15 October 2017, WP: The drug industry's triumph over the DEA
Drug industry hired dozens of officials from the DEA as the agency tried to curb opioid abuse
By Scott Higham, Lenny Bernstein, Steven Rich and Alice Crites
December 22, 2016
Pharmaceutical companies that manufacture or distribute highly addictive pain pills have hired dozens of officials from the top levels of the Drug Enforcement Administration during the past decade, according to a Washington Post investigation.
The hires came after the DEA launched an aggressive campaign to curb a rising opioid epidemic that has resulted in thousands of overdose deaths each year. In 2005, the DEA began to crack down on companies that were distributing inordinate numbers of pills such as oxycodone to pain-management clinics and pharmacies around the country.
Since then, the pharmaceutical companies and law firms that represent them have hired at least 42 officials from the DEA -- 31 of them directly from the division responsible for regulating the industry, according to work histories compiled by The Post and interviews with current and former agency officials.
The number of hires has prompted some current and former government officials to ask whether the companies raided the division to hire away DEA officials who were architects of the agency's enforcement campaign or were most responsible for enforcing the laws the firms were accused of violating.
"The number of employees recruited from that division points to a deliberate strategy by the pharmaceutical industry to hire people who are the biggest headaches for them," said John Carnevale, who was director of planning for the White House's Office of National Drug Control Policy and now runs a consulting firm. "These people understand how DEA operates, the culture around diversion and DEA's goals, and they can advise their clients how to stay within the guidelines."
The DEA's Diversion Control Division, tasked with preventing prescription drugs from reaching the black market, wields enormous power within the pharmaceutical world. The small division, with about 300 employees at its Arlington, Va., headquarters, can suspend or revoke the licenses of doctors, pharmacies and pharmaceutical companies that fail to comply with federal law.
From 2000 to 2015, nearly 180,000 people died of overdoses from prescription painkillers in what public health authorities have called an epidemic. States including Massachusetts, and most recently Virginia, have declared public health emergencies as the number of deaths has escalated.
It is not unusual for corporations to hire federal employees directly away from the government. Their expertise and inside knowledge can be invaluable, but there are laws and regulations to slow the "revolving door" in Washington and prevent potential conflicts of interest.
The restrictions include a lifetime ban on participating "personally and substantially" on a "particular matter" that the official had handled while working for the federal government. There also is a two-year ban on switching sides on a wider array of matters that were in the employee's official purview. State bar associations impose additional post-employment restrictions for government lawyers.
An industry spokesman said former DEA diversion officials are hired for their expertise.
"Our industry is highly specialized, and the function of drug diversion experts even more so," said John M. Gray, president and chief executive of the Healthcare Distribution Alliance, which represents drug distributors. "As such, for these individuals who want to continue to grow in their areas of expertise, it is logical for them to pursue government and industry roles that are closely aligned with their professional experience."
While The Post did not find evidence that the officials violated conflict-of-interest regulations, the number of hires from one key division shows how an industry can potentially blunt a government agency's aggressive attempts at enforcement.
The DEA diversion officials who have gone to the industry since 2005 include two executive assistants who managed day-to-day operations; the deputy director of the division; the deputy chief of operations; two chiefs of policy; a deputy chief of policy; the chief of investigations; and two associate chief counsels in charge of legal affairs and enforcement actions against pharmaceutical companies.
"It's obvious that they targeted the office," said Joseph T. Rannazzisi, who ran the diversion division for a decade before he was removed from his position and retired in 2015. "If you want to understand how we were doing our investigations, the best way to do it is to take our people who are doing the investigations and put them in place in your company. It's not difficult to understand why you would take these guys. They know the law."
Most of the DEA officials went to work for the pharmaceutical industry and law firms within weeks of leaving the agency. Among the 31 DEA diversion employees, 22 began their new jobs within weeks of leaving the DEA, according to work histories the officials posted on LinkedIn, as well as news releases and biographies published by the companies and law firms that hired them.
The Post found that several high-ranking DEA supervisors from outside the diversion division also took top jobs with industry: four special agents in charge and three assistant special agents in charge of field operations in some of the nation's largest cities, including New York, Washington and Atlanta.
In responses to questions from The Post, the DEA said in a statement that former employees must follow the law and ethics regulations in taking jobs in the private sector.
"Many who serve in government possess expert knowledge in a wide variety of fields. It is not uncommon for former government officials to use or rely on such expertise when they transfer to the private sector following their public sector service," DEA spokesman Rusty Payne said in the statement. "Employees who leave DEA and other government agencies for private sector work are expected to abide by the applicable laws and ethics rules that govern their private sector activities."
At least five of the 31 DEA employees were hired by McKesson -- the nation's largest drug distributor and fifth-largest corporation. McKesson has been the subject of two publicly disclosed DEA enforcement actions, which resulted in $163 million in fines after allegations that the firm failed to report hundreds of suspicious orders for millions of pain pills from Internet pharmacies and others.
"McKesson has put significant resources towards building a best-in-class controlled substance monitoring program to help identify suspicious orders and prevent prescription drug diversion in the supply chain," the company said in a statement. "It is only natural that this team is comprised of a broad range of experts, including individuals who have spent time at DEA, as they bring deep knowledge of effective strategies to prevent diversion. Our team is deeply passionate about curbing the opioid epidemic in our country."
The Post contacted a dozen former DEA officials who went to work for the drug industry, but few agreed to be interviewed. Those who did said they followed federal ethics guidelines designed to prevent potential conflicts of interest for officials who switch from government to the industries they once regulated.
"I don't feel like I took off the white hat and put the black hat on," said Larry P. Cote, who left as the associate chief counsel for the DEA's diversion division in May 2012 to become a partner at the law firm Quarles & Brady. "That's really not what's going on. It's trying to get the best people in place to make sure that companies are staying compliant. And frankly, that benefits the DEA as much as it benefits the companies."
At Quarles & Brady, Cote serves as co-director of the firm's DEA Compliance and Litigation Practice Group and provides legal advice to some of the nation's largest pharmaceutical companies.
Cote said he obtained an ethics opinion from the DEA that advised him on which cases he could and could not handle in the private sector.
Ethics experts said revolving-door issues have been a long-standing concern across the government, with some of the most notable cases coming from the Defense Department. President-elect Donald Trump recently criticized the revolving door at the Pentagon, saying high-ranking officials "should never be allowed to go work" for companies in the defense industry.
The ethics experts said the number of officials switching sides at the DEA raises serious questions about whether the ability of the diversion division to carry out its mission has been compromised by the pharmaceutical industry.
"The findings that so many DEA officials have switched from their roles preventing, detecting and investigating illegal drug use to working for those involved in the supply chain is disturbing," said Scott H. Amey, general counsel for the Project on Government Oversight, a watchdog group in Washington. "It's also another reminder of how well the revolving door is greased and how the revolving door can negatively impact government operations. It's not a surprise that DEA isn't as vigilant as it once was when so many ex-feds are working for the companies that they once investigated."
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In 2004, DEA officials became alarmed by the increasing number of overdose deaths. The following year, the agency's diversion division launched an initiative designed to hold distributors of narcotics accountable for the hundreds of millions of pills that were being diverted to the black market.
The DEA pursued cases against some of the largest opioid distributors in the country, including McKesson, Cardinal Health and AmerisourceBergen, as well as CVS and Walgreens, which distribute opioids to their own pharmacies. In general, the companies did not admit wrongdoing and said they were taking steps to address illegal diversion.
In 2008, McKesson settled one of those cases, paying a $13 million fine without admitting liability. That same the year, the DEA filed a case against Cardinal. That company also settled, paying a $34 million fine. Cardinal promised to improve monitoring of its drug shipments.
The DEA's initiative was sharply curtailed in the face of pressure from the pharmaceutical industry beginning in 2013, according to a Post investigation published in October. In fiscal 2011, civil case filings against distributors, manufacturers, pharmacies and doctors had reached 131. By 2014, they had fallen to 40.
The slowdown came after DEA lawyers began to require a higher standard of proof before cases could move forward. Supervisors in the field said they were frustrated that their cases were being stalled at DEA headquarters. Top DEA and Justice Department officials have declined to discuss the reasons behind the slowdown.
Government ethics experts said regulators often join the industries they oversee, lured by substantially higher salaries.
"That high rate of turnover makes you really wonder whether those officials were acting in the interests of the DEA rather than the companies they were regulating," said Craig Holman, an expert on revolving-door issues for Public Citizen, a government watchdog group in Washington. "Just by seeing your colleagues going that way, that tells you that you can shape your future employment prospects if you behave accordingly."
Once senior employees leave for jobs in the industry, they are in positions to help pharmaceutical companies comply with the complex laws and regulations that govern controlled substances. But ethics experts said they also can exploit weaknesses they are aware of within the DEA.
One of the key players in the DEA's diversion initiative went to work for a law firm that represents the companies he used to regulate.
D. Linden Barber, [1] who served as associate chief counsel from 2006 to 2010, guided cases against some of the largest pharmaceutical companies in the country.
In 2008, Barber's office filed its first diversion case against Cardinal, accusing it of failing to properly monitor shipments of painkillers. Barber conducted extensive meetings with DEA attorneys assigned to the case and was deeply involved in crafting a "memorandum of agreement" to settle the allegations against Cardinal, according to a DEA document. The case resulted in the $34 million settlement with Cardinal.
In September 2011, Barber, who had been serving as the DEA's regional diversion counsel in the Midwest, left for the law firm Quarles & Brady. His colleague, Larry Cote, had taken over as associate chief counsel at DEA headquarters.
The next month, the DEA served warrants seeking records from Cardinal as part of a second case against the company.
Quarles & Brady's clients include Cardinal.
Seven months later, in May 2012, Cote, who helped to coordinate the second Cardinal case while at the DEA, joined Barber at Quarles & Brady, becoming co-director of compliance and litigation. Cote had appeared in court on behalf of the DEA in the case against Cardinal three months earlier, records show.
Barber said he sought advice from Roberto D. DiBella, the DEA's ethics lawyer, before and after leaving the agency. Barber declined to say whether he asked DiBella for advice about representing Cardinal, but he said his representation of his clients complied with ethics laws.
"The rules governing my work as an attorney make it inappropriate for me to discuss work I did for DEA and any other clients," he said in a statement to The Post. "However, the records of DEA will show that I followed the rules. I never worked on a matter for DEA and then worked on the same matter for the other party. I am proud of the work I did for DEA and of the work I do in private practice for clients who want to work with DEA to stop the abuse of prescription drugs."
The DEA provided The Post with a copy of DiBella's ethics opinion. It shows that Barber asked for guidance on his representation of Cardinal. DiBella told him that he was banned for life from representing Cardinal on any issues connected to the 2008 memorandum of agreement (MOA).
"Your representation of Cardinal to address an alleged violation of the MOA would on its face appear that you switched sides on a matter that you participated in as a DEA employee," DiBella wrote.
DiBella did not respond to interview requests. The DEA said the ethics opinion was reviewed by DiBella's supervisor to double-check the advice Barber was given.
Cote said he, too, asked DiBella for an ethics opinion before leaving the agency in 2012.
"I provided him with a fairly comprehensive list of the cases that I worked on," he said in a recent interview.
The DEA provided a copy of the opinion to The Post. It noted that Cote had participated "personally and substantially" in specific matters relating to at least 10 companies while he was at the DEA. It said he was banned for life from communicating with or appearing before the DEA or any other federal agency on behalf of those companies on the specific matters he handled.
The companies include some of the largest drug distributors and retailers in the nation, including McKesson, AmerisourceBergen, CVS, Walgreens, Rite Aid and Walmart.
Cote said he has followed the opinion, which also singled out his work for the DEA on the Cardinal case.
"I did not and really have not represented Cardinal since I left DEA," Cote said. "Our firm does do work for Cardinal, but I've been really walled off from it because some of these matters are still pending and I just didn't want to go there."
Josephine Peterson contributed to this report. She is attached to The Post's investigative unit through a program at American University.
[1] https://www.washingtonpost.com/graphics/2017/investigations/dea-drug-industry-congress/