throbber
Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 1 of 411
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`UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF IOWA
`CENTRAL DIVISION
`
`
`
`
`
`
`
`
`Case No.: _______________
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`
`
`
`
`
`
`COMPLAINT
`
`DEMAND FOR JURY TRIAL
`
`
`
`
`
`
`
`
`
`This Complaint Relates to In Re National
`Prescription Opiate Litigation, MDL No. 2804
`
`Case No. 17-md-2804
`
`Judge Dan Aaron Polster
`N.D. Ohio (Eastern Division)
`
`
`
`APPANOOSE COUNTY, CERRO GORDO
`COUNTY, CHEROKEE COUNTY,
`CHICKASAW COUNTY, EMMET COUNTY,
`FREMONT COUNTY, HANCOCK COUNTY,
`HENRY COUNTY, IDA COUNTY, JONES
`COUNTY, KEOKUK COUNTY, MADISON
`COUNTY, MUSCATINE COUNTY, OSCEOLA
`COUNTY, POCAHONTAS COUNTY,
`POWESHIEK COUNTY, WEBSTER COUNTY,
`WINNEBAGO COUNTY, and WRIGHT
`COUNTY,
`
`
`Plaintiffs,
`
`vs.
`
`ALLERGAN PLC f/k/a ACTAVIS PLC,
`ALLERGAN FINANCE LLC f/k/a ACTAVIS,
`INC. f/k/a WATSON PHARMACEUTICALS,
`INC., ALLERGAN SALES, LLC, ALLERGAN
`USA, INC., WATSON LABORATORIES, INC.,
`WARNER CHILCOTT COMPANY, LLC,
`ACTAVIS PHARMA, INC. f/k/a WATSON
`PHARMA, INC., ACTAVIS SOUTH
`ATHLANTIC LLC, ACTAVIS ELIZABETH
`LLC, ACTAVIS MID ATLANTIC LLC,
`ACTAVIS TOTOWA LLC, ACTAVIS LLC,
`ACTAVIS KADIAN LLC, ACTAVIS
`LABORATORIES UT, INC. f/k/a WATSON
`LABORATORIES, INC.-SALT LAKE CITY,
`ACTAVIS LABORATORIES FL, INC. f/k/a
`WATSON LABORATORIES, INC.-FLORIDA,
`TEVA PHARMACEUTICALS USA, INC.,
`TEVA PHARMACEUTICAL INDUSTRIES
`LTD., CEPHALON, INC., JOHNSON &
`JOHNSON, JANSSEN PHARMACEUTICALS,
`INC., NORAMCO, INC., ORTHO-MCNEIL-
`JANSSEN PHARMACEUTICALS, INC.,
`JANSSEN PHARMACEUTICA, INC., ENDO
`HEALTH SOLUTIONS INC., ENDO
`
`
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 2 of 411
`
`PHARMACEUTICALS, INC., PAR
`PHARMACEUTICAL, INC., PAR
`PHARMACEUTICAL COMPANIES, INC. f/k/a
`PAR PHARMACEUTICAL HOLDINGS, INC.,
`ENDO INTERNATIONAL PLC, CARDINAL
`HEALTH, INC., McKESSON CORPORATION,
`AMERISOURCEBERGEN CORPORATION,
`ANDA, INC., CVS HEALTH CORPORATION;
`CVS INDIANA L.L.C.; CVS RX SERVICES,
`INC.; CVS TN DISTRIBUTION, LLC; CVS
`PHARMACY, INC.; OMNICARE
`DISTRIBUTION CENTER LLC; OHIO CVS
`STORES, LLC; WALGREEN CO.;
`WALGREENS BOOTS ALLIANCE, INC.;
`WALGREEN EASTERN CO., INC.; THE
`KROGER CO.; RITE AID CORP.; RITE AID
`HDQTRS. CORP.; ECKERD CORPORATION
`D/B/A RITE AID LIVERPOOL DISTRIBUTION
`CENTER; RITE AID OF OHIO, INC.; RITE AID
`OF MARYLAND, INC.; WALMART INC.
`F/K/A WAL-MART STORES, INC.; WAL-
`MART STORES EAST, LP; WSE
`MANAGEMENT, LLC; WSE INVESTMENT
`LLC; WAL- MART STORES EAST, INC.; KVK
`TECH, INC.; MYLAN PHARMACEUTICALS,
`INC.; SANDOZ, INC.; WEST-WARD
`PHARMACEUTICALS CORP.; SUPERVALU,
`INC. D/B/A ADVANTAGE LOGISTICS;
`DAKOTA DRUG, INC.; HY-VEE, INC.;
`PHARMACY BUYING ASSOCIATION, INC.;
`and SAJ DISTRIBUTORS,
`
`Defendants.
`
`
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 3 of 411
`
`TABLE OF CONTENTS
`
`
`Page
`
`B. 
`
`
`INTRODUCTION ......................................................................................................................... 3 
`JURISDICTION AND VENUE .................................................................................................... 9 
`PARTIES ....................................................................................................................................... 9 
`I. 
`PLAINTIFFS ..................................................................................................................... 9 
`II. 
`DEFENDANTS ............................................................................................................... 11 
`A. 
`Marketing Defendants. ......................................................................................... 11 
`1. 
`Actavis Entities ........................................................................................ 11 
`2. 
`Cephalon Entities ..................................................................................... 17 
`3. 
`Janssen Entities ........................................................................................ 18 
`4. 
`Endo Entities ............................................................................................ 20 
`5. 
`Allegations Against Additional Manufacturing Defendants .................... 22 
`Distributor & Dispenser Defendants .................................................................... 25 
`1. 
`Cardinal Health, Inc. ................................................................................ 26 
`2. 
`McKesson Corporation ............................................................................ 26 
`3. 
`AmerisourceBergen Drug Corporation .................................................... 27 
`4. 
`Anda, Inc. ................................................................................................. 27 
`5. 
`CVS .......................................................................................................... 27 
`6. 
`Walgreens ................................................................................................ 28 
`7. 
`Rite-Aid.................................................................................................... 30 
`8. 
`Walmart.................................................................................................... 32 
`9. 
`The Kroger Co. ........................................................................................ 32 
`10. 
`H.D. Smith ............................................................................................... 33 
`11. 
`Allegations Against Additional Distributor Defendants .......................... 33 
`Agency and Authority .......................................................................................... 36 
`C. 
`FACTUAL ALLEGATIONS ...................................................................................................... 37 
`I. 
`Facts Common to All Claims ........................................................................................... 37 
`A. 
`Opioids and Their Effects .................................................................................... 37 
`B. 
`The Resurgence of Opioid Use in the United States ............................................ 41 
`1. 
`The Sackler Family Integrated Advertising and Medicine ...................... 41 
`2. 
`Purdue and the Development of OxyContin ............................................ 43 
`
`
`
`-i-
`
`

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`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 4 of 411
`
`TABLE OF CONTENTS
`(continued)
`
`Page
`
`C. 
`D. 
`
`
`
`
`
`
`ii. 
`iii. 
`
`iv. 
`
`v. 
`
`3. 
`Other Marketing Defendants Leapt at the Opioid Opportunity ............... 47 
`Defendants’ Conduct Created an Abatable Public Nuisance ............................... 50 
`The Marketing Defendants’ Multi-Pronged Scheme to Change Prescriber
`Habits and Public Perception and Increase Demand for Opioids ........................ 51 
`The Marketing Defendants Promoted Multiple Falsehoods About
`1. 
`Opioids ..................................................................................................... 52 
`Falsehood #1: The risk of addiction from chronic opioid
`a. 
`therapy is low ............................................................................... 53 
`Purdue’s misrepresentations regarding addiction
`i. 
`risk.................................................................................... 54 
`Endo’s misrepresentations regarding addiction risk ........ 59 
`Janssen’s misrepresentations regarding addiction
`risk.................................................................................... 61 
`Cephalon’s misrepresentations regarding addiction
`risk.................................................................................... 62 
`Actavis’s misrepresentations regarding addiction
`risk.................................................................................... 63 
`vi.  Mallinckrodt’s misrepresentations regarding
`addiction risk .................................................................... 63 
`Falsehood #2: To the extent there is a risk of addiction, it
`can be easily identified and managed .......................................... 65 
`Falsehood #3: Signs of addictive behavior are
`“pseudoaddiction,” requiring more opioids ................................. 67 
`Falsehood #4: Opioid withdrawal can be avoided by
`tapering ........................................................................................ 70 
`Falsehood #5: Opioid doses can be increased without limit
`or greater risks.............................................................................. 71 
`Falsehood #6: Long-term opioid use improves functioning ........ 73 
`Falsehood #7: Alternative forms of pain relief pose greater
`risks than opioids ......................................................................... 78 
`Falsehood #8: OxyContin provides twelve hours of pain
`relief ............................................................................................. 82 
`Falsehood #9: New formulations of certain opioids
`successfully deter abuse ............................................................... 87 
`
`b. 
`
`c. 
`
`d. 
`
`e. 
`
`f. 
`g. 
`
`h. 
`
`i. 
`
`-ii-
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 5 of 411
`
`TABLE OF CONTENTS
`(continued)
`
`Page
`
`2. 
`
`
`
`
`
`
`i. 
`
`ii. 
`
`iii. 
`
`b. 
`
`Purdue’s deceptive marketing of reformulated
`OxyContin and Hysingla ER ........................................... 88 
`Endo’s deceptive marketing of reformulated Opana
`ER .................................................................................... 91 
`Other Marketing Defendants’ misrepresentations
`regarding abuse deterrence .............................................. 96 
`The Marketing Defendants Disseminated Their Misleading
`Messages About Opioids Through Multiple Channels ............................ 97 
`The Marketing Defendants Directed Front Groups to
`a. 
`Deceptively Promote Opioid Use ................................................ 98 
`i. 
`American Pain Foundation ............................................ 100 
`ii. 
`American Academy of Pain Medicine and the
`American Pain Society ................................................... 103 
`FSMB ............................................................................. 106 
`iii. 
`The Alliance for Patient Access ..................................... 107 
`iv. 
`The U.S. Pain Foundation (“USPF”) ............................. 111 
`v. 
`American Geriatrics Society (“AGS”) ........................... 112 
`vi. 
`The Marketing Defendants Paid Key Opinion Leaders to
`Deceptively Promote Opioid Use .............................................. 113 
`i. 
`Dr. Russell Portenoy ...................................................... 115 
`ii. 
`Dr. Lynn Webster........................................................... 118 
`iii. 
`Dr. Perry Fine................................................................. 120 
`iv. 
`Dr. Scott Fishman .......................................................... 123 
`The Marketing Defendants Disseminated Their
`Misrepresentations Through Continuing Medical Education
`Programs .................................................................................... 124 
`The Marketing Defendants Used “Branded” Advertising to
`Promote their Products to Doctors and Consumers ................... 127 
`The Marketing Defendants Used “Unbranded” Advertising
`To Promote Opioid Use For Chronic Pain Without FDA
`Review ....................................................................................... 128 
`The Marketing Defendants Funded, Edited And
`Distributed Publications That Supported Their
`Misrepresentations ..................................................................... 129 
`
`c. 
`
`d. 
`
`e. 
`
`f. 
`
`-iii-
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 6 of 411
`
`TABLE OF CONTENTS
`(continued)
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`Page
`
`E. 
`
`
`
`
`
`
`3. 
`4. 
`
`5. 
`
`g. 
`
`h. 
`
`b. 
`
`The Marketing Defendants Used Detailing To Directly
`Disseminate Their Misrepresentations To Prescribers .............. 131 
`Marketing Defendants Used Speakers’ Bureaus and
`Programs to Spread Their Deceptive Messages ......................... 135 
`The Marketing Defendants Targeted Vulnerable Populations ............... 136 
`Insys Employed Fraudulent, Illegal, and Misleading Marketing
`Schemes to Promote Subsys .................................................................. 138 
`The Marketing Defendants’ Scheme Succeeded, Creating a Public
`Health Epidemic..................................................................................... 142 
`The Marketing Defendants dramatically expanded opioid
`a. 
`prescribing and use .................................................................... 142 
`Marketing Defendants’ deception in expanding their market
`created and fueled the opioid epidemic ..................................... 145 
`Defendants Throughout the Supply Chain Deliberately Disregarded Their
`Duties to Maintain Effective Controls and to Identify, Report, and Take
`Steps to Halt Suspicious Orders ......................................................................... 146 
`All Defendants Have a Duty to Report Suspicious Orders and Not
`1. 
`to Ship Those Orders Unless Due Diligence Disproves Their
`Suspicions .............................................................................................. 148 
`Defendants Were Aware of and Have Acknowledged Their
`Obligations to Prevent Diversion and to Report and Take Steps to
`Halt Suspicious Orders .......................................................................... 153 
`Defendants Worked Together to Inflate the Quotas of Opioids
`They Could Distribute............................................................................ 156 
`Defendants Kept Careful Track of Prescribing Data and Knew
`About Suspicious Orders and Prescribers .............................................. 165 
`Defendants Failed to Report Suspicious Orders or Otherwise Act
`to Prevent Diversion .............................................................................. 172 
`Defendants Delayed a Response to the Opioid Crisis by Pretending
`to Cooperate with Law Enforcement ..................................................... 175 
`The Chain Pharmacies Were on Notice of and Contributed to
`Illegal Diversion of Prescription Opioids .............................................. 180 
`a. 
`The Chain Pharmacies Have a Duty to Prevent Diversion ........ 183 
`b. 
`Retail Pharmacies Were Aware of and Have
`Acknowledged Their Obligations to Prevent Diversion and
`to Report and Take Steps to Halt Suspicious Orders. ................ 190 
`
`2. 
`
`3. 
`
`4. 
`
`5. 
`
`6. 
`
`7. 
`
`-iv-
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 7 of 411
`
`TABLE OF CONTENTS
`(continued)
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`Page
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`
`
`
`
`
`F. 
`G. 
`
`H. 
`
`c. 
`
`d. 
`
`e. 
`
`Defendants Were Uniquely Positioned to Guard Against
`Diversion. ................................................................................... 201 
`Defendants were Uniquely Positioned to Guard Against
`Diversion. ................................................................................... 203 
`i. 
`CVS ................................................................................ 204 
`ii. 
`Walgreens ...................................................................... 218 
`iii. 
`Rite Aid .......................................................................... 244 
`iv.  Walmart.......................................................................... 253 
`Multiple Enforcement Actions against the Chain
`Pharmacies Confirms their Compliance Failures. ..................... 267 
`i. 
`CVS ................................................................................ 267 
`ii. 
`Walgreens ...................................................................... 272 
`iii. 
`Rite Aid .......................................................................... 275 
`iv.  Walmart.......................................................................... 278 
`Defendants Performance Metrics Put Profits Before Safety. ..... 280 
`Defendants Worked Together to Increase Their Profits and
`Lobbied Against Restrictions on Opioid Use and DEA
`Enforcement. .............................................................................. 288 
`Defendants Also Entered Into Joint Ventures that Further
`Undermined their Outside Vendors Incentive to Conduct
`Due Diligence, While Increasing their Own Access to
`Information. ............................................................................... 292 
`Defendants Worked With Opioid Manufacturers to
`Promote Opioids and Bolster Their Profits at the Expense
`of Communities Like these Counties. ........................................ 293 
`Defendants Delayed a Response to the Opioid Crisis by
`Pretending to Cooperate with Law Enforcement. ...................... 300 
`The Opioids the Defendants Sold Migrated into Other Jurisdictions ................ 305 
`Iowa-Specific Facts ............................................................................................ 310 
`1. 
`Defendants Breached Their Duties in Iowa ........................................... 310 
`2. 
`The Devastating Effects of the Opioid Crisis in Iowa ........................... 311 
`Facts Specific to Plaintiffs ................................................................................. 316 
`1. 
`The Opioid Epidemic Has Impacted Plaintiffs’ Communities .............. 317 
`
`f. 
`g. 
`
`h. 
`
`i. 
`
`j. 
`
`-v-
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 8 of 411
`
`TABLE OF CONTENTS
`(continued)
`
`Page
`
`2. 
`
`3. 
`
`2. 
`
`b. 
`
`c. 
`
`d. 
`
`Defendants Actively Promoted Opioids in Plaintiffs Communities
`and Were Aware of the Excessive Prescribing Practices That
`Followed ................................................................................................ 318 
`Plaintiffs’ Communities Have Borne and Will Continue to Bear
`Substantial Costs as a Direct Result of Defendants’ Misconduct .......... 319 
`No Federal Agency Action, Including The FDA, Can Provide the Relief
`Sought Here ....................................................................................................... 320 
`The Defendants Conspired To Engage In The Wrongful Conduct
`Complained Of Herein and Intended To Benefit Both Independently and
`Jointly From Their Conspiracy .......................................................................... 321 
`1. 
`Conspiracy Among Marketing Defendants ........................................... 321 
`2. 
`Conspiracy Among All Defendants ....................................................... 324 
`Statutes Of Limitations Are Tolled and Defendants Are Estopped From
`Asserting Statutes Of Limitations As Defenses ................................................. 325 
`1. 
`Continuing Conduct. .............................................................................. 325 
`2. 
`Equitable Estoppel and Fraudulent Concealment .................................. 326 
`Facts Pertaining to Punitive Damages ............................................................... 329 
`The Marketing Defendants Persisted in Their Fraudulent Scheme
`1. 
`Despite Repeated Admonitions, Warnings, and Even Prosecutions ...... 330 
`FDA Warnings to Janssen Failed to Deter Janssen’s
`a. 
`Misleading Promotion of Duragesic .......................................... 330 
`Governmental Action, Including Large Monetary Fines,
`Failed to Stop Cephalon from Falsely Marketing Actiq for
`Off-Label Uses ........................................................................... 331 
`FDA Warnings Did Not Prevent Cephalon from Continuing
`False and Off-Label Marketing of Fentora ................................ 332 
`A Guilty Plea and a Large Fine Did Not Deter Purdue from
`Continuing Its Fraudulent Marketing of OxyContin ................. 333 
`Repeated Admonishments and Fines Did Not Stop Defendants
`from Ignoring Their Obligations to Control the Supply Chain and
`Prevent Diversion................................................................................... 334 
`Facts Pertaining To Claims Under Racketeer-Influenced and Corrupt
`Organizations (“RICO”) Act .......................................................................................... 340 
`A. 
`The Opioid Marketing Enterprise ...................................................................... 340 
`
`I. 
`
`J. 
`
`K. 
`
`L. 
`
`
`
`II. 
`
`
`
`
`-vi-
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 9 of 411
`
`TABLE OF CONTENTS
`(continued)
`
`Page
`
`
`
`1. 
`
`The Common Purpose and Scheme of the Opioid Marketing
`Enterprise ............................................................................................... 340 
`The Conduct of the Opioid Marketing Enterprise violated Civil
`RICO ...................................................................................................... 345 
`The RICO Marketing Defendants Controlled and Paid Front
`Groups and KOLs to Promote and Maximize Opioid Use .................... 349 
`Pattern of Racketeering Activity ............................................................ 350 
`4. 
`The Opioid Supply Chain Enterprise ................................................................. 353 
`B. 
`CLAIMS FOR RELIEF ............................................................................................................. 364 
`FIRST CLAIM FOR RELIEF Violation of RICO, 18 U.S.C. § 1961 et seq. – Opioid
`Marketing Enterprise (Against All Marketing Defendants) .......................................... 364 
`SECOND CLAIM FOR RELIEF Violation of RICO, 18 U.S.C. § 1961 et seq. – Opioid
`Supply Chain Enterprise (Against All Supply Chain Defendants– “RICO Supply
`Chain Defendants”) ........................................................................................................ 375 
`THIRD CLAIM FOR RELIEF Violations of Iowa’s Private Right of Action for
`Consumer Frauds Act (Against All Defendants) ........................................................... 383 
`FOURTH CLAIM FOR RELIEF Common Law Absolute Public Nuisance (Against All
`Defendants) .................................................................................................................... 385 
`FIFTH CLAIM FOR RELIEF Public Nuisance (Against All Defendants) ............................... 392 
`SIXTH CLAIM FOR RELIEF Negligence (Against All Defendants) ...................................... 393 
`SEVENTH CLAIM FOR RELIEF Unjust Enrichment (Against All Defendants) ................... 394 
`EIGHTH CLAIM FOR RELIEF Fraud (Against All Defendants) ............................................ 396 
`NINTH CLAIM FOR RELIEF Civil Conspiracy (Against All Defendants) ............................ 398 
`PRAYER FOR RELIEF ............................................................................................................ 400 
`
`2. 
`
`3. 
`
`
`
`
`-vii-
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`

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`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 10 of 411
`
`
`
`1.
`
`Appanoose County, Cerro Gordo County, Cherokee County, Chickasaw County,
`
`Emmet County, Fremont County, Hancock County, Henry County, Ida County, Jones County,
`
`Keokuk County, Madison County, Muscatine County, Osceola County, Pocahontas County,
`
`Poweshiek County, Webster County, Winnebago County, and Wright County (“Plaintiffs”) bring
`
`this action to prevent future harm and to redress past wrongs against Defendants:
`
` Cephalon, Inc.; Teva Pharmaceuticals Industries, Ltd.; and Teva Pharmaceuticals USA,
`
`Inc.;
`
` Janssen Pharmaceuticals, Inc.; (formerly known as Ortho-McNeil-Janssen
`
`Pharmaceuticals, Inc. and Janssen Pharmaceutica, Inc.); Johnson & Johnson; and
`
`Noramco, Inc.;
`
` Endo International plc; Endo Health Solutions Inc.; Endo Pharmaceuticals, Inc.; Par
`
`Pharmaceutical, Inc.; and Par Pharmaceutical Companies, Inc. (formerly known as Par
`
`Pharmaceutical Holdings, Inc.);
`
` Allergan PLC (formerly known as Actavis PLC); Allergan Finance LLC (formerly
`
`known as Actavis, Inc., formerly known as Watson Pharmaceuticals, Inc.); Watson
`
`Laboratories, Inc.; Actavis Pharma, Inc. (formerly known as Watson Pharma, Inc.);
`
`Actavis LLC; Allergan Sales, LLC; Allergan USA, Inc.; Warner Chilcott Company,
`
`LLC; Actavis Elizabeth LLC; Actavis Mid Atlantic LLC; Actavis Kadian LLC; Actavis
`
`Totowa LLC; Actavis South Atlantic LLC; Actavis Laboratories UT, Inc. (formerly
`
`known as Watson Laboratories, Inc. – Salt Lake City); and Actavis Laboratories FL, Inc.
`
`(formerly known as Wat Laboratories, Inc. – Florida);
`
` AmerisourceBergen Drug Corporation;
`
` Cardinal Health, Inc.;
`
`
`
`1
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 11 of 411
`
`
`
` McKesson Corporation;
`
` Anda, Inc.;
`
` CVS Health Corporation; CVS Indiana L.L.C.; CVS Rx Services, Inc.; CVS TN
`
`Distribution, LLC; CVS Pharmacy, Inc.; Omnicare Distribution Center LLC; Ohio CVS
`
`Stores, LLC;
`
` Walgreen Co.; Walgreens Boots Alliance, Inc.; Walgreen Eastern Co., Inc.;
`
` Rite Aid Corp.; Rite Aid Hdqtrs. Corp.; Eckerd Corporation d/b/a Rite Aid Liverpool
`
`Distribution Center; Rite Aid of Ohio, Inc.; Rite Aid of Maryland, Inc.;
`
` Walmart Inc. (formerly known as Wal-Mart Stores, Inc.), Wal-Mart Stores East, LP;
`
`WSE Management, LLC; WSE Investment LLC; and Wal-Mart Stores East, Inc.
`
` The Kroger Co.;
`
` H. D. Smith, LLC d/b/a HD Smith, f/k/a H. D. Smith Wholesale Drug Co., H.D. Smith
`
`Holdings, LLC, H.D. Smith, LLC d/b/a HD Smith, f/k/a H.D. Smith Wholesale Drug Co.,
`
`H.D. Smith Holdings, LLC, and H.D. Smith Holding Company; and
`
` KVK Tech, Inc.; Mylan Pharmaceuticals, Inc.; Sandoz, Inc.; West-Ward Pharmaceuticals
`
`Corp.; Supervalu, Inc. D/B/A Advantage Logistics; Dakota Drug, Inc.; Hy-Vee, Inc.;
`
`Pharmacy Buying Association, Inc.; and SAJ Distributors.
`
`2.
`
`Plaintiffs assert claims against the pharmaceutical manufacturers of prescription
`
`opioid drugs that engaged in a massive false marketing campaign to drastically expand the
`
`market for such drugs and their own market share; claims against entities in the supply chain that
`
`reaped enormous financial rewards by refusing to monitor and restrict the improper distribution
`
`of those drugs; and claims to hold accountable the Chain Pharmacies that reaped enormous
`
`
`
`2
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 12 of 411
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`
`
`financial rewards by refusing to monitor and restrict the improper sale and distribution of opioids
`
`and abate the opioid epidemic in the Counties.
`
`INTRODUCTION
`
`3.
`
`This case arises from the worst man-made epidemic in modern medical history—
`
`the misuse, abuse, and over-prescription of opioids.1
`
`4.
`
`By now, most Americans have been affected, either directly or indirectly, by the
`
`opioid disaster. But few realize that this crisis arose from the opioid manufacturers’ deliberately
`
`deceptive marketing strategy to expand opioid use, together with the distributors’ equally
`
`deliberate efforts to evade or curtail restrictions on opioid distribution. Manufacturers and
`
`distributors alike acted without regard for the lives that would be trammeled in pursuit of profit.
`
`5.
`
`Since the push to expand prescription opioid use began in the late 1990s, the
`
`death toll has steadily climbed, with no sign of slowing. The number of opioid overdoses in the
`
`United States rose from 8,000 in 1999 to over 20,000 in 2009, and over 33,000 in 2015.2 In the
`
`twelve months that ended in September 2017, opioid overdoses claimed 45,000 lives.
`
`6.
`
`From 1999 through 2016, overdoses killed more than 350,000 Americans.3 Over
`
`200,000 of them, more than were killed in the Vietnam War, died from opioids prescribed by
`
`doctors to treat pain.4 These opioids include brand-name prescription medications such as
`
`
`1 Unless otherwise indicated, as used herein, the term “opioid” refers to the entire family of
`opiate drugs including natural, synthetic and semi-synthetic opiates.
`2 Overdose Death Rates, NIH Nat’l Inst. on Drug Abuse, https://www.drugabuse.gov/related-
`topics/trends-statistics/overdose-death-rates (revised Sept. 2017).
`3 Understanding the Epidemic, Ctrs. for Disease Control and Prevention,
`https://www.cdc.gov/drugoverdose/epidemic/index.html (last updated Aug. 30, 2017).
`4 Prescription Opioid Overdose Data, Ctrs. for Disease Control and Prevention,
`https://www.cdc.gov/drugoverdose/data/overdose.html (last updated Aug. 1, 2017).
`
`
`
`3
`
`

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`
`
`OxyContin, Opana ER, Vicodin, Subsys, and Duragesic, as well as generics like oxycodone,
`
`hydrocodone, and fentanyl.
`
`7.
`
`Most of the overdoses from non-prescription opioids are also directly related to
`
`prescription opioids. Many opioid users, having become addicted to but no longer able to obtain
`
`prescription opioids, have turned to heroin. According to the American Society of Addiction
`
`Medicine, 80% of people who initiated heroin use in the past decade started with prescription
`
`opioids—which, at the molecular level and in their effect, closely resemble heroin. In fact,
`
`people who are addicted to prescription opioids are 40 times more likely to become addicted to
`
`heroin, and the Centers for Disease Control and Prevention (“CDC”) identified addiction to
`
`prescription opioids as the strongest risk factor for heroin addiction.
`
`8.
`
`As a result, in part, of the proliferation of opioid pharmaceuticals between the late
`
`1990s and 2015, the life expectancy for Americans decreased for the first time in recorded
`
`history. Drug overdoses are now the leading cause of death for Americans under 50.
`
`9.
`
`In the words of Robert Anderson, who oversees death statistics at the Centers for
`
`Disease Control and Prevention, “I don’t think we’ve ever seen anything like this. Certainly not
`
`in modern times.” On October 27, 2017, the President declared the opioid epidemic a public
`
`health emergency.
`
`10.
`
`This suit takes aim at primary causes of the opioid crisis: (a) a marketing scheme
`
`involving the false and deceptive marketing of prescription opioids, which was designed to
`
`dramatically increase the demand for and sale of opioids and opioid prescriptions; and (b) a
`
`supply chain scheme, pursuant to which the various entities in the supply chain, including
`
`distributors and pharmacies, failed to design and operate systems to identify suspicious orders of
`
`prescription opioids, maintain effective controls against diversion, and halt suspicious orders
`
`
`
`4
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 14 of 411
`
`
`
`when they were identified, thereby contributing to the oversupply of such drugs and fueling an
`
`illegal secondary market.
`
`11.
`
`On the demand side, the crisis was precipitated by the defendants who
`
`manufacture, sell, and market prescription opioid painkillers. Through a massive marketing
`
`campaign premised on false and incomplete information, the Marketing Defendants engineered a
`
`dramatic shift in how and when opioids are prescribed by the medical community and used by
`
`patients. The Marketing Defendants relentlessly and methodically, but untruthfully, asserted that
`
`the risk of addiction was low when opioids were used to treat chronic pain, and overstated the
`
`benefits and trivialized the risk of the long-term use of opioids.
`
`12.
`
`The Marketing Defendants’ goal was simple: to dramatically increase sales by
`
`convincing doctors to prescribe opioids not only for the kind of severe pain associated with
`
`cancer or short-term post-operative pain, but also for common chronic pains, such as back pain
`
`and arthritis. They did this even though they knew that opioids were addictive and subject to
`
`abuse, and that their other claims regarding the risks, benefits, and superiority of opioids for
`
`long-term use were untrue and unfounded.
`
`13.
`
`The Marketing Defendants’ push to increase opioid sales worked. Through their
`
`publications and websites, endless stream of sales representatives, “education” programs, and
`
`other means, Marketing Defendants dramatically increased their sales of prescription opioids and
`
`reaped billions of dollars of profit as a result. Since 1999, the amount of prescription opioids sold
`
`in the U.S. nearly quadrupled. In 2016, 289 million prescriptions for opioids were filled in the
`
`U.S.—enough to medicate every adult in America around the clock for a month.
`
`
`
`5
`
`

`

`Case 4:21-cv-00095-JAJ-CFB Document 1 Filed 03/24/21 Page 15 of 411
`
`
`
`14. Meanwhile, the Defendants made blockbuster profits. In 2012 alone, opioids
`
`generated $8 billion in revenue for drug companies. By 2015, sales of opioids grew to
`
`approximately $9.6 billion.
`
`15.
`
`On the supply side, the crisis was fueled and sustained by those involved in the
`
`supply chain of opioids, including manufacturers, distributors, and

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