's no mistakes
currently being done that you know of? There's no way of--what
is your system to find and review in case you do make a
mistake?
Dr. Mastandrea. Each order is reviewed by our--we purchased
a Buzzeo system. It's a computer algorithm that tells us
whether or not the order deviates from frequency, pattern,
size. And we stop it in real time if it does. We pend the
order. If the order is adjudicated to be an appropriate order,
then we release it. If it's not, then we report it.
Mr. Ruiz. The DEA data indicate that McKesson also supplied
the Sav-Rite in Kermit, population of 400, with almost 5
million opioids over a 2-year period.
So, Mr. Hammergren, if a pharmacy serving a comparable
population placed those large orders today, particularly in an
area hard hit by opioid diversion, would McKesson's monitoring
systems be capable of flagging these orders for further review
to make sure that they are not affiliated with a pill mill?
Mr. Hammergren. Congressman, that's a good question. We
would not ship to Sav-Rite today.
Mr. Ruiz. OK. So, in terms of your system, if this happened
to another comparable city, do you have a system in place to
flag? The first question.
Mr. Hammergren. We have a system in place that would block
the order if it was a pharmacy that was outside of a boundary,
a threshold being set.
Mr. Ruiz. So why hasn't that happened? Why did you have
another settlement in 2017, when you told us this exact same
thing in 2008?
Mr. Hammergren. We had a system in place from 2008 to block
suspicious orders. Our settlement in 2017 was really related to
our reporting of suspicious orders.
Mr. Ruiz. And so the implementation of those reporting and
also the shipping of orders.
So I think it's very important that we also identify, which
we see on multiple scenarios where corporations and agencies
will hold up their policy on paper, but then the actual
implementation of those are either not enforced or they're not
transparent to determine what's working and what's not working.
Mr. Collis, since you are now responsible for H.D. Smith's
customers as well as your own, this question is for you.
Without debating the merits of the West Virginia litigation
that's currently undergoing, do you now have a way to assess
orders for high volumes of pills against the populations
receiving them?
Mr. Collis. I believe we do. I believe we have a robust
system and we've always had one.
Mr. Ruiz. OK. I yield back my time.
Mr. Harper. The Chair will now recognize the gentleman from
Michigan, Mr. Walberg, for 5 minutes.
Mr. Walberg. Thank you, Mr. Chairman. And thank you for
having these hearings.
As we look at the various players--and today, of course, we
have distributors--we had the opportunity to have DEA in front
of us, and that was an amazing time of testimony as well with
amazing failings that went on in DEA also.
But this epidemic knows no boundaries. When we talk of
losing 115 Americans every day to the opioid epidemic, these
are people that are our neighbors, our friends, our fathers,
our family members, our sons, our daughters, our mothers. It
knows no bounds. But the sheer number of opioids dumped into
small town America is simply baffling and incomprehensible to
me.
Many of us have tragic stories of pill mills in our
district. And my district in Michigan is, unfortunately, no
different. In Monroe County, one doctor alone was able to get
his hands and prescribe over 2 million pain killers in just two
short years.
I, for one, am interested to have the distributors here
today to tell us exactly how and why this type of thing happens
and to hear the steps that they have or will take.
Mr. Collis, you wrote in an editorial last year that
AmerisourceBergen has, and I quote, ``reported and stopped tens
of thousands of suspicious orders since 2007,'' end quote. If a
specific pharmacy is reported for suspicious orders multiple
times during a short period, would that trigger a heightened
investigation of that customer?
Mr. Collis. I believe it absolutely would. I wouldn't say
we don't make mistakes, but I will tell you one of pharmacies
that's been mentioned several times, we had them on service for
38 days, and we reported them 36 of the 38 days. And on the
38th day we stopped servicing them.
Mr. Walberg. In the editorial, you also noted that
AmerisourceBergen uses, and I quote, ``complex algorithms to
identify and stop orders that are deemed to be suspicious.''
From 2012 to 2015, AmerisourceBergen reported 394 suspicious
orders for a single West Virginia pharmacy, Beckley Pharmacy.
If the company opens an investigation of a pharmacy like
Beckley, the investigators would want to know the percent of
controlled substance prescriptions the pharmacy filled,
correct?
Mr. Collis. That's correct.
Mr. Walberg. Whether there are signs of drug activity
around the pharmacy. Is that correct?
Mr. Collis. We would review the type of business that they
are servicing. Some of my colleagues on the panel here have
talked about the type of business. If they service a hospice
account or pain management clinic, we would investigate that.
Mr. Walberg. If there are any known pill mill doctors
writing prescriptions, you would want to note that, correct?
Mr. Collis. If we knew that they were servicing a pill mill
doctor, by your description, we would not service that
pharmacy. If their business was designed around that, we would
not service that.
Mr. Walberg. AmerisourceBergen reported 199 of its
suspicious orders for Beckley Pharmacy between 2013 and March
of 2014. But documents your company provided to the committee
indicate that Amerisource didn't investigate the pharmacy until
February 2015.
Please, if you would, turn to tab 46 to see the
investigator's February 2015 report, which found, and I'll read
that:
The pharmacist said that 50 percent of prescriptions he
filled were for controlled substances and that customers told
him other pharmacies wouldn't fill their prescriptions. Some of
the pharmacies top 10 prescribers were among the top
hydrocodone prescribers in the State, and the pharmacy security
guard referred to customers as drug addicts and drug dealers
and said he witnessed numerous drug deals in the parking lot
after customers filled oxycodone prescriptions.
Amerisource didn't stop doing business with that pharmacy
until November 2015, 10 months after the investigator's report,
which itself came only after your company filled hundreds of
suspicious orders. The company is supposed to use, and I quote,
``complex algorithms'' to identify problems pharmacies have.
So why did it take so long?
Mr. Collis. I have a team, some them are behind me. We
trust them. I think that we--I have never heard of this
pharmacy before. But we're committed to continuous learning.
And if we made mistakes, hopefully we'll rectify them and they
won't happen in the future.
Mr. Walberg. Well, if we could get the response to that
question, since you're not aware of it. It comes from your
reports and the reports that we have in front of us.
Mr. Collis. We ship 100,000 orders a day. It's not feasible
that I would know about all the orders.
Mr. Walberg. Well, we'll appreciate the response to that.
Mr. Chairman, I have other questions I'll have included in
the record.
Mr. Harper. Certainly. Each of the witnesses will be aware,
you may be getting written questions following this. We'd ask
for your response to those as quickly as possible, including an
answer to that question, Mr. Collis, at your earliest
convenience.
At this time, the Chair will recognize the gentlewoman from
California, Mrs. Walters, for 5 minutes.
Mrs. Walters. Thank you, Mr. Chairman.
And, Mr. Barrett, these questions will be asked of you.
When Cardinal began setting threshold limits for pharmacies
in 2008, the company set Family Discount's hydrocodone
threshold at 27,000 doses a month. In a little over a year,
Cardinal adjusted the pharmacy's threshold 14 times. And by
August 2009, it was cleared to receive 110,000 hydrocodone
pills a month.
The pharmacy's threshold for hydrocodone reached a peak of
150,000 dosages a month in January 2010, a level it remained at
for a year and a half before Cardinal officials reviewed and
reduced it.
Mr. Barrett, when a pharmacy goes over its monthly drug
threshold, does Cardinal inquire about the reason for the
higher drug order?
Mr. Barrett. Thank you, Congresswoman.
Today, if an order reaches its threshold, it simply stops.
So the process is the threshold is set, and the threshold is
set based on a number of factors, the size of the community it
serves, not just the population but the community it serves.
Other factors. Does it serve a hospice center, a surgical
center, et cetera. If an order reaches that threshold, that
limit, it simply stops.
Mrs. Walters. But in the past, did it question it, before
today?
Mr. Barrett. So as I look back at some of the historical
documents, I think the thresholds probably should have been set
with a different set of eyes. I've mentioned this notion of
asking different questions. And I think today we'd probably set
those quite differently.
But I think at the time of those pharmacies you referred
to, thresholds probably should have been adjusted down more
quickly.
Mrs. Walters. Did they--did Cardinal make an assessment as
to whether the explanation for increasing its threshold made
sense and verified it in any way?
Mr. Barrett. It's hard for me to answer that fully. Again,
this is part of the history. I have no reason to question the
good intent of those doing that kind of assessment. They were
professionals. I think they were looking at the incoming order
of prescribing.
I think now we know some of that prescribing was driven by
some behavior that we would have liked to have caught in the
physician world. And today that simply could not happen.
Mrs. Walters. OK. In Family Discount's case, the pharmacy
gave several explanations as to why it needed higher drug
threshold. But in April 2009, the pharmacy said its hydrocodone
volumes increased because of the closure of a nearby pharmacy
called Sav-Rite pharmacy.
Mr. Barrett, do you know why Sav-Rite closed in 2009?
Mr. Barrett. I'm sorry, Congresswoman, I don't.
Mrs. Walters. OK. Well, it closed because it was raided by
the DEA as part of a crackdown on prescription drug diversion.
Sav-Rite, which is located about 30 miles away from Family
Discount, closed after it was raided by the DEA, as I just
mentioned. And the raid was covered in the local media at the
time, but due diligence files Cardinal provided the committee
do not indicate that the company knew about this event. Is that
something Cardinal should have investigated or known?
Mr. Barrett. I think today under our procedures in our,
essentially, know your customer model, we try to take into
account what factors that we can that are fact. Those weigh
into the judgment along with various analytical tools that
relate to the nature of the community of practices that a
pharmacy serves. So very likely today that would have been a
factor that would have been--it would have been caught in the
system.
Mrs. Walters. OK. Cardinal's policies indicate that, as of
2016, two people must now sign off on the decision to raise
certain drug threshold levels above 20,000 and above 40,000 a
month. Before that policy was adopted, was Cardinal failing to
properly vet threshold level adjustments?
Mr. Barrett. I'm not sure, Congresswoman, that I could say
that we were failing to reflect that. I think we were using the
tools of the moment. And it was probably much more subjective
judgment than what would happen today. Today it is a much more
rigorous, evidence-based, data-based decision, and it doesn't
have the same kind of subjectively I think that was present at
that moment.
Mrs. Walters. OK. Cardinal Health has advised the committee
staff that, starting in 2012, your corporation implemented
stronger compliance systems. However, I would note that, in
March 2017, the California State Board of Pharmacy filed a
complaint against Cardinal's Valencia, California, facility for
shipping suspicious orders, including hydrocodone, during 2012
to 2015, to Pacific Plaza Pharmacy.
I would further note that the conduct of the Cardinal
Valencia facility figured in the 2008 $34 million settlement
with the Justice Department and DEA. The shipments to Pacific
Plaza involved sharp increases in the volume of controlled
substances over a period of time. There were also orders of
significant amounts of the highest available strength of drug
compared to lower strengths, a red flag for illegitimate
pharmacy dispensing.
I understand Cardinal is contesting the complaint. But, Mr.
Barrett, shouldn't Cardinal Health's stronger compliance system
have been able to detect and to prevent these transactions?
Mr. Barrett. Congresswoman, if I'm responding, I think, to
the case that you referred to, and, again, this is important,
we ship to a pharmacy that had an employee that stole a
product. We were then criticized for shipping to the pharmacy
and not being able to detect that internal theft.
Again, I think this in some ways highlights part of the
challenge. We ship to hospitals and pharmacies all over this
country. There are things that may happen inside their watch.
If the volumes are not things that would normally hit our
thresholds that are happening at a much lower level, and this
can happen, that is something we probably would not somebody
detect.
And so, again, this may or may not be the situation you're
referring to. If it is, and I think it may be, that's
essentially what the issue is.
But for us today, we are driven by strict thresholds, and
those are limits on the amount of certain products, 120
categories of drugs that can go to certain pharmacies.
Mrs. Walters. OK. Thank you.
I'm out of time.
Mr. Harper. The Chair now recognizes the gentleman from
Georgia, Mr. Carter, for 5 minutes.
Mr. Carter. Thank you, Mr. Chairman.
And thank all of you for being here today. We appreciate
this very much.
I have to say that I'm pleased thus far that my colleagues
have not made this a witch hunt. But instead, I think they've
asked some great questions and very fair questions.
What I've heard, and I've been kind of in and out, but what
I've heard is that you've acknowledged that you have a
responsibility here and that you understand that. What I think
I've also heard is that if you knew back then what you know
now, you'd do things differently. And I think that's true for
all of us in this profession. And I say that having practiced
pharmacy for over 30 years.
I'm going to ask you all to be very, very honest with me
right now, because I'm concerned, as Dr. Burgess mentioned,
about the role of the DEA.
Now, we've already had the DEA before this committee, and I
think we had--I think we kind of had it backwards. I wish I
could have another shot at them, to be quite honest with you,
to ask them some questions.
But let me--I just ask any of you. I assume all of you are
compliant to ARCOS, that you're reporting. What does DEA do
with that information? Do you know? And if you can be brief,
because I've got a bunch of questions.
I ask you, Mr. Hammergren. Do you have any idea what DEA
does with that information?
Mr. Hammergren. No, I don't, sir.
I would also say, Congressman, some of this testimony, you
see these pharmacies switch wholesalers back and forth.
Mr. Carter. Absolutely.
Mr. Hammergren. We don't see it before that happens.
Mr. Carter. OK.
Mr. Collis, do you have any idea what the DEA does with
this?
Mr. Collis. No. No. We would like more feedback. We'd also
like [off mic] the rules, for example, on what constitutes a
suspicious order.
Mr. Carter. OK.
Mr. Collis. Very, very helpful. I know one of the gentlemen
and I think we would be very interested in complying with the
rules.
Mr. Carter. Let me ask any of you. Has the DEA ever come to
you and said do not send opioids to that pharmacy or to that
clinic or to that hospital? Has anybody ever been told that by
the DEA?
Mr. Collis. Not to my knowledge.
Mr. Carter. Have they ever given you any kind of directions
or guidelines? You know, I get it if they're outside of the
rim, you know, and obviously there's something going on. But, I
mean, aside from that.
Mr. Collis.
Mr. Collis. Well in 2007, we had a lot of discussion with
them, and we developed our current controlled substance order
monitoring program and with the understanding that this was
where they wanted the industry to go to.
So I would say we do have regular consultation with them.
We have worked with them on training programs.
I wouldn't say it's--I would say, like all relationships,
it can be improved and worked upon.
Mr. Carter. Right. Right.
Mr. Collis. But it's not totally without communication and
collaboration.
Mr. Carter. Let me ask you this. Obviously, you know the
difference in a schedule two drug and a schedule three drug.
The DEA schedules those depending on the tendency for
addiction.
When did hydrocodone become a C two drug?
Mr. Collis. I do not know.
Mr. Carter. I will tell you. It became a C two drug in
2014.
Why did it take so long, do you think, for the DEA to
reclassify hydrocodone from a C three to a C two drug? Do you
treat C two drugs differently from C three drugs?
I know you do, because when I get them from you, or when I
used to get them from you, I had to sign different documents
that came in a different box. They came sealed.
Now, we're talking about all these pills that came here,
and they weren't sealed, they weren't on a different invoice or
anything else.
I'm just wondering, and, again, I wish I could ask the DEA
this, why did it take so long to reschedule hydrocodone?
The last thing I will say is this. Mr. Smith, you were
involved in the situation in West Virginia. And I'm not taking
up for you guys. You guys have a responsibility, and I believe
you take that responsibility very seriously. And what I said
earlier, I believe. I believe that if you had it to do to over
again, you'd do some things differently.
Mr. Smith, there was a doctor, a Dr. Katherine Hoover, who
accounted for 69 percent of all the prescriptions that were
written during that timeframe in this town in West Virginia. Do
you know whatever came about with Dr. Hoover? Do you know where
she is today?
Mr. Smith. I believe they referred to her earlier, and that
she's either--oh, I'm sorry.
Thanks, Steve.
I believe she was referred to earlier and that there's
either been disciplinary action taken with her or she's left--
--
Mr. Carter. She fled to the Bahamas. She bought an island.
Twenty-one doctors, Dr. Burgess pointed out, 21 doctors in the
whole Nation.
Now, when you're sending drugs to a pharmacy, and it's out
of control, there's one of two things happening. Either that
pharmacy is out of control and they're selling drugs out the
back door, or there's a doctor who's out of control in that
area.
Has the DEA ever come to you asking you about a particular
doctor?
Mr. Collis. Not to the best of my knowledge.
Mr. Carter. Nobody has.
Dr. Mastandrea. We have received subpoenas regarding
physicians.
Mr. Carter. Good. Thank you. I'm glad to hear that. And I
hope that we will hear that.
I'm sorry. I'm out of time. But, again, we all have
responsibility in this. All of us. There is no one solution to
the opioid epidemic. All of us. Pharmacists, distributors,
manufacturers, physicians, all of us have a responsibility.
And I appreciate your role in that responsibility and you
accepting that role in that responsibility. This is very
important. You can help, and I hope that you are committed to
helping. I believe that you are.
Thank you, Mr. Chairman, and I yield back.
Mr. Harper. The gentleman yields back.
The Chair will now recognize the gentleman from
Pennsylvania, Mr. Costello, for 5 minutes.
Mr. Costello. Thank you, Mr. Chairman.
Mr. Barrett, the committee asked Cardinal Health how it
assessed whether the 6.5 million opioid pills distributed to
Family Discount Pharmacy over a 5-year period was an
appropriate number to send to a town of less than 2,000 people.
The company's response was that Family Discount in Mount Gay-
Shamrock was a large pharmacy that served the broader Logan
County, which has a population of 35,000 people.
When Cardinal investigators reviewed several high-volume
purchases of controlled substances in 2008, they did not cite
the county population in their investigation. They instead
cited the population within a 35-mile radius of the pharmacy as
2,600 people. I know which figure looks better for the company,
but why is the company now relying on the county population
data when it cited a more limited area in its investigation of
this pharmacy?
Mr. Barrett. Mr. Congressman, let me start by saying, and I
have mentioned earlier, if we looked at that pharmacy today and
those patterns, we would have come to different conclusions. So
I can only observe what I see in the documents back then.
I think the pharmacy is--its volumes are not necessarily
dictated by the size of the community. It's dictated by the
nature of the customers that it serves: hospitals, clinics,
surgery centers, regional centers.
So in some cases, rural centers--excuse me--rural
pharmacies, which have small populations, search a large area.
So I think that may have been part of the judgment.
What is important for me today is looking at it with
today's eyes. And with today's eyes, I still think we would
have made a different decision.
Mr. Costello. Thank you.
Cardinal also told the committee that when assessing
pharmacy drug orders it doesn't have the full picture of how
many pills are being sent to a pharmacy or the surrounding area
by other distributors. That's because the company does not have
the ARCOS data collected by the DEA. But this argument that the
distributor has to see the full picture to recognize issues
with its own distribution is nevertheless problematic, I think.
Using ARCOS data, the committee was able to determine how
many opioids Cardinal alone dispensed to pharmacies in ZIP
Codes surrounding Family Discount. The company sent over 16
million hydrocodone and oxycodone pills to that West Virginia
region between 2006 and 2016. Family Discount received 6.7
million of those pills and its Stollings location received
another 1 million.
Mr. McKinley, I apologize if I pronounced Stollings wrong.
I think I got it right, but if I did.
Cardinal could see that 46 percent of its own distribution
of opiates to the region was going to two related pharmacies.
Mr. Barrett, can you really tell me that Cardinal needed to
know what other companies were distributing in order to raise a
red flag? I understand what you just said about hospitals in
the region, but I'm trying to dig a little bit deeper here.
Mr. Barrett. So again, I can only repeat what I've said
about this. I've seen enough in reviewing this file to say that
we should have seen patterns earlier. But I think the comment
that was in our document is generally true about how we do
assessment of pharmacies, that there are many factors that go
beyond simply the size of the community.
Mr. Costello. Right. But you did cut off Family Discount in
2012. Why is that?
Mr. Barrett. Again, I think our team had enough data at
that point in that moment at that time to say we are not
comfortable with these levels of hydrocodone and oxycodone and
at that point made a decision to cut off those pharmacies.
Mr. Costello. But that data did not yield conclusions as to
other pharmacies at that moment in time? Presumably not if you
didn't stop.
Mr. Barrett. I really can't answer that. I'm sorry. I just
don't know the answer to that, sir.
Mr. Costello. In addition to knowing what Cardinal itself
distributes to a pharmacy, the company can also ask a pharmacy
to produce a drug dispensing report. Is that correct?
Mr. Barrett. I'm sorry. Could you repeat one more time
Mr. Costello. In addition to knowing what Cardinal itself
distributes to a pharmacy, the company can also ask a pharmacy
to produce a drug dispensing report. Is that correct?
Mr. Barrett. I think that may occur from time to time, yes.
Mr. Costello. In the case of Family Discount, Cardinal
asked for and received drug dispensing reports, an example of
which can be found on tab 55, tab 55 in the document binder.
Dispensing reports contain information about all the
prescriptions and drugs a pharmacy sends out the door, not just
the drugs that Cardinal supplied. Is that correct?
Mr. Barrett. I think that's correct, sir.
Mr. Costello. And for Family Discount, investigators
requested drug dispensing reports multiple times as they
reviewed high orders for controlled substances. Isn't that
right?
Mr. Barrett. Sir, I believe all this is in the documents.
But I believe that's correct.
Mr. Costello. Very good.
I will yield back the balance of my time.
Mr. Harper. The Chair will now recognize the gentlewoman
from Tennessee, Mrs. Blackburn, for 5 minutes.
Mrs. Blackburn. Thank you, Mr. Chairman.
Thank you all for being here today. We appreciate this.
And I think probably what you're hearing from us on each
side of this dais is enough is enough. And you all have faced
penalties. You have had settlements. You have had memorandums.
We have covered every bit of that.
And just as we are doing more at this committee to get our
arms around this issue, legislation that we are moving forward
with, we expect you all to do more also.
And I have spent a lot of my time since I was in the senate
in Tennessee, the Tennessee State Senate, doing roundtables,
visiting treatment centers, sitting down with families, law
enforcement, hearing their stories. And what we know is that
the opioid crisis is different. The detox, the treatment, the
recovery is different. And this is going to have to be a
concerted effort to end this crisis.
And Senator Portman has CARA 2.0 in the Senate. I have it
along with Congressman Ryan here in the House. It's totally
bipartisan. Another billion dollars to go toward addressing
this crisis. So we do expect you all to work with us on this.
And I have got kind of a different set of questions I want
to run through fairly quickly, and this will be a yes or no.
And I'm going to start with you, Mr. Barrett, straight down the
list.
Have any of you personally met with families who have lost
loved ones or survivors, individuals who are in recovery? Just
yes or no right down the line.
Mr. Barrett. Yes, ma'am.
Dr. Mastandrea. Yes.
Mr. Hammergren. Yes.
Mr. Smith. I have not.
Mrs. Blackburn. You have not?
Mr. Collis. Yes.
Mrs. Blackburn. OK. So four of you have.
Now, let me ask you this. Do you have employees who are in
treatment or recovery for opioid addiction, and does your
insurance cover that treatment for these employees? Because
what I understand is it takes about a year to a year and a half
for someone to rewire their brain. Yes or no, straight down the
line.
Mr. Barrett. I believe our coverage does cover behavioral
health issues.
Dr. Mastandrea. Yes, we do have employees who have had
substance abuse problems, and we do cover substance abuse
treatment.
Mr. Hammergren. Sadly, Congresswoman, I've had employees as
well that are in treatment. And in addition to the insurance,
we've also got a fund that helps them anytime it's outside of
the treatment from insurance to cover those costs.
Mr. Smith. I was generally not told about any health
conditions of any employees, so I can't speak to that. But I do
believe that during my tenure that would have been covered.
Mrs. Blackburn. Yes or no is fine.
Mr. Collis.
Mr. Collis. I'm not aware. I do not know.
Mrs. Blackburn. You do not know.
Well, let me ask you this. When you started distributing
the opioids, were you aware of the addictive nature of this
drug? Yes or no, straight down the line.
Mr. Barrett. Our company's been distributing opioids----
Mrs. Blackburn. Yes or no.
Mr. Barrett [continuing]. For as long as it's been in
business. I would assume that we know that all drugs have side
effects.
Mrs. Blackburn. OK.
Yes or no.
Dr. Mastandrea. Yes.
Mrs. Blackburn. You were.
Dr. Mastandrea. We know the requirements of the DEA
schedules.
Mrs. Blackburn. OK.
Mr. Smith.
Mr. Smith. We know there's a tradeoff with every drug.
Mrs. Blackburn. OK. All right.
Mr. Collis. It's done in a pure clinical decision.
Mrs. Blackburn. All right.
OK. We've talked a little bit about your algorithms and the
way you've changed your protocols, moving to more of an
evidence-based database, a platform less subjective. And we
hope that that helps with the distribution.
I want to know from each of you, how many pharmacies have
you removed from your distribution list?
Straight down the line. You can say--give me the number or
``I don't know.'' And then you'll submit it for the record.
Mr. Collis. We have 800.
Mrs. Blackburn. I'll get to you in a minute.
Mr. Barrett.
Mr. Barrett. We have cut off or refused to do business with
a thousand or more.
Mrs. Blackburn. A thousand.
You don't know? Please submit for the record.
Mr. Hammergren. Hundreds.
Mrs. Blackburn. Hundreds? I'd like an exact, please.
Mr. Smith. What time period are you asking for?
Mrs. Blackburn. Well, through the history of your company.
How many of----
Mr. Smith. I wouldn't be able to give an exact number, but
hundreds.
Mrs. Blackburn. OK, find a number and let us know.
Mr. Collis. We have a robust list that we have 800
pharmacies.
Mrs. Blackburn. I would to know--800. That you've cut off
or that you distribute to?
Mr. Collis. That we do not ship to.
Mrs. Blackburn. Eight hundred. OK. That is wonderful.
And how often does your algorithm flag a--and you all can
submit this, because I'm out of time and there are others who
want questions.
I want to know, how often does your system flag a bad
pharmacy? And then what is your threshold? You have mentioned
thresholds several times, but you have not given a specific as
to what that threshold is that kicks a pharmacy out. And if
each of you will submit that in writing, I'd appreciate it.
Thank you. I yield back.
Mr. Harper. The Chair will now recognize the gentleman from
New Jersey, Mr. Lance, for 5 minutes.
Mr. Lance. Thank you very much, Mr. Chairman.
Dr. Mastandrea, Miami-Luken noted that in June of 2015,
following a review of Westside Pharmacy's dispensing data, the
company identified concerns with two of the pharmacy's top
prescribing physicians of oxycodone, Dr. David Morgan and Dr.
Sanjay Mehta. The company has said that you expressed your
concerns to the pharmacy's owner who assured you the pharmacy
would no longer fill their prescriptions effective June 30 of
2015.
However, as I understand it, in October of that year,
Miami-Luken learned that Drs. Morgan and Mehta continued to be
among the pharmacy's top prescribing physicians.
When Miami-Luken learned that Westside pharmacy had not
been truthful by continuing to fill prescriptions written by
these doctors, did you drop the pharmacy as a customer?
Dr. Mastandrea. We probably dropped that customer within 30
days of finding out that she was not cooperating with us.
Mr. Lance. On November 4, 2015, your director of compliance
performed a site evaluation at Westside Pharmacy. You will find
this evaluation in the binder at tab 33. Shouldn't your site
investigators have investigated the pharmacy's falsehoods
instead of ignoring them?
Dr. Mastandrea. I'm sorry. The question was shouldn't the
investigators have done what?
Mr. Lance. Shouldn't your site investigators have
investigated the pharmacy's falsehoods instead of apparently
ignoring them?
Dr. Mastandrea. I think that they should have investigated
the pharmacy in totality.
Mr. Lance. After you knew the pharmacy wasn't telling you
the truth by continuing to fill prescriptions written by Drs.
Morgan and Mehta, did Miami-Luken agree to increase Westside
Pharmacy's oxycodone threshold in November 2015?
Dr. Mastandrea. I am not aware of that.
Mr. Lance. I request that you review the situation and give
the committee an answer, yes or no. Not being aware of that is
not sufficient, and please report back to the committee with
the answer.
Dr. Mastandrea. My counsel will do so.
Mr. Lance. Thank you.
Given that the DEA cited Miami-Luken's relationship with
Westside Pharmacy in its order to show cause, doesn't that
raise a question in your mind about your company's due diligent
efforts with respect to this pharmacy?
Dr. Mastandrea. Congressman, we were in the process of
vetting that particular customer at the time we received the
order to show cause. We had already terminated--I believe there
were 13 different customers that were on the order to show
cause and we terminated, prior to receiving the order to show
cause, all of them with the exception of Westside Pharmacy,
which we were in the process of vetting at the time. When we
found that they were on the order to show cause, enough was
enough, and we terminated the relationship.
Mr. Lance. It's my belief that the relationship was
terminated at a point well beyond when it should have been
terminated.
I realize that monitoring for and reporting suspicious
records is often complicated. Therefore, I take this
opportunity to discuss a proposal that may enable distributors
and the DEA to use the data that is available to them in a more
effective way. And this is for the entire panel.
Technology today that didn't exist when ARCOS was put into
place is able to deliver information that would allow the DEA
to stop a suspicious order before it is filled. I, along with
colleagues in the Senate, I am working on a proposal that would
create a new data platform for the DEA to utilize moving
forward so that this situation is ameliorated to the greatest
extent possible.
To the entire panel, will you commit to working with me and
other Members of Congress--and this will be completely
bipartisan, I assure you--to create a system that can
effectively ensure that we are ready to police suspicious
orders in a way that is truly effective? And as Congresswoman
Blackburn suggested, going down the line.
Gentlemen.
Mr. Barrett. I would support any technology that would help
us do this job better, yes.
Dr. Mastandrea. Yes.
Mr. Hammergren. I look forward to working with you.
Mr. Smith. I am no longer employed in the industry, but I
wish you the best of luck.
Mr. Lance. Yes, we will need more than luck.
Mr. Collis. Yes. Absolutely.
Mr. Lance. Thank you.
I yield back the balance of my time, Mr. Chairman.
Mr. Harper. The gentleman yields back.
And I would like to clarify for the record that Miami-Luken
did increase the threshold, as Mr. Lance described. The Chair
will now--and also would like to put into the record a letter
so signifying.
Without objection.\1\
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\1\ The letter appears in the document binder, which has been
retained in committee files and also is available at https://
docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=108260.
---------------------------------------------------------------------------
Mr. Harper. Now the Chair will recognize the gentleman from
West Virginia, Mr. McKinley, for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman. And thank you,
because I'm not a member of this committee, for the opportunity
to address the panel and carry on.
I'm from West Virginia we've been hearing about all day
today. The fury inside me right now is bubbling over with how
we're going to address this problem. And for several of you to
say you had no role whatsoever in this, I find it particularly
offensive when we've had over 900 people a year dying in West
Virginia because of lack of attention on your algorithm and
your operation. And deflecting responsibility saying, ``I just
had to fill the order,'' no, you had a role. You had a role.
So let me just--Mr. Hammergren, if I could focus on you.
You said you have notified the DEA of suspicious activity--
suspicious orders. But between years 2001 and 2014, did any of
those suspicious orders involve West Virginia?
Mr. Hammergren. I can't be certain, Congressman. We've
reported between 2000--in that period of time, around a million
orders to the DEA as suspicious.
Mr. McKinley. Well, I just want to, for all of you, between
2001 and 2014, none of you were complying with State law. State
law says if there is a suspicious order that you file with the
DEA, you're supposed to send a copy of that order to the West
Virginia Board of Pharmacy, and none of you have done it
between those time periods. Not only a suspicious order, but at
the end of every month, you're supposed to file a report that
says, during the past month, they give you 15 to the end of--
after 15 days, you're supposed to file a report with the Board
of West Virginia Pharmacy saying no suspicious orders took
place in West Virginia.
But you didn't do it. And that was some of the heart. That
was the genesis. That's when this disease really took hold in
West Virginia. And you weren't complying. But yet you said the
same thing. You said: We're not responsible.
I think you very much were responsible.
So, Mr. Hammergren, again, do you agree that a person like
Dr. Hoover should be held accountable for her actions and
perhaps pay more than a fine for her actions?
Mr. Hammergren. Congressman, I don't know Dr. Hoover, and I
don't know the situation of her case.
Mr. McKinley. Do you just think in general doctors that
spread this poison, writing 40,000, 50,000, 100,000 of
prescriptions on opioids, should pay a penalty?
Mr. Hammergren. Absolutely, Congressman.
Mr. McKinley. OK. What about pharmacies, pharmacies that
are following that order? The one that we have in particular,
Sav-Rite pharmacy. Should that pharmacy, should that pharmacist
be held accountable for what he's done?
Mr. Hammergren. In fact, I think that pharmacy was closed,
per some earlier----
Mr. McKinley. What about--no, no. It may have been closed.
He may have lost his job. But what about him or her who filled
the order? Should she have been held accountable?
Mr. Hammergren. I don't know the specifics. I can't comment
on it.
Mr. McKinley. OK. I'm coming back. I'm setting this up. I
want to know whether you all should be held accountable.
Because if the doctors and the pharmacies are being held
accountable, I sure as the dickens would think you all have a
role in this thing, too.
So if I could, I want to go back again, Mr. Hammergren, to
you. Let me try again with another. Do you regret any role that
your company has played in this crisis?
Mr. Hammergren. Congressman, I don't know how you could
look at this crisis and not feel terrible about what's going on
in this country. And I certainly believe in situations like the
Sav-Rite pharmacy and----
Mr. McKinley. So you do regret----
Mr. Hammergren. I feel terrible about this----
Mr. McKinley [continuing]. That what McKesson did in
participating in this scourge that's ravaged this country, you
regret it?
Mr. Hammergren. I feel terrible about this crisis.
Mr. McKinley. So what's the proper accountability? What's
the punishment? It's just a slap on the wrist of maybe 100th of
1 percent of the revenue? What's the accountability, what's the
punishment that fits this crime when 900 people in West
Virginia lose their life or 115 people lose their lives across
this country? Just a slap on the wrist? A financial penalty? Or
should there be time spent for participating in this?
So I just want you to feel shame about your roles,
respectively, in all of this, how we're going to get through
this.
So apparently I have run out of time, but--let me just
leave it at that. I am so frustrated for the people in West
Virginia and across this country that you all have not played
and stepped up, took more responsibility for this.
I yield back my time.
Mr. Harper. The Chair now recognizes the gentleman from
Ohio, Mr. Johnson, for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman.
And, gentlemen, thank you for being here today.
I have listened with interest to today's testimony and the
questions that you have responded to. It's a very tough
subject. Eastern and southeastern Ohio sits at the epicenter of
the opioid epidemic. I hear about it every day that I'm out and
about in my district.
And I don't know if you've heard this yet today, but I'm
glad you folks are at the table. And part of my questioning is
going to be, where do we go from here? What are the solutions
to this problem that you folks have been looking at and maybe
some things that you're looking at down the road?
Let me start out with Dr. Mastandrea. Do I have that
pronounced right? And I apologize
Dr. Mastandrea. Yes, sir.
Mr. Johnson. OK.
As I mentioned, I represent eastern and southeastern Ohio.
It includes the town of Wheelersburg in Scioto County. In 2008
Scioto County had an overdose death rate of more than 27 times
the national average.
For several years, 2005 through 2011, Dr. Margy Temponeras
owned and operated the Unique Pain Management Clinic there in
Wheelersburg. This clinic was a pill mill. Temponeras saw more
than 20 patients per day who paid cash, starting at $200 for
each appointment, and received monthly prescriptions for
similar combinations of medications such as 120 to 150 pills of
oxycodone and 90 pills of Xanax.
In April of 2017, Dr. Temponeras pleaded guilty in U.S.
District Court to conspiracy to distribute a controlled
substance, which she did through a pain clinic and dispensary.
Between November 2008 and August 2010, Miami-Luken supplied
the Unique Pain Management Clinic with controlled substances,
including oxycodone.
So my first question. According to the DEA, December of
2008 was the first full month that Miami-Luken began shipping
to Dr. Temponeras. In that month's shipment, 97 percent of the
total dosage units were controlled substances and 84 percent of
the controlled substances ordered, totaling 71,100 dosage
units, were oxycodone.
Do those numbers seem unusually high to you?
Dr. Mastandrea. Congressman, I find it to be unusual that
we would sell directly to a physician. I find it unusual that
she would be a dispensing physician. By doing that, she
bypassed all of the checks and balances that were in place.
Mr. Johnson. OK. But I'm not talking about what she did.
I'm talking about what you guys did. Did those numbers----
Dr. Mastandrea. That's right. And what we should not have
done, we never should have supplied to a dispensing physician.
Mr. Johnson. All right. Given that, should those orders be
investigated, do you think?
Dr. Mastandrea. Those orders should have never been
shipped.
Mr. Johnson. But should they be investigated?
Dr. Mastandrea. How so?
Mr. Johnson. Well, I think, if my facts are correct, Miami-
Luken claims to have investigated Dr. Temponeras and the
clinic. You, yourself, stated that in November 2008 one of the
company's salesmen conducted an inspection. However, according
to the DEA, that inspection was cursory at best and it failed
to take into account the area's prescription drug problem.
Then, in 2009, Miami-Luken CEO Tony Rattini and compliance
manager Jim Barclay showed up to investigate on a day when the
facility was closed and never returned to visit when it was
open.
So I guess my question to you is, looking back in
retrospect, are those instances, in your opinion, adequate due
diligence? I mean, you express outrage now that it never should
have happened. But was due diligence supplied, do you think,
when the opportunity presented itself?
Dr. Mastandrea. Due diligence was attempted in that
particular situation.
Mr. Johnson. When they showed up and didn't show back up,
the alarm bells didn't go off?
Dr. Mastandrea. I said it was attempted.
Mr. Johnson. OK. All right.
My time has expired. But I do appreciate you folks being
here. And I know that--I know there's a lot of emotion around
this issue. There certainly is in my district. And I want to
thank you for any work that you are doing and continue to do to
help us get a handle on this, 115 people dying per day. We need
your engagement at your level to get this problem resolved.
Mr. Chair, I yield back.
Mr. Harper. The Chair now recognizes the gentleman from
Florida, Mr. Bilirakis, for 5 minutes.
Mr. Bilirakis. Thank you, Mr. Chairman.
And I appreciate you all being here. This is something we
need to focus on. It's an epidemic, and we need your
engagement, as my colleagues said.
So I'm glad to hear that the drug distributors acted in
recent years to reform the policies and tighten controls on the
distribution of opioid pain pains. But I'm surprised to hear,
why did it take so long?
And Florida was awash in pain-- I represent the State of
Florida, the Tampa Bay area, as you know, and the Tampa Bay
area, in particular, but the whole State of Florida was awash
in pain pills back in 2010. And it's taken significant efforts
by law enforcement and Florida lawmakers, the local lawmakers,
to battle the prescription drug epidemic in recent years.
On the part of the distributors, I'm concerned that you may
not be on the same page. For instance, Mr. Barrett, Cardinal
was the subject of a DEA administration action in Florida
several times over the years. The DEA took enforcement action
against Cardinal's Lakeland, Florida, distribution center in
2007 for failure to maintain effective controls against the
diversion of hydrocodone and again for similar allegations
involving oxycodone in 2012.
In court documents involving the 2012 action, the company
made an interesting point. Cardinal said between 2009 and 2012
it stopped distributing controlled substances to 149 Florida
pharmacies. But the company noted that 113 of those Florida
pharmacies still had DEA registrations as of 2012. That means
even though Cardinal had cut off pharmacies it suspected of
drug diversion, other drug distributors were still doing
business with them.
I understand the committee's investigation turned up
numerous examples in West Virginia of one distributor dropping
a pharmacy due to diversion concerns only for another
distributor to immediately start doing business with the
pharmacy. I mean, that's very concerning again.
So for all the witnesses, starting over here, I'd like all
your companies to address two questions, please.
First, when your company is considering bringing on a new
pharmacy as a customer, do you verify whether that particular
pharmacy was cut off from another distributor for suspected
diversion?
Please begin.
Mr. Barrett. Congressman, I don't think we can know for
sure. Actually, we don't have access to that information that
another company has necessarily cut off a pharmacy. We may, but
there's nothing in the mechanics of the regulatory process that
makes that happen.
Mr. Bilirakis. All right. Next, please.
Dr. Mastandrea. We ask them whether or not--why they are
coming to us and whether or not they were with another
distributor and why they left that distributor.
Mr. Bilirakis. And you take their word for it?
Dr. Mastandrea. We do as much due diligence investigation
as we possibly can, but it's, unfortunately, a trade.
Mr. Bilirakis. Next, please.
Mr. Hammergren. It's difficult for us to get accurate
information on that.
Mr. Bilirakis. Next, please.
Mr. Smith. In my experience at H.D. Smith, that was
something that we sought from the customer, an explanation, if
they were leaving another wholesaler. But, no, we didn't talk
to the other wholesaler about it.
Mr. Bilirakis. Next.
Mr. Collis. I agree with the previous comments. That
information would be very helpful, Congressman.
Mr. Bilirakis. OK. Next question. And second, what
safeguards do you have in place to ensure your company is not
bringing on a bad actor as a customer after they were dropped
by one of your competitors?
Let's start again from you.
Mr. Barrett. So, Congressman, given the observation I made
earlier, which is you don't know for certain, we try to take,
in this know-your-customer program of ours, any information
that will help us dictate the nature of that pharmacy, who it
serves, what its customers are, and whether or not there are
any red flags.
Mr. Bilirakis. So what safeguards do you have?
Mr. Barrett. I'm sorry?
Mr. Bilirakis. What safeguards do you have in place, any
particular safeguards? Name a few safeguards.
Mr. Barrett. Well, as I mentioned today, we have either not
taken on or shut off a thousand pharmacies over these last 7 or
8 years. So we literally put in place----
Mr. Bilirakis. What kind of process?
Mr. Barrett. If they won't qualify, they don't get products
from us.
Mr. Bilirakis. Do you have any kind of a process that you
go through?
Mr. Barrett. Yes, a very rigorous process, sir.
Mr. Bilirakis. All right. Go next, because I don't have a
lot of time. Next, sir, please.
Dr. Mastandrea. We ask for drug utilization reviews from
every new customer.
Mr. Bilirakis. All right. Next, please.
Mr. Hammergren. We certainly--first, we'll check with the
regulatory agencies, the DEA and the State boards of pharmacy,
make sure the licensing is all done. That would be a baseline
check.
So certainly if there was a problem that was reported to
the DEA and the DEA reported it to us, or a State pharmacy
board, that would be the end of the decision relative to that
pharmacy.
Mr. Bilirakis. Do you do that as well, sir?
Mr. Smith. We had a due diligence process that included all
the elements I think that you've heard from the other
wholesalers.
Mr. Bilirakis. OK. Yes, please.
Mr. Collis. If we did bring on a new customer, we would
have extensive monitoring requirements and look at--in our
suspicious order program, we'd be looking at what is the
content of the orders that we receive from that pharmacy.
Mr. Bilirakis. Would you also--for the first two--would you
also check with the regulatory agencies as well.
Mr. Barrett. Yes. We can't onboard a pharmacy without the
proper authorization from the regulatory agencies.
Mr. Bilirakis. That's a common practice for you as well?
Mr. Barrett. It's a standard practice.
Mr. Bilirakis. OK. Standard practice.
OK. Thank you very much. I appreciate it.
I yield back, Mr. Chairman.
Mr. Harper. The gentleman yields back.
Certainly, I think each of you recognize and would agree
that the distributors are the first line of defense against
diversion of opioids.
And I know we've spent a lot of time on West Virginia. Is
it been on the front line of the opioid epidemic. That's why we
use apportions of the State as a case study in this
investigation. But it leads us to wonder are there other hot
spots across the country that there are problems that maybe we
haven't really seen enough of that information yet.
So given what you've heard today, will each of you commit
to look for communities across the country where the volume of
opioids that your company distributed appear far in excess of
what the community can sustain?
Mr. Barrett. Sir, we will and we do.
Dr. Mastandrea. Absolutely.
Mr. Hammergren. Absolutely.
Mr. Smith. I'm not in a position to do that.
Mr. Collis. We will. And, unfortunately, you know, opioids
seem to thrive in communities where there often is, you know,
hardship. And so we feel particularly concerned about that.
Mr. Harper. I want to thank each of you for taking your
valuable time to help us on this very important matter. I know
everyone recognizes the seriousness of this. We're going to
have to look at every aspect of what goes on. But we do
appreciate the time.
I want to remind Members that they have 10 business days to
submit questions for the record. And I ask that the witnesses
agree to respond promptly to those questions.
Mr. Harper. With that, the subcommittee is adjourned.
[Whereupon, at 12:50 p.m., the subcommittee was adjourned.]
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