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Case: 1:18-cv-01639 Document #: 1 Filed: 03/05/18 Page 1 of 49 PageID #:1

IN THE UNITED STATES DISTRICT COURT


FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CITY OF CHICAGO, a municipal Civil Action No.:


corporation,

Plaintiff,

vs.

CARDINAL HEALTH, INC.;


MCKESSON CORPORATION;
AMERISOURCEBERGEN DRUG
CORPORATION,
Complaint
Defendants.
(Jury Trial Demanded)
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PRELIMINARY STATEMENT

1. Plaintiff, the City of Chicago (“City”), brings this action to redress

AmerisourceBergen Drug Corporation’s, Cardinal Health, Inc.’s and McKesson Corporation d/b/a

McKesson Drug Company’s (together “Defendants”) unfettered and unlawful distribution of

opioids into the City. Defendants distribute opioid medications, including hydrocodone,

oxycodone, and other opioids, to pharmacies and other dispensaries across the country and within

the City. The City alleges as follows:

I. INTRODUCTION

2. Prescription opioids are narcotics. They are derived from and possess properties

similar to opium and heroin, and they are regulated as controlled substances. While opioids can

dampen the perception of pain, they also can create a euphoric high and are highly addictive. At

higher doses, they can slow the user’s breathing, causing potentially fatal respiratory depression.

Because the medical community recognized these dangers, they originally used opioids cautiously

and sparingly, typically only for short-term acute pain or for palliative (end-of-life) care.1

Consequently, the prescribing of opioids was sharply constrained.

3. In the mid-1990s, however, pharmaceutical companies (which the City sued

separately in 2014) aggressively and deceptively marketed opioids for common chronic conditions

like back pain, migraines, and arthritis. By the mid-2000s, chronic opioid therapy—the prescribing

of opioids long-term to treat chronic pain—became widespread and the use of opioids skyrocketed.

According to the CDC opioid prescriptions, as measured by number of prescriptions and morphine

milligram equivalent (“MME”) per person, tripled from 1999 to 2015. In 2015, on an average day,

more than 650,000 opioid prescriptions were dispensed in the U.S.

1
In this Complaint, “chronic pain” means non-cancer pain lasting three months or longer.

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4. Together, Defendants account for approximately 90% of all revenues from

prescription drug distribution in the U.S. Known colloquially as the “Big Three,” Defendants

dominate the wholesale drug distribution market, including in the City.

5. Taking advantage of this mass market, Defendants flooded many communities with

opioids, without conducting the due diligence required by law to prevent the diversion of opioids

to an illicit market in these drugs that predictably developed, and that Defendants helped to create,

expand, and maintain.

6. Defendants are paid to securely deliver opioids made by the various manufacturers

and are the closest link to pharmacies throughout the country. As registered distributors of

controlled substances, Defendants are placed in a position of special trust and responsibility.

Because of their direct relationship with pharmacies in the supply chain, they are uniquely capable

of determining whether a pharmacy is facilitating the diversion of prescription opioids.

7. Defendants have a duty under federal and state law to exercise due diligence in

order to prevent diversion and to monitor and report, and reject suspicious orders of controlled

substances into the City. Such orders include, for example, orders of opioids that exceed

reasonable volume, are of an unusual frequency, or that raise other red flags. Yet, Defendants

shipped orders that they knew or should have known were being diverted or used other than for

legitimate medical purposes.

8. Sales and distribution data available to Defendants, as well as their own

observations, would, or should, have put them on notice of potential diversion. Yet, upon

information and belief, Defendants consistently failed to report or suspend these illicit orders,

deepening the crisis of opioid abuse, addiction, and death in the City. Defendants had financial

incentives to continue to supply opioids to pill mills (doctors, clinics, or pharmacies that prescribe

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or dispense opioids inappropriately or for non-medical reasons) because they may entitle them to

volume-based rebates and discounts that they may then leverage to further increase their sales

volumes and profits.

9. As a direct and foreseeable result of Defendants’ conduct, the nation and the City

are now swept up in what the Centers for Disease Control (“CDC”) has called a “public health

epidemic” and what the U.S. Surgeon General has deemed an “urgent health crisis.”2 From 1999

to 2015, more than 183,000 people died in the U.S. from overdoses related to prescription

opioids—more than the number of Americans who died in the Vietnam War. In 2016, the Centers

for Disease Control (“CDC”) reported that, in contrast to other developed countries, and despite

having some of the world’s highest spending on medical care, our nation saw life expectancy at

birth decline for the second straight year, with the increasing number of people who died of

overdoses representing the most significant factor in this alarming trend.

10. The careless, even reckless distribution of opioids into the City correlates directly

to skyrocketing addiction, overdose, and death; black markets for diverted prescription opioids;

and a concomitant rise in heroin and fentanyl abuse by individuals who could no longer legally

acquire—or simply could not afford—prescription opioids.

11. The City has not escaped this deadly trend. Chicago suffered 741 opioid-related

overdose deaths in 2016, a roughly 75% increase from the year before. The cost of this human

tragedy cannot be calculated or ever adequately compensated. But the financial burden to the City

is staggering. In 2017, the Chicago Department of Public Health (“CDPH”) began investing an

additional $700,000 a year in opioid addiction treatment and supportive services, with a focus on

2
CDC, Examining the Growing Problems of Prescription Drug and Heroin Abuse (Apr. 29, 2014),
available at http://www.cdc.gov/washington/testimony/2014/t20140429.htm; Vivek H. Murthy,
Letter from the Surgeon General, August 2016, available at http://turnthetiderx.org.

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medication-assisted treatment (“MAT”). In 2018, CDPH is increasing its investment again in

opioid addiction treatment and services, including funding for MAT and recovery homes to serve

an estimated 500 more residents annually. These increases are on top of the $1.5 million the City

was already investing annually on substance use treatment overall, including on outpatient

treatment, medical detoxification services, residential treatment and recovery homes.

12. Defendants’ conduct has violated, and continues to violate, the Municipal Code of

Chicago (“MCC”) § 2-25-090, MCC § 1-20-020, and the Illinois’ Drug Dealer Liability Act, 740

ILCS 57/5 et seq. Additionally, Defendants’ conduct constitutes a common law public nuisance,

negligence, and unjust enrichment.

13. Accordingly, Plaintiff brings this action to hold Defendants accountable for their

conduct, and seeks abatement, civil penalties, damages, and any other injunctive and equitable

relief within this Court’s powers to redress and halt these unlawful practices.

II. PARTIES

A. PLAINTIFF

14. Plaintiff, the City, is a municipal corporation organized and existing under the laws

of the State of Illinois.

15. The City’s Corporation Counsel has the authority to “[a]ppear for and protect the

rights and interests of the city in all actions, suits and proceedings brought by or against it or any

city officer, board or department.” MCC § 2-60-020.

B. DEFENDANTS

16. AmerisourceBergen Drug Corporation (“AmerisourceBergen”) is a wholesaler of

pharmaceutical drugs that distributes opioids throughout the country. AmerisourceBergen is the

eleventh largest company by revenue in the United States, with annual revenue of $147 billion in

2016.

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17. AmerisourceBergen’s principal place of business is located in Chesterbrook,

Pennsylvania, and it is incorporated in Delaware.

18. AmerisourceBergen has been licensed as a wholesale distributor of dangerous

drugs in Illinois since at least 2002. AmerisourceBergen operates a distribution center in

Romeoville, Illinois.

19. Cardinal Health, Inc. (“Cardinal”) describes itself as a “global, integrated health

care services and products company,” and is the fifteenth largest company by revenue in the U.S.,

with annual revenue of $121 billion in 2016. Cardinal distributes pharmaceutical drugs, including

opioids, throughout the country.

20. Cardinal is an Ohio corporation and is headquartered in Dublin, Ohio.

21. Cardinal has been licensed as a wholesale distributor of dangerous drugs in Illinois

since 1986. Cardinal operates distribution centers in Burr Ridge, Illinois and Aurora, Illinois. In

2012, Cardinal purchased Chicago-area regional wholesaler Dik Drug Company. Based on

Defendant Cardinal’s own estimates, one of every six pharmaceutical products dispensed to U.S.

patients travels through the Cardinal Health network.

22. McKesson Corporation (“McKesson”) is fifth on the list of Fortune 500 companies,

ranking immediately after Apple and ExxonMobil, with annual revenue of $191 billion in 2016.

McKesson is a wholesaler of pharmaceutical drugs that distributes opioids throughout the country.

23. McKesson is incorporated in Delaware, with its principal place of business in San

Francisco, California.

24. McKesson has been licensed as a wholesale distributor of dangerous drugs in

Illinois since at least 1996. McKesson operates a distribution center in Aurora, Illinois.

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III. JURISDICTION AND VENUE

25. Jurisdiction is proper in this Court pursuant to 28 U.S.C. § 1332, because there is

complete diversity between Plaintiff and Defendants, and the amount in controversy is greater than

$75,000.

26. This Court has personal jurisdiction over Defendants pursuant to 735 ILCS § 5/2-

209 because they conduct business in Illinois, purposefully direct or directed their actions toward

Illinois, consented to be sued in Illinois by registering an agent for service of process, consensually

submitted to the jurisdiction of Illinois when obtaining an Illinois wholesale distributor license,

and have the requisite minimum contacts with Illinois necessary to constitutionally permit the

Court to exercise jurisdiction.

27. Venue as to each Defendant is proper in this court under 28 U.S.C. § 1391(b)(2)

because a substantial part of the events and omissions giving rise to the claim occurred in the

Eastern Division of the Northern District of Illinois.

IV. JURY DEMAND

28. The City demands a jury trial pursuant to Federal Rule of Civil Procedure 38.

V. FACTUAL ALLEGATIONS

A. DEFENDANTS DELIBERATELY DISREGARDED THEIR DUTIES TO MAINTAIN


EFFECTIVE CONTROLS AGAINST DIVERSION.

1. Defendants have a duty to report suspicious orders, and to not ship those
orders unless due diligence disproves their suspicions.

29. Until the mid-1990s, opioids were widely thought to be too addictive for use for

chronic pain conditions, which would require long-term use of the drugs at increasingly high doses.

By the mid-2000s, the medical community had abandoned its prior caution, and opioids were

entrenched as an appropriate—and often the first—treatment for chronic pain conditions. This

created both a vastly and dangerously larger market for opioids in the City, and a lucrative

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opportunity for Defendants, who compounded this harm by failing to implement effective controls

against diversion and by supplying opioids they knew or should have known were being abused

or diverted. Defendants’ failure to investigate, report, and terminate orders that they knew or

should have known were suspicious breached both their statutory and common law duties.

30. First, by failing to exercise due diligence to refrain from filling, and by failing to

report orders that it knew or should have known were likely being diverted for illicit uses,

Defendants breached their duty to exercise reasonable care in delivering controlled, narcotic

substances, and both created, and failed to prevent, a foreseeable risk of harm to the Plaintiff.

31. Second, each Defendant assumed a duty, when speaking publically about opioids,

and their efforts and commitment regarding diversion of prescription opioids, to speak accurately

and truthfully. Defendants violated this duty by engaging in concealed misconduct at odds with

their public pronouncements.

32. Third, as wholesalers, Defendants violated their obligations under the MCC § 2-

25-090, as well as the Illinois Consumer Fraud and Deceptive Business Practices Act (“CFDBA”),

by engaging in unfair acts or practices. They also violated statutory obligations under Illinois and

federal controlled substances laws, which create a standard of conduct and care below which

reasonably prudent distributors would not fall.

33. The federal Controlled Substances Act (“CSA”), 21 U.S.C. § 801 et seq. and its

implementing regulations impose a duty on registrants (entities, like Defendants, licensed to

distribute controlled substances) to monitor, detect, report, investigate, and refuse to fill suspicious

orders. See 21 U.S.C. § 823; 21 C.F.R. 1301.74.3 Defendants must “design and operate a system

3
See also Letter from Joseph T. Rannazzisi, Deputy Assistant Adm’r, Office of Diversion Control,
Drug. Enf’t Admin., U.S. Dep’t of Justice, to Cardinal Health (Sept. 27, 2006), filed in Cardinal

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to disclose to the registrant suspicious orders of controlled substances.” 21 C.F.R. § 1301.74(b).

Further, registrants are not entitled to be passive (but profitable) observers, but rather “shall inform

the Field Division Office of the Administration in his area of suspicious orders when discovered

by the registrant.” Id. Suspicious orders include orders of unusual size, orders deviating

substantially from a normal pattern, and orders of unusual frequency. Id. Other red flags may

include, for example, “[o]rdering the same controlled substance from multiple distributors.”4

34. Wholesale distributors, including Defendants, must also be licensed by the Illinois

Department of Financial and Professional Regulation (“IDFPR”) to distribute controlled

substances in the State of Illinois, including in the City. Like the federal CSA, Illinois’ Controlled

Substances Act (“ICSA”), requires that registration, or licensure, be consistent with the public

interest, which, in turn, requires “maintenance of effective controls against diversion of controlled

substances into other than lawful medical, scientific, or industrial channels,” and “compliance with

applicable Federal, State and local law.” 720 ILCS 570/303.

35. An “applicant for registration is registered under the Federal law to manufacture,

distribute or dispense controlled substances, . . . , upon filing a completed application for licensure

in this State and payment of all fees due . . . shall be licensed in [Illinois] to the same extent as his

or her Federal registration, unless, within 30 days after completing his or her application in th[e]

State, the Department of Financial and Professional Regulation notifies the applicant that his or

her application has not been granted.” 720 ILCS 570/303. Thus, registration in the state of Illinois

Health, Inc. v. Holder, No. 1:12-cv-00185-RBW (D.D.C. Feb. 10, 2012), ECF No. 14-51
(hereinafter “2006 Rannazzisi Letter”); Letter from Joseph T. Rannazzisi, Deputy Assistant
Adm’r, Office of Diversion Control, Drug. Enf’t Admin., U.S. Dep’t of Justice, to Cardinal Health
(Dec. 27, 2007), filed in Cardinal Health, Inc. v. Holder, No. 1:12-cv-00185-RBW (D.D.C. Feb.
10, 2012), ECF No. 14-8 (hereinafter “2007 Rannazzisi Letter”).
4
See 2006 Rannazzisi Letter.

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may rely on the applicant’s representations of compliance with the federal registration

requirements.

36. Illinois regulations mandate that “[a]ll applicants and licensees shall provide

effective controls and procedures to guard against theft and diversion of controlled substances.”

77 Ill. Adm. Code 3100.310 (explaining that “[i]n order to determine whether a person has

provided effective controls against diversion, the Division shall use the security requirements set

forth in this Section as standards for the physical security controls and operating procedures

necessary to prevent diversion”). Further, “[w]holesale drug distributors shall operate in

compliance with applicable federal, state and local laws and regulations.” Ill. Admin. Code tit. 68,

§ 1510.50 (emphasis added); accord 21 C.F.R. § 205.50 (mandating that wholesale drug

distributors that deal in controlled substances register with the appropriate state controlled

substance authority and with the Drug Enforcement Administration (DEA), and comply with all

applicable State, local, and DEA regulations).

37. In sum, under both federal and state law, Defendants have several responsibilities

with respect to suspicious orders of opioids. First, they must set up a system designed to detect

such orders. That would include reviewing their own data, relying on their observations of

prescribers and pharmacies, and following up on reports or concerns of potential diversion. All

flagged orders must be reported to relevant enforcement authorities.5 Further, Defendants must

also stop shipment of any order which is flagged as suspicious and only ship orders which were

5
Id.

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flagged as potentially suspicious if, after conducting due diligence, they can determine that the

order is not likely to be diverted into illegal channels.6

38. Any of the red flags identified by law trigger a duty to report; however, this list is

not exclusive. Other factors—such as whether the order is skewed toward high dose pills, or orders

that are skewed towards drugs valued for abuse, rather than other high-volume drugs, such as

cholesterol medicines, also should alert distributors to potential problems. Defendants also

regularly visit pharmacy customers and their own observations—cash transactions or young and

seemingly healthy patients filling prescriptions for opioids at a pharmacy they supply—can trigger

reasonable suspicion. A single order can warrant scrutiny, or it may be a pattern of orders, or an

order that is unusual given the customer’s history or in comparison to other customers in the area.

2. Defendants understood the importance of their reporting obligations.

39. The reason for the reporting rules is to create a “closed” system intended to reduce

the diversion of these drugs out of legitimate channels into the illicit market, while at the same

time providing the legitimate drug industry with a unified approach to narcotic and dangerous drug

control.7 Because distributors both handle such large volumes of controlled substances, and are

uniquely positioned, based on their knowledge of their customers and orders, as the first line of

defense in the movement of legal pharmaceutical controlled substances from legitimate channels

into the illicit market, their obligation to maintain effective controls to prevent diversion of

6
See Southwood Pharm., Inc., 72 Fed. Reg. 36,487, 36,501 (Drug Enf’t Admin. July 3, 2007)
(applying federal requirements no less stringent than those of Ohio); Masters Pharmaceutical, Inc.
v. Drug Enforcement Administration, 861 F.3d 206 (D.C. Cir. 2017) (same).
7
See 1970 U.S.C.C.A.N. 4566, 4571-72.

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controlled substances is critical. Should a distributor deviate from these checks and balances, the

closed system of distribution, designed to prevent diversion, collapses.8

40. Defendants were well aware they had an important role to play in this system, and

also knew or should have known that their failure to comply with their obligations would have

serious consequences. For example, trade organizations to which all Defendants belong have

acknowledged that wholesale distributors such as Defendants have been responsible for reporting

suspicious orders for more than 40 years.9 The Healthcare Distribution Management Association

(“HDMA,” now known as the Healthcare Distribution Alliance (“HDA”)), a trade association of

pharmaceutical distributors to which all Defendants belong, has long taken the position that

distributors have responsibilities to “prevent diversion of controlled prescription drugs” not only

because they have statutory and regulatory obligations do so, but “as responsible members of

society.”10

41. Guidelines established by the HDA also explain that distributors, “[a]t the center of

a sophisticated supply chain . . . are uniquely situated to perform due diligence in order to help

8
See Rannazzisi Decl. ¶ 10, filed in Cardinal Health, Inc. v. Holder, No. 1:12-cv-00185-RBW
(D.D.C. Feb. 10, 2012), ECF No. 14-2.
9
See Brief for Healthcare Distribution Management Association and National Association of
Chain Drug Stores as Amici Curiae in Support of Neither Party, Masters Pharmaceuticals, Inc. v.
Drug Enforcement Administration, 2012 WL 1321983, at *4 (D.C. Cir. Apr. 4, 2016) (stating that
regulations “in place for more than 40 years require distributors to report suspicious orders of
controlled substances to DEA . . .”) (emphasis omitted).
10
See Amicus Curiae Br. of HDMA in Support of Cardinal Health, Inc.’s Motion for Injunction
Pending Appeal, No. 12-5061 (D.C. Cir. Mar. 7, 2012), Doc. No. 1362415 at 4; Brief for HDMA
and National Association of Chain Drug Stores as Amici Curiae in Support of Neither Party,
Masters Pharmaceuticals, Inc. v. Drug Enforcement Administration, 2012 WL 1321983, at *2
(D.C. Cir. Apr. 4, 2016).

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support the security of the controlled substances they deliver to their customers.”11 The FTC, too,

has recognized the unique role of distributors. Since their inception, Defendants have continued

to integrate vertically by acquiring businesses that are related to the distribution of pharmaceutical

products and health care supplies. In addition to the actual distribution of pharmaceuticals, as

wholesalers, Defendants also offer their pharmacy, or dispensing, customers a broad range of

added services. For example, Defendants offer their pharmacies sophisticated ordering systems

and access to an inventory management system and distribution facility that allows customers to

reduce inventory carrying costs. Defendants are also able to use the combined purchase volume

of their customers to negotiate the cost of goods with generic manufacturers and offer services that

include software assistance and other database management support. See Fed. Trade Comm’n v.

Cardinal Health, Inc., 12 F. Supp. 2d 34, 41 (D.D.C. 1998) (granting the FTC’s motion for

preliminary injunction and holding that the potential benefits to customers did not outweigh the

potential anti-competitive effect of a proposed merger between Cardinal and Bergen Brunswig

Corp.). As a result of their acquisition of a diverse assortment of related businesses within the

pharmaceutical industry, as well as the assortment of additional services they offer, Defendants

have a unique insight into the ordering patterns and activities of their dispensing customers.

42. The DEA also repeatedly has made clear that Defendants’ obligations under federal

law, mirrored in and incorporated by Illinois law, see infra Section III.A.1, obligate them to report

and decline to fill suspicious orders. Responding to the proliferation of pharmacies operating on

the internet that arranged illicit sales of enormous volumes of opioids to drug dealers and

11
HDMA Industry Compliance Guidelines: Reporting Suspicious Orders and Preventing
Diversion of Controlled Substances, filed in Cardinal Health, Inc. v. Holder, No. 12-5061 (D.C.
Cir. Mar. 7, 2012), Doc. No. 1362415 (App’x B at 1).

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customers, the DEA began a major push to remind distributors of their obligations to prevent these

kinds of abuses and educate them on how to meet these obligations. Since 2007, the DEA has

hosted at least five conferences that provided registrants with updated information about diversion

trends and regulatory changes. Each of the Defendants attended at least one of these conferences.

The DEA has also briefed distributors regarding legal, regulatory, and due diligence

responsibilities since 2006. During these briefings, the DEA pointed out the red flags distributors

should look for to identify potential diversion.

43. For example, in a September 27, 2006 letter (“9/27/06 DEA Letter”) sent to every

commercial entity registered to distribute controlled substances (which included Defendants), the

DEA advised them that they are “one of the key components of the distribution chain. If the closed

system is to function properly . . . distributors must be vigilant in deciding whether a prospective

customer can be trusted to deliver controlled substances only for lawful purposes. This

responsibility is critical, as . . . the illegal distribution of controlled substances has a substantial

and detrimental effect on the health and general welfare of the American people.”12 The 9/27/06

DEA Letter also expressly reminded them that registrants, in addition to reporting suspicious

orders, have a “statutory responsibility to exercise due diligence to avoid filling suspicious orders

that might be diverted into other than legitimate medical, scientific, and industrial channels.”13

The 9/27/06 DEA Letter reminds distributors of the importance of their obligation to “be vigilant

in deciding whether a prospective customer can be trusted to deliver controlled substances only

12
See 2006 Rannazzisi Letter (“This letter is being sent to every commercial entity in the United
States registered with the Drug Enforcement Agency (DEA) to distribute controlled substances.
The purpose of this letter is to reiterate the responsibilities of controlled substance distributors in
view of the prescription drug abuse problem our nation currently faces.”).
13
See 2006 Rannazzisi Letter.

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for lawful purposes,” and warns that “even just one distributor that uses its DEA registration to

facilitate diversion can cause enormous harm.”14

44. The DEA sent another letter to Defendants on December 27, 2007 (“9/27/07 DEA

Letter”), reminding them that, as registered distributors of controlled substances, they share, and

must each abide by, statutory and regulatory duties to “maintain effective controls against

diversion” and “design and operate a system to disclose to the registrant suspicious orders of

controlled substances.”15 The 9/27/07 DEA Letter reiterated the obligation to detect, report, and

not fill suspicious orders, and provided detailed guidance on what constitutes a suspicious order

and how to report (e.g., by specifically identifying an order as suspicious, not merely transmitting

data to the DEA). Finally, the 9/27/07 DEA Letter references the Revocation of Registration

issued in Southwood Pharmaceuticals, Inc., 72 Fed. Reg. 36,487-01 (July 3, 2007), which

discusses the obligation to report suspicious orders and “some criteria to use when determining

whether an order is suspicious.”16

3. Despite repeated admonitions, Defendants have repeatedly violated their


reporting obligations.

45. Defendants have faced repeated enforcement actions for their failure to comply

with their obligations to report and decline suspicious orders, making clear both that Defendants

were repeatedly reminded of their duties, and that they frequently and systematically failed to meet

them.

46. In May 2014, the United States Department of Justice (“DOJ”), Office of the

Inspector General, Evaluation and Inspections Divisions, reported that the DEA issued final

14
Id.
15
See 2007 Rannazzisi Letter.
16
See 2007 Rannazzisi Letter.

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decisions in 178 registrant actions between 2008 and 2012. These included actions against each

Defendant:

a. On April 24, 2007, the DEA issued an Order to Show Cause and
Immediate Suspension Order against the AmerisourceBergen Orlando, Florida
distribution center (“Orlando Facility”) alleging failure to maintain effective
controls against diversion of controlled substances. On June 22, 2007,
AmerisourceBergen entered into a settlement that resulted in the suspension of its
DEA registration;

b. On November 28, 2007, the DEA issued an Order to Show Cause and
Immediate Suspension Order against the Cardinal Auburn, Washington
Distribution Center (“Auburn Facility”) for failure to maintain effective controls
against diversion of hydrocodone;

c. On December 5, 2007, the DEA issued an Order to Show Cause and


Immediate Suspension Order against the Cardinal Lakeland, Florida Distribution
Center (“Lakeland Facility”) for failure to maintain effective controls against
diversion of hydrocodone;

d. On December 7, 2007, the DEA issued an Order to Show Cause and


Immediate Suspension Order against the Cardinal Swedesboro, New Jersey
Distribution Center (“Swedesboro Facility”) for failure to maintain effective
controls against diversion of hydrocodone;

e. On January 30, 2008, the DEA issued an Order to Show Cause against the
Cardinal Stafford, Texas Distribution Center (“Stafford Facility”) for failure to
maintain effective controls against diversion of hydrocodone;

f. On May 2, 2008, McKesson entered into an Administrative Memorandum


of Agreement (“2008 McKesson MOA”) with the DEA which provided that
McKesson would “maintain a compliance program designed to detect and prevent
the diversion of controlled substances, inform DEA of suspicious orders required
by 21 C.F.R. § 1301.74(b), and follow the procedures established by its Controlled
Substance Monitoring Program”;

g. On September 30, 2008, Cardinal entered into a Settlement and Release


Agreement and Administrative Memorandum of Agreement with the DEA related
to its Auburn, Lakeland, Swedesboro and Stafford Facilities. The document also
referenced allegations by the DEA that Cardinal failed to maintain effective
controls against the diversion of controlled substances at its distribution facilities
located in McDonough, Georgia (“McDonough Facility”), Valencia, California
(“Valencia Facility”) and Denver, Colorado (“Denver Facility”);

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h. On February 2, 2012, the DEA issued an Order to Show Cause and


Immediate Suspension Order against Cardinal’s Lakeland Facility for failure to
maintain effective controls against diversion of oxycodone; and

i. On December 23, 2016, Cardinal agreed to pay a $44 million fine to the
DEA to resolve the civil penalty portion of the administrative action taken against
its Lakeland, Florida Distribution Center.

j. On January 5, 2017, McKesson entered into an Administrative


Memorandum Agreement with the DEA wherein it agreed to pay a $150,000,000
civil penalty for violation of the 2008 McKesson MOA as well as failure to identify
and report suspicious orders at its facilities in Aurora CO, Aurora IL, Delran NJ,
LaCrosse WI, Lakeland FL, Landover MD, La Vista NE, Livonia MI, Methuen
MA, Santa Fe Springs CA, Washington Courthouse OH and West Sacramento CA.

47. These violations reflect a pervasive pattern and practice over the last decade of

failing to report and stop suspicious orders from which Defendants’ operations in Illinois and the

supply of opioids into the City would not have been exempt. In addition, these violations of federal

law and regulations also constituted violations of Illinois law for Defendants’ operations in this

state.

48. More recently, McKesson admitted to breach of its duties to monitor, report, and

prevent suspicious orders. Pursuant to an Administrative Memorandum of Agreement (“2017

Agreement”) entered into between McKesson and the DEA in January 2017, McKesson admitted

that, at various times during the period from January 1, 2009 through the effective date of the

Agreement (January 17, 2017), it “did not identify or report to [the] DEA certain orders placed by

certain pharmacies which should have been detected by McKesson as suspicious based on the

guidance contained in the DEA Letters.”17 Further, the 2017 Agreement specifically finds that

17
Settlement Agreement and Release between the U.S. and McKesson Corp., at 5 (Jan. 17, 2017)
(hereinafter “2017 Settlement”) (“McKesson acknowledges that, at various times during the
Covered Time Period [2009-2017], it did not identify or report to DEA certain orders placed by
certain pharmacies, which should have been detected by McKesson as suspicious, in a manner
fully consistent with the requirements set forth in the 2008 MOA.”), available at
https://www.justice.gov/opa/press-release/file/928471/download.

17
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McKesson “distributed controlled substances to pharmacies even though those McKesson

Distribution Centers should have known that the pharmacists practicing within those pharmacies

had failed to fulfill their corresponding responsibility to ensure that controlled substances were

dispensed pursuant to prescriptions issued for legitimate medical purposes by practitioners acting

in the usual course of their professional practice, as required by 21 C.F.R § 1306.04(a).”18

McKesson admitted that, during this time period, it “failed to maintain effective controls against

diversion of particular controlled substances into other than legitimate medical, scientific and

industrial channels by sales to certain of its customers in violation of the CSA and the CSA’s

implementing regulations, 21 C.F.R. Part 1300 et seq., at the McKesson Distribution Centers,”

which included its distribution center in Aurora, Illinois.19

49. As the Washington Post and 60 Minutes recently reported, DEA staff recommended

a much larger penalty, as much as a billion dollars, and delicensing of certain facilities.20 A DEA

memo outlining the investigative findings in connection with the administrative case against 12

McKesson distribution centers included in the 2017 Settlement stated that McKesson “[s]upplied

controlled substances in support of criminal diversion activities”; “[i]gnored blatant diversion”;

had a “[p]attern of raising thresholds arbitrarily”; “[f]ailed to review orders or suspicious activity”;

and “[i]gnored [the company’s] own procedures designed to prevent diversion.”21 Investigators

18
Id.
19
Other facilities include McKesson’s distribution centers in Aurora, CO; Aurora, IL; Delran, NJ;
LaCrosse, WI; Lakeland, FL; Landover, MD; La Vista, NE; Livonia, MI; Methuen, MA; Santa Fe
Springs, CA; and West Sacramento, CA.
20
Lenny Bernstein and Scott Higham, “‘We Feel Like Our System Was Hijacked’: DEA Agents
Say a Huge Opioid Case Ended in a Whimper, Washington Post (Dec. 17, 2017).
21
Lenny Bernstein and Scott Higham, “‘We Feel Like Our System Was Hijacked’: DEA Agents
Say a Huge Opioid Case Ended in a Whimper, Washington Post (Dec. 17, 2017).

18
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also found that McKesson distribution centers “were supplying pharmacies that sold to criminal

drug rings.”22

50. Even the far-less-than recommended civil penalty against McKesson, a $150

million fine, was record breaking. In addition to the monetary penalty, the DOJ required

McKesson to suspend sales of controlled substances from distribution centers in four different

states. Though this penalty too, was far less severe than investigators had recommended, as the

DOJ explained, these “staged suspensions” are nevertheless “among the most severe sanctions

ever agreed to by a [DEA] registered distributor.”23

51. Following the 2017 settlement, McKesson shareholders made a books and records

request of the company. According to a separate action pending on their behalf, the Company’s

records show that the Company’s Audit Committee failed to monitor McKesson's information

reporting system to assess the state of the Company's compliance with the CSA and McKesson’s

2008 Settlements. More particularly, the shareholder action alleges that the records show that in

October 2008, the Audit Committee had an initial discussion of the 2008 Settlements and results

of internal auditing, which revealed glaring omissions; specifically:

(a) some customers had "not yet been assigned thresholds in the system to flag large

shipments of controlled substances for review";

22
Id.
23
DOJ, “McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report
Suspicious Orders of Pharmaceutical Drugs, (Jan. 17, 2017)
https://www.justice.gov/opa/pr/mckesson-agrees-pay-record-150-million-settlement-failure-
report-suspicious-orders.

19
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(b) "[d]ocumentation evidencing new customer due diligence was incomplete"; (c)

"documentation supporting the company's decision to change thresholds for existing

customers was also incomplete"; and

(d) Internal Audit "identified opportunities to enhance the Standard Operating

Procedures."24

52. Yet, instead of correcting these deficiencies, after that time, for a period of more

than four years, the Audit Committee failed to address the Controlled Substance Monitoring

Program (“CSMP”) or perform any more audits of McKesson's compliance with the CSA or the

2008 Settlements, the shareholder action’s description of McKesson’s internal documents

reveals.25

53. As a DEA official working on the case noted, McKesson, was “neither rehabilitated

nor deterred by the 2008 [McKesson MOA].”26 Quite the opposite, “‘their bad acts continued and

escalated to a level of egregiousness not seen before’” and reflected the company’s wholesale

failure to comply with state and federal law.27 According to statements of “DEA investigators,

agents and supervisors who worked on the McKesson case” reported in the Washington Post, “the

company paid little or no attention to the unusually large and frequent orders placed by pharmacies,

some of them knowingly supplying the drug rings.”28 “Instead, the DEA officials said, the

24
Verified Shareholder Derivative Compl., Chaile Steinberg derivatively on behalf of McKesson
Corp., v. Bryant et al., No. 2017-0736-SG (Del. Ct. Chancery Dec. 8, 2017) (alteration in original).
25
Id.
26
Id. (alteration in original).
27
Id. (quoting a March 30, 2015 DEA memo).
28
Id.

20
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company raised its own self-imposed limits, known as thresholds, on orders from pharmacies and

continued to ship increasing amounts of drugs in the face of numerous red flags.”29

54. Further, in a 60 Minutes interview last fall, former DEA agent Joe Rannazzisi

described Distributor Defendants’ industry as “out of control,” stating that “[w]hat they wanna do,

is do what they wanna do, and not worry about what the law is. And if they don't follow the law

in drug supply, people die. That's just it. People die. ”30 He further explained that:

JOE RANNAZZISI: The three largest distributors are Cardinal Health, McKesson, and
AmerisourceBergen. They control probably 85 or 90 percent of the drugs going
downstream.

[INTERVIEWER]: You know the implication of what you're saying, that these big
companies knew that they were pumping drugs into American communities that were
killing people.

JOE RANNAZZISI: That's not an implication, that’s a fact. Thats exactly what they did.31

55. Another DEA veteran similarly stated that these companies failed to make even a

“good faith effort” to “do the right thing.”32 He further explained that “I can tell you with 100

percent accuracy that we were in there on multiple occasions trying to get them to change their

behavior. And they just flat out ignored us.”33

56. Upon information and belief, each of the Defendants similarly disregarded their

reporting and due diligence obligations under federal and Illinois law in and affecting the City.

B. DEFENDANTS HAD FINANCIAL INCENTIVES TO TURN A BLIND EYE TO RED


FLAGS OF DIVERSION TO SUSTAIN THEIR MARKET AND BOOST THEIR
PROFITS.

29
Id.
30
Bill Whitaker, Ex-DEA Agent : Opioid Crisis Fueled by Drug Industry and Congress, CBS News
(Oct. 17, 1017), https://www.cbsnews.com/news/ex-dea-agent-opioid-crisis-fueled-by-drug-
industry-and-Congress
31
Id.
32
Id.
33
Id.

21
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57. Defendants had financial incentives to distribute higher volumes, and thus to refrain

from reporting or declining to fill suspicious orders. Wholesale drug distributors acquire

pharmaceuticals, including opioids, from manufacturers at an established wholesale acquisition

cost. Discounts and rebates from this cost may be offered by manufacturers based on market share

and volume. As a result, higher volumes may decrease the cost per pill to distributors. Decreased

cost per pill in turn, allows wholesale distributors to offer more competitive prices, or alternatively,

pocket the difference as additional profit. Either way, the increased sales volumes result in

increased profits.

58. Upon information and belief, manufacturers engaged in the practice of paying

rebates and/or chargebacks to the Defendants for sales of prescription opioids as a way to help

them boost sales and better target their marketing efforts. The Washington Post has described the

practice as industry-wide, and the HDA includes a “Contracts and Chargebacks Working Group,”

suggesting a standard practice. Further, in a recent settlement with the DEA, Mallinckrodt, a

prescription opioid manufacturer, acknowledged that “[a]s part of their business model

Mallinckrodt collects transaction information, referred to as chargeback data, from their direct

customers (distributors).”34 This exchange of information, upon information, and belief, would

have opened channels providing for the exchange of information revealing suspicious orders as

well.

34
Administrative Memorandum of Agreement between the United States Department of Justice,
the Drug Enforcement Agency, and Mallinckrodt, plc. and its subsidiary Mallinckrodt, LLC at 5
(July 10, 2017), https://www.justice.gov/usao-edmi/press-release/file/986026/download. (“2017
Mallinckrodt MOA”).

22
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59. As the leading whole sale distributors, Defendants had close financial relationships

with both manufacturers and customers, for whom they provide a broad range of value added

services that render them uniquely positioned to obtain information and control against

diversion. These services often otherwise would not be provided by manufacturers to their

dispensing customers and would be difficult and costly for the dispenser to reproduce. For

example, “[w]holesalers have sophisticated ordering systems that allow customers to

electronically order and confirm their purchases, as well as to confirm the availability and prices

of wholesalers’ stock.” Fed. Trade Comm'n v. Cardinal Health, Inc., 12 F. Supp. 2d 34, 41

(D.D.C. 1998). Through their generic source programs, wholesalers are also able “to combine the

purchase volumes of customers and negotiate the cost of goods with manufacturers.” Wholesalers

also offer marketing programs, patient services, and other software to assist their dispensing

customers.

C. DEFENDANTS IGNORED RED FLAGS OF ABUSE AND DIVERSION.

60. The data that reveals and/or confirms the identity of each wrongful opioid

distributor is hidden from public view in the DEA’s confidential ARCOS database. 35 The data

necessary to identify with specificity the transactions that were suspicious is in possession of the

Defendants, but has not been disclosed to the public.

61. Yet, publicly available information indicates that Defendants ignored red flags of

suspicious orders. This information, along with the information known only to Defendants and

any manufacturers with whom they entered into charge-back arrangements, would have alerted

them to potentially suspicious orders of opioids in and affecting the City.

62. The City’s information and belief rests upon the following facts:

35
See Madel v. USDOJ, 784 F.3d 448 (8th Cir. 2015).

23
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a. distributors have access to detailed transaction-level data on the sale and

distribution of opioids, which can be broken down by zip code, prescriber, and

pharmacy and includes the volume of opioids, dose, and the distribution of other

controlled and non-controlled substances;

b. manufacturers make use of that data to target their marketing and, for that purpose,

regularly monitor the activity of doctors and pharmacies, which information they

would have the ability to share with distributors;

c. manufacturers and distributors regularly visit pharmacies and doctors to promote

and provide their products and services, which allows them to observe red flags of

diversion, as described in paragraph 31; and

d. Defendants together account for approximately 90% of all revenues from

prescription drug distribution in the United States, and each plays such a large part

in the distribution of opioids that its own volume provides a ready vehicle for

measuring the overall flow of opioids into a pharmacy or geographic area.

63. Defendants’ gross inadequacies in the performance of their due diligence

obligations is underscored by several examples of illegal prescribing and diversion in the City. In

2016, a suburban Chicago-land doctor’s license was revoked after he was discovered to have been

running a cash-only pill mill where he prescribed vast quantities of Subsys, a drug containing

fentanyl that was developed exclusively for the treatment of breakthrough pain in cancer patients,

and other prescription opioids. From 2014 to 2016, at least three prescribers in the City were

convicted of crimes in connection with the operation of a pill mill. Based on publicly available

information (also, of course, available to Defendants) provided by the IDFPR, from 2010 to 2015,

at least 88 physicians, nurses, and pharmacy technicians faced some kind of disciplinary action

24
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involving drug diversion. Upon information and belief, these prescribers, and the pharmacies at

which their patients filled prescriptions for opioids, yielded orders of unusual size, frequency, or

deviation, or raised other warning signs that should have alerted Defendants to instances of

diversion. Upon information and belief, none of the aforementioned disciplinary actions came

about through the due-diligence efforts or suspicious order report from a wholesale distributor.

Additionally, in 2004, one of Defendant McKesson’s distribution facilities was disciplined by the

IDFPR for practicing within the state of Illinois without a license for approximately five years. In

2009, Defendant Cardinal was also disciplined by the IDFPR for delivering controlled substances

to two Illinois pharmacies after the pharmacies’ Illinois controlled substances licenses had expired.

That Cardinal delivered to these pharmacies despite their lapsed licenses further supports the

inference that Cardinal failed to implement and adhere to adequate compliance policies.

64. This pattern of illicit prescribing and dispensing is linked to and confirmed by the

City’s role in the broader network of illicit opioid distribution that Defendants and opioid

manufacturers helped create, and that supplied the growing population of individuals who were

exposed to and became addicted to opioids as a result of the unlawful marketing and distribution

by Defendants and by opioid manufacturers. According to the Illinois Criminal Justice Authority,

because of “its large transportation industry and accessible highways and roadways, Chicago and

the state of Illinois serve as a major center for heroin and opioid drug trafficking.”36

65. In addition, the increase in fatal overdoses from prescription opioids has been

widely publicized for years. In the City, there were 403 accidental deaths due to opioid overdoses

in 2015. Of those, 68 deaths were attributable to fentanyl, 243 to heroin, and 92 to other

36
See Jessica Reichert and Vernon Smith, Illinois Criminal Justice Information Authority, A state
and national overview of the opioid and heroin crisis, November 16, 2016, available at
http://www.icjia.state.il.us/articles/an-overview-of-national-and-illinois-opioid-and-heroin-crisis

25
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prescription opioids. Combining the City and Cook County suburbs, there were 609 total deaths

from opiate overdoses in 2015. The CDC has estimated that for every opioid-related death, there

are 733 non-medical users. Defendants thus had every reason to believe that illegal diversion was

occurring in the City. Given these fatalities and the pattern of disciplinary actions and diversion,

Defendants should have been on notice that the diversion of opioids was likely occurring in and

around the City. Defendants should have investigated and ceased filling suspicious orders for

opioids, and reported potential diversion to law enforcement. In the City, as elsewhere, based

upon information and belief (including the absence of reporting to IDFPR), Defendants failed to

meet these obligations – with grave, and often deadly, consequences to the City and its residents.

D. DEFENDANTS HID THEIR LACK OF COOPERATION WITH LAW


ENFORCEMENT AND FALSELY CLAIMED TO BE ACTIVELY WORKING TO
PREVENT DIVERSION.

66. When a distributor does not report or stop suspicious orders, prescriptions for

controlled substances may be written and dispensed to individuals who abuse them or who sell

them to others to abuse. This, in turn, fuels and expands the illegal market and results in opioid-

related overdoses. Without reporting by those involved in the supply chain, law enforcement may

be delayed in taking, or may not know to take, action.

67. After being caught failing to comply with particular obligations at particular

facilities, Defendants made broad promises to change their ways and insisted that they sought to

be good corporate citizens. As part of McKesson’s 2008 Settlement with the DEA, McKesson

claimed to have “taken steps to prevent such conduct from occurring in the future,” including

specific measures delineated in a “Compliance Addendum” to the Settlement. Yet, in 2017,

McKesson paid $150 million to resolve an investigation by the DOJ for again failing to report

suspicious orders of certain drugs, including opioids.

26
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68. More generally, the Defendants publically portrayed themselves as committed to

working with law enforcement, opioid manufacturers, and others to prevent diversion of these

dangerous drugs.

69. For example, Cardinal claims that: “We challenge ourselves to best utilize our

assets, expertise and influence to make our communities stronger and our world more sustainable,

while governing our activities as a good corporate citizen in compliance with all regulatory

requirements and with a belief that doing ‘the right thing’ serves everyone.”37 Cardinal likewise

claims to “lead [its] industry in anti-diversion strategies to help prevent opioids from being

diverted for misuse or abuse.” Along the same lines, it claims to “maintain a sophisticated, state-

of-the-art program to identify, block and report to regulators those orders of prescription controlled

medications that do not meet [its] strict criteria.”38 Cardinal also promotes funding it provides for

“Generation Rx,” which funds grants related to prescription drug misuse.39 A Cardinal executive

recently claimed that Cardinal uses “advanced analytics” to monitor its supply chain; Cardinal

assured the public it was being “as effective and efficient as possible in constantly monitoring,

identifying, and eliminating any outside criminal activity.”40

70. Along the same lines, McKesson publicly claims that its “customized analytics

solutions track pharmaceutical product storage, handling and dispensing in real time at every step

37
Cardinal website, Ethics and Governance, available at http://www.cardinalhealth.com/en/about-
us/corporate-citizenship/ethics-and-governance.html.
38
Cardinal website, Archives, Cardinal Health Values Statement, available at
http://cardinalhealth.mediaroom.com/valuestatement.
39
Cardinal website, available at http://www.cardinalhealth.com/en/about-us/corporate-
citizenship/community-relations/population-health/rx-drug-misuse-and-abuse.html.
40
Lenny Bernstein et al., How Drugs Intended for Patients Ended up in the Hands of Illegal Users:
‘No one was doing their job’, The Washington Post (Oct. 22, 2016), http://wapo.st/2vCRGLt.

27
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of the supply chain process,” creating the impression that McKesson uses this tracking to help

prevent diversion.41 McKesson has also publicly stated that it has a “best-in-class controlled

substance monitoring program to help identify suspicious orders,” and claimed it is “deeply

passionate about curbing the opioid epidemic in our country.”42

71. These public statements created the false and misleading impression that the

Defendants rigorously carried out their duty to report suspicious orders and exercise due diligence

to prevent diversion of these dangerous drugs, and also worked voluntarily to prevent diversion as

a matter of corporate responsibility to the communities their business practices would necessarily

impact. Not only were Defendants failing to rigorously adhere to their minimum legal obligations

and the duties they voluntarily assumed through the promises above, they were actively working

to undermine enforcement and controls by the government as well.

72. Defendants and opioid manufacturers coordinated in other ways that, including,

according to articles published by the Center for Public Integrity and the Associated Press,

lobbying through the Pain Care Forum—whose members include Defendants’ trade association,

the HDA—to undermine legal controls and enforcement mechanisms designed to prevent

diversion.”

E. BY IGNORING MANDATORY OBLIGATIONS TO REPORT SUSPICIOUS


ORDERS AND GUARD AGAINST DIVERSION, DEFENDANTS COLLECTIVELY
FUELED THE OPIOID EPIDEMIC AND SIGNIFICANTLY HARMED CHICAGO
AND THEIR RESIDENTS.

41
McKesson website, Pharmaceutical Distribution for Manufacturers, available at
http://www.mckesson.com/manufacturers/pharmaceutical-distribution/.
42
Scott Higham et al., Drug Industry Hired Dozens of Officials from the DEA as the Agency Tried
to Curb Opioid Abuse, Wash. Post, Dec. 22, 2016, available at
https://www.washingtonpost.com/investigations/key-officials-switch-sides-from-dea-to-
pharmaceutical-industry/2016/12/22/55d2e938-c07b-11e6-b527-949c5893595e_story.html.

28
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73. Defendants compounded the harms from aggressive marketing that overcame

barriers to widespread prescribing of opioids for chronic pain by supplying opioids beyond even

what this expanded market could bear, and by turning a blind eye to red flags that they were fueling

abuse and diversion of these dangerous drugs.

74. By continuing to fill and failing to report suspicious orders of opioids, Defendants

have enabled an oversupply of opioids and supplied opioid that they knew or should have known

would be used for other than legitimate medical use, would be abused by patients who had become

addicted, or would be diverted to non-patients. They also knew or should have known that by

failing to report, and failing to exercise due diligence not to fill suspicious orders, they would

facilitate access to opioids for both patients who could no longer access or afford prescription

opioids and addicts struggling with relapse.

75. As explained above, Defendants had financial incentives to distribute higher

volumes and not to report suspicious orders or guard against diversion. See infra Section III.A.4.

Wholesale drug distributors acquire pharmaceuticals, including opioids, from manufacturers at an

established wholesale acquisition cost. Discounts and rebates from this cost may be offered by

manufacturers based on market share and volume. As a result, higher volumes may decrease the

cost per pill to distributors. Decreased cost per pill in turn, allows wholesale distributors to offer

more competitive prices, or alternatively, pocket the difference as additional profit. Either way,

the increased sales volumes result in increased profits.

76. Indeed, as the FTC has recognized, Defendants “depend on a revenue model that

makes money by capitalizing the economies of scale, using both physical efficiencies such as ‘just-

in-time’ deliveries and financial efficiencies, for example, by offering discounts for prompt

29
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payment.”43 See also Fed. Trade Comm’n v. Cardinal Health, Inc., 12 F. Supp. 2d 34, 39 (D.D.C.

1998) (noting that “over the years, [the major pharmaceutical distributors] have acquired other

drug wholesale companies and consolidated operations to achieve greater economies of scale”).

Because of this revenue model, the more opioids Defendants distribute, the lower their margins

and thus, the greater their profits.

77. The oversupply of opioids to the City has caused significant harm to the City and

its residents. In addition to the harms described above, emergency room visits tied to opioid use

have sharply increased in the City. The U.S. Department of Health and Human Services estimated

that in 2009 in the City, there were 40.4 emergency department visits involving adverse reactions

to opioids per 100,000 people, which, for the City’s population, translates into 1,080 trips to the

emergency room. Emergency department visits due to opioids increased 153 percent between

2004 and 2011. In 2009, over 1,200 emergency department visits involved patients who were

illicitly using opioids.

78. Rising opioid use and abuse also have negative social and economic consequences

beyond overdoses. According to a recent analysis by a Princeton University economist,

approximately one out of every three working age men who are not in the labor force take daily

prescription pain medication. The same research finds that opioid prescribing alone accounts for

20% of the overall decline in the labor force participation for this group from 2014-16, and 25%

of the decline in labor force participation among women. According to addiction treatment

programs interviewed by the City, opioid addiction is affecting residents of all ages, ethnicities,

and socio-economic backgrounds in the City.

43
Kaiser Foundation, Follow the Pill: Understanding the U.S. Commercial Pharmaceutical Supply
Chain (2005), available at http://avalere.com/research/docs/Follow_the_Pill.pdf.

30
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79. Further, people who are addicted to prescription opioid painkillers are 40 times

more likely to be addicted to heroin. The CDC identified addiction to prescription pain medication

as the strongest risk factor for heroin addiction. Nationally, roughly 80% of heroin users

previously used prescription opioids. Studies have shown that heroin use is 19-times greater

among individuals who reported past use of prescription pain relievers.

80. A recent, even more deadly problem stemming from the prescription opioid

epidemic involves fentanyl—a powerful opioid prescribed for cancer pain or in hospital settings

that, in synthetic form, has made its way into the City, like elsewhere.

81. As a result of the impacts described above, and others, the City has taken significant

measures to combat the public health crisis created by opioid use. The CDPH has more than

doubled its investments to combat substance use disorders in recent years, with all new dollars

going toward the opioid crisis. Other City departments have increased their spending, as well.

F. DEFENDANTS FRAUDULENTLY CONCEALED THEIR MISCONDUCT.

82. Defendants also fraudulently concealed their misconduct. They have declined to

release the Automated Records and Consolidated Orders System/Diversion Analysis and

Detection System (“ARCOS”) data which provides detailed tracking information about their

shipments. In addition, as explained above, Defendants publicly portray themselves as

maintaining sophisticated technology as part of a concerted effort to thwart diversion and

publically portray themselves as committed to fighting the opioid epidemic. However, their public

pronouncements are at odds with their concealed misconduct.

83. To the extent that information about Defendants’ violations of the federal CSA and

its implementing regulations was disclosed through settlement agreements, that information, until

McKesson’s 2017 Settlement, concerned facilities outside Illinois. Further, such settlement

agreements have typically been followed by or coupled with promises to improve compliance.

31
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CAUSES OF ACTION

COUNT ONE - PUBLIC NUISANCE


IL CSA 720 ILCS 570 AND/OR COMMON LAW
AGAINST ALL DEFENDANTS

84. The City incorporates the allegations within all prior paragraphs within this

Complaint as if fully set forth herein.

85. Defendants’ conduct has unreasonably interfered with the health, safety, peace,

comfort, and convenience of the general public in the City by: (a) intentionally, recklessly, or

negligently engaging in conduct proscribed by statute, ordinance or administrative regulation; and

(b) engaging in conduct of a continuing nature that Defendants knew or should have known

produced and continues to produce permanent and long-lasting significant effect of these rights

common to the general public.

86. In particular, Defendants unreasonably interfered with rights common to the

general public of the City by failing to design and operate a system that would disclose the

existence of suspicious orders of controlled substances and/or by failing to report and reject

suspicious orders of opioids as required by the ICSA, 720 ILCS 570 (which also incorporates the

CSA’s obligations) and the CSA, 21 C.F.R. §1301.74(b).

87. The ICSA was enacted, with

the intent of the General Assembly, recognizing the rising incidence in the abuse of
drugs and other dangerous substances and its resultant damage to the peace, health,
and welfare of the citizens of Illinois, to provide a system of control over the
distribution and use of controlled substances which will more effectively: (1) limit
access of such substances only to those persons who have demonstrated an
appropriate sense of responsibility and have a lawful and legitimate reason to
possess them; (2) deter the unlawful and destructive abuse of controlled substances;
(3) penalize most heavily the illicit traffickers or profiteers of controlled substances,
who propagate and perpetuate the abuse of such substances with reckless disregard
for its consumptive consequences upon every element of society; (4) acknowledge
the functional and consequential differences between the various types of
controlled substances and provide for correspondingly different degrees of control
over each of the various types; (5) unify where feasible and codify the efforts of

32
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this State to conform with the regulatory systems of the Federal government; and
(6) provide law enforcement authorities with the necessary resources to make this
system efficacious.

720 ILCS 570/100.

88. In light of Defendants’ failures to disclose suspicious orders of opioids and

maintain adequate controls to prevent diversion, the City was unaware of, and could not reasonably

know or have learned through reasonable diligence, that it had been exposed to the risks alleged

herein. Information pertaining to the suspicious orders of opioids Defendants were required to

disclose—but did not—was information that the Defendants, given their placement in the supply

chain, are uniquely positioned to possess and which was otherwise unavailable to the City. At all

times relevant to this Complaint, Defendants were in complete control over the instrumentalities

constituting the public nuisance.

89. All Defendants’ actions were, at the very least, a substantial factor in opioids

becoming widely available and widely used in the City. By failing to report and exercise due

diligence not to fill suspicious orders in the City, Defendants exacerbated the opioid crisis in the

City and failed to limit its reach. Defendants controlled these actions and, therefore, willingly

participated to a substantial extent in creating and maintaining the public nuisance. Without

Defendants’ actions, opioid use, misuse, abuse, and addiction would not have become so

widespread, and the opioid epidemic that now exists would have been averted or much less severe.

90. Defendants’ conduct is unreasonable, intentional, and unlawful.

91. Defendants knew of the public health hazard their conduct would create.

92. The public nuisance is substantial and unreasonable. Defendants’ actions caused

and continue to cause the public health epidemic and state of emergency described in this

Complaint.

33
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93. Defendants’ conduct directly and proximately caused injury to the City and its

residents.

94. The public nuisance – i.e. the opioid epidemic - created, perpetuated, and

maintained by Defendants can be abated and further recurrence of such harm and inconvenience

can be abated.

WHEREFORE, the City respectfully requests that this Court enter an order (a) awarding

judgment in its favor and against Defendants on Count One of the Complaint; (b) granting

injunctive relief, (c) for abatement of the public nuisance, and (d) for compensatory damages in an

amount to be determined by a jury, together with all the costs of this action, including prejudgment

interest, post-judgment interest, costs and expenses, attorney fees, and such other relief as this

Court deems just and equitable.

COUNT TWO - NEGLIGENCE / NEGLIGENCE PER SE / GROSS NEGLIGENCE


AGAINST ALL DEFENDANTS

95. The City incorporates the allegations within all prior paragraphs within this

Complaint as if fully set forth herein.

96. Defendants have a duty to exercise reasonable care in distributing highly dangerous

opioid drugs in the City.

97. Defendants have a duty to exercise reasonable care under the circumstances, in light

of the risks. This includes a duty not to cause foreseeable harm to others.

98. In addition, Defendants, having engaged in a course of conduct that created a

foreseeable risk of injury, had, and still have, a duty to protect others from such injury. Like every

person, Defendants owe a duty of ordinary care to all others to guard against injuries which

naturally flow as a reasonably probable and foreseeable consequences of their actions.

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99. Defendants are part of a limited class of registrants authorized to legally market,

sell, and distribute controlled substances, which places them in a position of great trust and

responsibility vis-à-vis the City. Their duty cannot be delegated.

100. In addition, 21 U.S.C. § 801 et seq.; 21 C.F.R. § 1301.74; 21 C.F.R. § 205; the

ICSA, including 720 ILCS 570/303; and Ill. Admin. Code tit. 68, § 1510.50, are public safety laws.

Each Defendant had a duty under, inter alia, 21 U.S.C. § 801 et seq., 21 C.F.R. § 1301.74, 720

ILCS 570/303, and Ill. Admin. Code tit. 68, § 1510.50, to maintain effective controls against

diversion of prescription opioids, to report suspicious orders of opioids, and not to fill suspicious

orders unless and until due diligence had eliminated the basis for its suspicion.

101. Defendants also misleadingly portrayed themselves as cooperating with law

enforcement and actively working to combat the opioid epidemic when, in reality, Defendants

failed to satisfy even their minimum, legally-required obligations to report suspicious prescribers.

Defendants voluntarily undertook duties, through their statements to the media, regulators, and the

public at large, to take all reasonable precautions to prevent drug diversion.

102. Upon information and belief, each Defendant repeatedly and recklessly or

intentionally breached its duties. These breaches included:

1. Selling prescription opioids in the supply chain when they knew, or should have

known, that there was a substantial likelihood the sale was for non-medical

purposes and that opioids are an inherently dangerous product when used for

non-medical purposes;

2. Using unsafe distribution practices;

3. Inviting criminal activity into the City by disregarding precautionary measures

built into the CSA, ICSA, and these statutes’ implementing regulations;

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4. Failing to comply with the public safety laws described above;

5. Failing to acquire or utilize special knowledge or skills that relate to the

dangerous activity of selling opioids in order to prevent or ameliorate such

significant dangers;

6. Failing to review prescription orders for red flags;

7. Failing to report, or refuse to fill, suspicious orders; and

8. Failing to provide effective controls and procedures to guard against theft and

diversion of controlled substances.

103. Each Defendant breached its duty to exercise the degree of care, prudence,

watchfulness, and vigilance commensurate with the dangers involved in selling dangerous

controlled substances.

104. Defendants acted with actual malice in breaching their duties, i.e., they have acted

with a conscious disregard for the rights and safety of other persons, and said actions have a great

probability of causing substantial harm.

105. The foreseeable harm from a breach of these duties is the sale, use, abuse, and

diversion of prescription opioids.

106. The foreseeable harm from a breach of these duties also includes abuse, addiction,

morbidity and mortality in the City.

107. Reasonably prudent distributors of prescription opioids would have anticipated that

the scourge of opioid addiction would wreak havoc on communities, and the significant costs

which would be imposed upon the governmental entities associated with those communities. The

closed system of opioid distribution whereby wholesale distributors are the gatekeepers between

manufacturers and pharmacies, and wherein all links in the chain have a duty to prevent diversion,

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exists for the purpose of controlling dangerous substances such as opioids and preventing diversion

and abuse to prevent precisely these types of harms. The very purpose of these duties was to

prevent the diversion of highly addictive drugs for non-medical purposes and the resulting harm.

108. Reasonably prudent distributors would know that failing to report suspicious orders

would lead to diversion of the opioids they shipped. Reasonably prudent distributors would also

know that filling such orders without first exercising due diligence would create an environment

in which diversion would occur.

109. The City is not asserting a cause of action under the CSA or ICSA or seeking to

enforce these laws. Rather, the City seeks to remedy harms caused to it by the breach of duty

created by these statutes and under common law.

110. The City seeks recovery for its economic losses (direct, incidental, or consequential

pecuniary losses) resulting from Defendants’ negligence, negligence per se, or gross negligence.

The City does not seek damages for the wrongful death, physical personal injury, serious emotional

distress, or any physical damage to property caused by Defendants’ actions.

111. Defendants’ breach of the duties described in this Count directly and proximately

resulted in the injuries and damages alleged by the City.

112. Defendants’ conduct as described in this Count demonstrates wanton, willful, or

reckless conduct or criminal indifference to civil obligations affecting the rights of others and

justifies an award of punitive damages.

113. The misconduct alleged in this case is ongoing and persistent.

114. The misconduct alleged in this case does not concern a discrete event or discrete

emergency of the sort a municipality would reasonably expect to occur, and is not part of the

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normal and expected costs of municipal existence. The City alleges wrongful acts which are

neither discrete nor of the sort a municipality can reasonably expect.

115. The City has incurred expenditures for special programs over and above the City’s

ordinary municipal services.

WHEREFORE, the City respectfully requests that this Court enter an order (a)

awarding judgment in its favor and against Defendants on Count II of the Complaint; (b) all legal

and equitable relief as allowed by law, except as expressly disavowed herein, including inter alia

injunctive relief, compensatory and punitive damages, and all other damages allowed by law; (c)

compelling Defendants to pay the cost of the suit, including attorneys’ fees; and (d) awarding the

City such other, further, and different relief as this Honorable Court may deem just.

COUNT THREE - CONSUMER FRAUD—DECEPTIVE PRACTICES


VIOLATIONS OF MCC § 2-25-090
AGAINST ALL DEFENDANTS

116. The City incorporates the allegations within all prior paragraphs within this

Complaint as if fully set forth herein.

117. The MCC § 2-25-090 makes it unlawful for a business to “engage in any act of

consumer fraud, unfair method of competition, or deceptive practice while conducting any trade

or business in the city,” including but not limited to, “any conduct constituting an unlawful practice

under the Illinois [CFDBPA].” The CFDBPA, 815 ILCS 505/2, makes unlawful, among other

things, “[u]nfair . . . acts or practices . . . . in the conduct of any trade or commerce.” Section 1(f)

defines “trade or commerce” as inclusive of the “distribution of any services and any property,

tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value

wherever situated,” as well as “any trade or commerce directly or indirectly affecting the people

of this State.”

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118. At all times relevant to this Complaint, Defendants violated the CFDBPA and MCC

§ 2-25-090 by engaging in unfair acts or practices in distributing opioids in the City. These acts

or practices are unfair in that they offend public policy; are immoral, unethical, oppressive, or

unscrupulous; and have resulted in substantial injury to Chicago consumers that is not outweighed

by any countervailing benefits to consumers or competition.

119. Defendants’ unfair acts or practices include, but are not limited to failing to

maintain effective controls against opioid diversion by:

a. Failing to create and maintain and use a compliance program


that effectively detects and prevents suspicious orders of
controlled substances;

b. Failing to report suspicious reports of controlled substances;

c. Filling suspicious or invalid orders for prescription opioids;

d. Failing to exercise due diligence to ensure that pharmacies and


dispensers were not at risk for diversion; and

e. Publicly claiming to use advance analytics and technology to


address suspicious orders and prevent illegitimate use of
prescription opioids while actually failing to maintain effective
controls against diversion.

120. Defendants’ practices as described above offend deep-seated public policies. As

the Illinois legislature recognized in enacting the ICSA, “the rising incidence in the abuse of drugs

and other dangerous substances and its resultant damage to the peace, health, and welfare of the

citizens of Illinois” requires a “system of control over the distribution and use of controlled

substances . . . .”44 The Legislature has also decreed that “drug addiction [is] among the most

serious health problem[] facing the people of the State of Illinois.”45 It is also the public policy of

44
720 Ill. Comp. Stat. 570/100 (West 2012).
45
745 Ill. Comp. Stat. 35/2 (West 1987).

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the state of Illinois to “shift, to the extent possible, the cost of the damage caused by the existence

of the illegal drug market in a community to those who illegally profit from that market.”46

Nevertheless, by engaging in the conduct alleged above, Defendants profited from the opioid

epidemic in the City turning a blind eye to orders that Defendants knew or should have known

were likely to be diverted.

121. Defendants’ conduct has caused substantial, indeed grievous, injury to the City—

in lives lost to drug overdoses; addictions endured; emergency room visits; the creation of an illicit

drug market and all its concomitant crime and costs; unrealized economic productivity; and broken

lives, families, and homes.

122. The profound injuries to the City are not outweighed by any countervailing benefits

to consumers or competition since there is no benefit from the deceptive marketing of these

narcotic drugs. In light of Defendants’ lack of transparency and public claims of commitment to

exercising due diligence not to fuel abuse and diversion of prescription opioids, consumers could

not reasonably have avoided their injuries.

123. By reason of Defendants’ unlawful acts, the City and its residents have been

damaged and continue to be damaged, in a substantial amount to be determined at trial.

124. The misconduct alleged in this case does not concern a discrete event or discrete

emergency of the sort a municipality would reasonably expect to occur, and is not part of the

normal and expected costs of municipal existence. The City alleges wrongful acts which are

neither discrete nor of the sort a municipality can reasonably expect.

125. The City’s damages include expenditures incurred for special programs over and

above the City’s ordinary municipal services.

46
740 Ill. Comp. Stat. 57/5 (West 1996).

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WHEREFORE, the City respectfully requests that this Court enter an order (a)

awarding judgment in its favor and against Defendants on Count III of the Complaint; (b) enjoining

Defendants from performing or proposing to perform any acts in violation of the MCC § 2-25-

090; (c) compelling Defendants to pay civil penalties up to $10,000 per violation pursuant to § 2-

25-0909(f) for each day the violations occurred; (d) compelling Defendants to disgorge their ill-

gotten profits; ; and (e) awarding the City such other, further, and different relief as this Honorable

Court may deem just.

COUNT FOUR - RECOVERY OF CITY COSTS OF PROVIDING SERVICES


VIOLATIONS OF MCC § 1-20-020
AGAINST ALL DEFENDANTS

126. The City incorporates the allegations within all prior paragraphs within this

Complaint as if fully set forth herein.

127. Section 1-20-020 of the MCC provides, in pertinent part:

Any person who causes the city or its agents to incur costs in order to provide
services reasonably related to such person’s violation of any federal, state or local
law, or such person’s failure to correct conditions which violate any federal, state
or local law when such person was under a legal duty to do so, shall be liable to the
city for those costs. This liability shall be collectible in the same manner as any
other personal liability.

128. At all times relevant to this Complaint, Defendants participated in unlawful acts or

lawful acts in an unlawful manner by, among other unlawful conduct:

a. Violating the CSA, 21 U.S.C. § 801 et seq. and its implementing


regulations by failing to monitor, detect, investigate, refuse to
fill, and report suspicious orders. See 21 U.S.C. § 823; 21 C.F.R.
1301.74;

b. Violating the (“CSA, 21 U.S.C. § 801 et seq. and its


implementing regulations by failing to “design and operate an
adequate system to disclose to the registrant suspicious orders of
controlled substances. See 21 C.F.R. § 1301.74(b);

c. Violating the ICSA, by failing to maintain effective controls


against diversion of controlled substances into other than lawful

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medical, scientific, or industrial channels. See 720 ILCS


570/303;

d. Violating 77 Ill. Adm. Code 3100.310 by failing to “provide


effective controls and procedures to guard against theft and
diversion of controlled substances;”

e. Violating the Illinois Drug Dealer Liability Act (“DDLA”), 740


ILCS 57/5 et seq., by knowingly distributing, or knowingly
participating in the chain of distribution of, an illegal drug that
was actually used by individual drug users in the City and by
knowingly fueling an illegal drug market in the City

f. Violating, or aiding and abetting in the violation of, MCC § 2-


25-090 and the CFDBA by engaging in unfair acts or practices,
including the distribution of dangerous drugs without
maintaining adequate controls to avoid fostering diversion and
without reporting suspicious orders to law enforcement as
required by law; and

g. Violating, or aiding and abetting in the violation of, MCC § 2-


25-090 and the CFDBA by making and disseminating untrue,
false, or misleading statements regarding their compliance with
federal and state statutes and regulations governing reporting of,
and due diligence with respect to, suspicious orders of controlled
substances.

129. Defendants have known, or should have known, at all times relevant to this

Complaint that their violations of local, state and federal law set forth above, and their failure to

correct these violations despite having the legal obligation to do so, would cause the City to incur

costs.

130. The City’s health plans have also paid costs imposed by long-term opioid use,

abuse, and addiction, such as hospitalizations for opioid overdoses, drug treatment for individuals

addicted to opioids, intensive care for infants born addicted to opioids, long-term disability, and

more. The City’s workers’ compensation program and health benefit plans have expended

approximately $2.4 million on addiction treatment services from May 2013 to May 2015 alone.

Claims data indicate that non-retirees covered by the City’s health plans had 835 days of inpatient

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therapy between May 2013 and May 2015, causing these employees to miss work, with

corresponding costs to the City.

131. Defendants’ conduct has also imposed costs on the City beyond those incurred by

its health and workers compensation plans. These include costs of providing emergency services

in response to opioid-related deaths, overdoses, addiction, and other injury; costs of funding

addiction treatment, such as the prescription of additional drugs like buprenorphine/naloxone and

naltrexone; and other costs attendant to the epidemic of opioid use and abuse in the City.

132. The misconduct alleged in this case does not concern a discrete event or discrete

emergency of the sort a municipality would reasonably expect to occur, and is not part of the

normal and expected costs of municipal existence. The City alleges wrongful acts which are

neither discrete nor of the sort a municipality can reasonably expect.

133. The City has incurred expenditures for special programs over and above the City’s

ordinary municipal services.

WHEREFORE, the City respectfully requests that this Court enter an order (a)

awarding judgment in its favor and against Defendants on Count IV of the Complaint; (b)

compelling Defendants to pay the costs the City incurred that were reasonably related to

Defendants’ violations of federal, state, or local law; and, (c) awarding the City such other, further,

and different relief as this Honorable Court may deem just.

COUNT FIVE - DRUG DEALER LIABILITY ACT


VIOLATIONS OF 740 ILCS 57/5 ET SEQ.
AGAINST ALL DEFENDANTS

134. The City incorporates the allegations within all prior paragraphs within this

Complaint as if fully set forth herein.

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135. Illinois’ Drug Dealer Liability Act provides a civil remedy for damages to persons,

including governmental entities and others who pay for drug treatment or employee assistance

programs, in a community injured as a result of illegal drug use. 740 ILCS 57/5.

136. The statute recognizes that “[e]very community in the country is affected by the

marketing and distribution of illegal drugs,” and “[t]he civil justice system can provide an avenue

of compensation for those who have suffered harm as a result of the marketing and distribution of

illegal drugs.” 740 ILCS 57/10.

137. Section 20 of the DDLA provides, in pertinent part, that, “[a] person who

knowingly participates in the illegal drug market within this State is liable for civil damages as

provided in this Act. A person may recover damages under this Act for injury resulting from an

individual's use of an illegal drug.” 740 ILCS 57/20(a).

138. The DDLA provides that a governmental entity that funds a drug treatment program

or employee assistance program for an individual drug user or otherwise expended money on

behalf of an individual drug user, may bring an action for damages caused by an individual’s use

of an illegal drug, as can any person injured as a result of the willful, reckless, or negligent actions

of an individual drug user. 740 ILCS 57/25(a).

139. A person entitled to bring such an action may seek damages from:

(1) A person who knowingly distributed, or knowingly participated in the chain of distribution of,

an illegal drug that was actually used by the individual drug user.

(2) A person who knowingly participated in the illegal drug market if:

(A) the place of illegal drug activity by the individual drug user is within the illegal

drug market target community of the defendant;

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(B) the defendant's participation in the illegal drug market was connected with the

same type of illegal drug used by the individual drug user; and

(C) the defendant participated in the illegal drug market at any time during the

individual drug user's period of illegal drug use.

Under 740 ILCS 57/25:

A person entitled to bring an action under this Section may recover all of the following damages:

(1) economic damages, including, but not limited to, the cost of treatment and rehabilitation,

medical expenses, loss of economic or educational potential, loss of productivity, absenteeism,

support expenses, accidents or injury, and any other pecuniary loss proximately caused by the

illegal drug use; . . .

(3) exemplary damages;

(4) reasonable attorneys' fees;

(5) costs of suit, including, but not limited to, reasonable expenses for expert testimony.

140. 740 ILCS 57/25(c). 740 ILCS 57/15 defines an “[i]llegal drug” as “a drug whose

distribution is a violation of State law.” Defendants’ failure to comply with the CSA and ICSA

make their distribution of opioids within the City illegal.

141. Moreover, it is a violation of state law to, “to acquire or obtain, or attempt to acquire

or obtain, possession of a controlled substance by misrepresentation, fraud, forgery, deception or

subterfuge.” 720 ILCS 570/406.

142. Doctor shopping and pharmacy shopping are likewise violations of state law, 720

ILCS 570/314.5.

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143. Upon information and belief, by failing to detect, report, and reject suspicious

orders reaching the City, Defendants knowingly distributed, or knowingly participated in the chain

of distribution of, an illegal drug that was actually used by individual drug users in the City.

144. Upon information and belief, Defendants knowingly fueled the illegal drug market

in the City at all relevant times.

145. The City funds drug treatment for individuals who are addicted to opioids,

including individuals who, at some point, would have used prescription opioids or heroin illegally.

In addition to the money the City is already spending annually on substance abuse treatment –

including outpatient treatment, medical detoxification services, and residential treatment and

recovery homes – in 2016, the City added annual funding in order to train and provide naloxone

kits to residents. The CDPH is also investing additional resources to support peer health workers

to be trained to disseminate overdose prevention messages, distribute naloxone, and provide

information on treatment resources to fellow community members. In addition, the City has

incurred economic damages, including from loss of loss of productivity, absenteeism, support

expenses, accidents or injury, and other pecuniary loss.

146. As a direct result of Defendants’ actions alleged in this Count, the City has suffered

injury and damages.

147. The misconduct alleged in this case does not concern a discrete event or discrete

emergency of the sort a municipality would reasonably expect to occur, and is not part of the

normal and expected costs of municipal existence. The City alleges wrongful acts which are

neither discrete nor of the sort a municipality can reasonably expect.

148. The City has incurred expenditures for special programs over and above the City’s

ordinary municipal services.

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WHEREFORE, the City respectfully requests that this Court enter an order (a)

awarding judgment in their favor and against Defendants on Count V of the Complaint; (b)

compelling Defendants to pay damages for their violations of the DDLA, including, but not limited

to, the cost of treatment and rehabilitation, medical expenses, loss of economic or educational

potential, loss of productivity, absenteeism, support expenses, accidents or injury, and other

pecuniary loss; (c) compelling Defendants to pay exemplary damages; (d) compelling Defendants

to pay the cost of the suit, including attorneys’ fees and interest; and (d) awarding the City such

other, further, and different relief as this Honorable Court may deem just.

COUNT SIX
UNJUST ENRICHMENT
AGAINST ALL DEFENDANTS

149. The City incorporates the allegations within all prior paragraphs within this

Complaint as if fully set forth herein.

150. As an expected and intended result of their conscious wrongdoing as set forth in

this Complaint, Defendants have profited and benefited from the increase in the distribution and

purchase of opioids within the City.

151. The City has expended substantial amounts of money in an effort to remedy or

mitigate the societal harms caused by Defendants’ conduct.

152. Upon information and belief, these expenditures include the provision of healthcare

services and treatment services to people who use opioids.

153. These expenditures have helped sustain Defendants’ businesses.

154. The City has conferred a benefit upon Defendants by paying for Defendants’

externalities: the cost of the harms caused by Defendants’ improper distribution practices.

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155. The City has also conferred a benefit upon Defendants by paying for purchases by

unauthorized users of prescription opioids from the Defendants’ supply chain for non-medical

purposes.

156. By distributing a large volume of opioids to the City and by acting in concert with

third parties, Defendants have unjustly enriched themselves at the City’s expense. The City has

paid for the cost of Defendants’ externalities and Defendants have benefited from those payments

because they allowed them to continue providing customers with a high volume of opioid

products. Because of their conscious failure to exercise due diligence in preventing diversion,

Defendants obtained enrichment they would not otherwise have obtained. The enrichment was

without justification and the City lacks a remedy provided by law.

157. Defendants have unjustly retained a benefit to the City’s detriment, and these

Defendants’ retention of the benefit violates the fundamental principles of justice, equity, and good

conscience.

WHEREFORE, the City respectfully requests that this Court enter an order (a) awarding

judgment in their favor and against Defendants on Count VI of the Complaint; (b) compelling

Defendants to disgorge all unjust profits to the City; and (c) awarding such other, further, and

different relief as this Honorable Court may deem just.

Dated: March 5, 2018 Respectfully submitted,

EDWARD N. SISKEL
Corporation Counsel, City of Chicago

BY: /s/
Thomas P. McNulty
Fiona A. Burke
City of Chicago, Department of Law
30 N. LaSalle St., Suite 1240
Chicago, IL 60602

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thomas.mcnulty@cityofchicago.org
fiona.burke@cityofchicago.org
Telephone: (312) 744-6939

Linda Singer (pro hac vice to be submitted)


Elizabeth Smith (pro hac vice to be
submitted)
David I. Ackerman (pro hac vice to be
submitted)
MOTLEY RICE LLC
401 9th St. NW, Suite 1001
Washington, DC 20004
jnelson@motleyrice.com
lsinger@motleyrice.com
esmith@motleyrice.com
Telephone: (202) 232-5504

Lisa Saltzburg (pro hac vice to be


submitted)
Jennifer Guy (pro hac vice to be submitted)
Natalie Deyneka (pro hac vice to be
submitted)
MOTLEY RICE LLC
28 Bridgeside Blvd.
Mount Pleasant, SC 29464
lsaltzburg@motleyrice.com
jguy@motleyrice.com
ndeyneka@motleyrice.com
Telephone: (843) 216-9000

Kenneth A. Wexler
Thomas A. Doyle
WEXLER WALLACE LLP
55 W. Monroe Street, Suite 3300
Chicago, IL 60603
kaw@wexlerwallace.com
tad@wexlerwallace.com
Telephone: (312) 346-2222

Attorneys for Plaintiff City of Chicago

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