Indictment: Former pharmaceutical industry CEO ignored red flags as opioid crisis raged

Pharmaceutical industry executives were hit Tuesday with criminal charges stemming from the opioid crisis.

Laurence Doud III, the 75-year-old retired CEO of the Rochester Drug Co-Operative, surrendered to authorities in New York City and is awaiting arraignment on two counts of conspiracy related to drug trafficking. His lawyer said he would fight the charges.

Doud, who retired in 2017, alleged in a lawsuit last year that Rochester Drug Co-Operative tried using him as a scapegoat for its legal and regulatory troubles.

If convicted, Doud faces a mandatory minimum sentence of 10 years in prison, U.S. Attorney Geoffrey Berman said.

Rochester Drug Co-Operative and William Pietruszewski, the company’s former chief compliance officer, were also charged.

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Doud’s criminal charges added a new twist to efforts to hold companies and people responsible for the opioid crisis. Other companies and executives have faced lawsuits from a growing list of state and local governments looking to hold them accountable for an epidemic that led to more than 70,000 deaths in 2017.

"This prosecution is the first of its kind: Executives of a pharmaceutical distributor and the distributor itself have been charged with drug trafficking, trafficking the same drugs that are fueling the opioid epidemic that is ravaging this country," Geoffrey S. Berman, U.S. attorney for the Southern District of New York, told NBC News. "Our office will do everything in its power to combat this epidemic, from street-level dealers to the executives who illegally distribute drugs from their boardrooms.”

An indictment unsealed Tuesday alleged Dowd operated in the fringes of the drug business, obliterating red flags to turn his small New York firm into a supplier of last resort for independent pharmacies whose dubious practices got them cut off by other distributors.

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Doud encouraged his sales force to sign up new customers with no questions asked, picking up competitors’ rejects as he boasted that his company was “the knight in shining armor” for independent pharmacies, the indictment said.

When Rochester’s largest customer went from buying 70,000 units of oxycodone per month in October 2012 to more than 200,000 units per month a year later, Doud had its back — overruling his own compliance officers and ordering that the pills keep flowing because it was a “big account,” the indictment said.

The Associated Press contributed to this report.