American Cartel

Prologue

DEA Headquarters, Arlington, Virginia, October 2015

Late on his last day as a DEA agent, Joe Rannazzisi grabbed a mailroom cart and wheeled a few boxes with personal belongings to his midnight blue Ford Excursion in the parking lot outside. He had turned in his badge earlier—a day without a formal goodbye lunch that was now an evening without farewell drinks. Almost everyone had already cleared out of the Drug Enforcement Administration’s sleek office complex in Arlington, Virginia, and the silent corridor was a numbing coda to a career that for all its accolades seemed to have ended in defeat.

It was an unusual feeling for the muscled, tough-talking New Yorker who had spent a storied thirty years bringing down bad guys. Most recently, as head of the DEA’s division responsible for policing the drug industry, Joe and his agents had pursued corrupt doctors, pharmacies, and the nation’s largest drug manufacturers and distribution companies, who were pouring powerful and highly addictive opioids into communities across the country. Righteous investigations, Joe believed. But he and his team had been crushed, their struggle to stop the destructive flow of pain pills snuffed out by a secret, well-financed campaign. It was led by a coalition of drug company executives and lobbyists with close ties to members of Congress and high-ranking officials inside the Department of Justice, including some who had jumped from the DEA to the fat payrolls of the drug companies and the law firms that represented them.

Washington at its worst.

Joe’s friends had known for months that he was being ostracized at the DEA—no longer a welcome crusader—and that he had finally been forced from the job that gave him a daily jolt of purpose. His buddies called him at home, gently probing to see if he was safe. Could someone as obsessive and wounded as Joe transition to retirement? “Don’t worry, I’m not going to off myself,” he told them. Still, some wondered whether they should take his Walther PPK .380, just to be sure. Joe was just a little bemused by the concern. He may have lost his job, but he was no quitter. He had two daughters at home to take care of and, he noted with a smile, a new coonhound mutt from the pound named Banjo.

The fight, he hoped, would go on in some form. Addiction to opioids was an epidemic. People were dying from overdoses by the hundreds of thousands. The companies would eventually choke on their greed. Citizens would eventually demand that their government stop it all. There had to be a reckoning. The shape of that reckoning, however, was not visible to Joe Rannazzisi on the dreary Friday he was finally cut loose from the DEA.

But other forces, just a state away, in the deadlands of the overdose epidemic, were beginning to stir. A few short years, and tens of thousands of deaths later, they would combine to expose the inner workings of the opioid industry and bring the drug companies to account.

In Huntington, West Virginia, Paul T. Farrell Jr., a small-town lawyer, sat at the kitchen table in his parents’ home. A local news story in the Charleston Gazette-Mail was the talk of the town. It reported that several drug companies, including some of the largest in the nation, had sent 780 million prescription pain pills to West Virginia within six years, while 1,728 people in the state overdosed. The shipments were enough to supply 433 pain pills to every man, woman, and child in the state.

Paul’s family had lived in Huntington for generations, Irish Catholic immigrants who arrived in New York’s Hell’s Kitchen during the nineteenth century and made their way to West Virginia. Huntington once prospered from the coal mines. But those boom years were long gone, and Paul’s town had descended into something resembling a zombie movie—shells of human beings wandering downtown, empty syringes and needles in public parks, parentless children, an entire generation raised in foster homes or by grandparents.

The 2016 newspaper story led to the shocking realization that the blame didn’t lie with Mexican drug cartels or any of the usual suspects, but instead with American companies, some of them household names, others obscure distribution outfits, all of them profiting from the misery on the streets outside.

These corporations were earning unprecedented profits in the billions of dollars while, to Paul’s mind, his neighbors were being exterminated by opioids such as OxyContin, Percocet, and Vicodin. The disclosures in the story infuriated Paul’s mother, Charlene. She and her family had seen too many deaths, gone to too many funerals. “Someone should do something,” she said as her husband stood over the stove, frying up bacon for the Sunday morning family breakfast.

Paul’s younger brother, Patrick, a fighter pilot during the Iraq War, chimed in. “Isn’t that what you do for a living?” he asked Paul.

Paul’s journey into the corrupt labyrinth of America’s opioid industry began with that Sunday morning challenge. Soon he would collaborate with some of the most colorful and high-profile plaintiffs’ lawyers in the nation. Along the way they would call as a star witness a former DEA agent named Joe Rannazzisi.

By 2018, this sprawling coalition of lawyers and investigators had launched the largest and most complex civil litigation in American history on behalf of thousands of counties, cities, and Native American tribes. The coalition won access to a confidential pill-tracking database and millions of internal corporate emails and memos during courtroom combat with legions of white-shoe law firms defending the opioid industry.

One breathtaking disclosure after another—from emails that mocked addicts to sales reports chronicling the rise of pill mills—showed the indifference of big business to the epidemic’s toll. The revelations open a horrifying panorama on corporate greed and political cowardice. They also highlight the efforts of community activists, DEA agents, and a coalition of lawyers to stop the human carnage.

The records include once-confidential communications inside corporate boardrooms, DEA headquarters, and the marbled corridors of Capitol Hill. The documents would eventually find their way into thousands of lawsuits filed in federal courthouses across the country and form the basis of a legal battle without precedent in American jurisprudence—a bruising, complex, and unfinished quest for justice.

A modern-day opium war has been fought on American soil over the last twenty years and it has claimed five hundred thousand lives—more than the U.S. military lost during World War II. The death toll from overdoses continues to rise as the opioid epidemic takes new forms.

Over time, it became apparent to Paul that the companies that comprised the opioid industry were not behaving like any corporations he had ever seen.

They aren’t, Joe would say one day. They are an American cartel.

Chapter 1

Joe Rann

DEA Headquarters, 2006

Joseph T. Rannazzisi was furious, his anger teetering toward rage as he stepped into a DEA conference room to meet with several executives from the McKesson Corporation, the largest drug distribution company in America. For months, he and his team of investigators on the sixth floor of the agency’s headquarters in Arlington had been demanding that the company follow the law. A bear of a man at six foot two and 205 pounds, Joe quickly commanded attention. It was January 3, 2006, and time for a come-to-Jesus.

Headquartered in San Francisco, with seventy-six thousand employees around the world, McKesson had $93 billion in annual revenues, making it the eighteenth-largest corporation in the country. The firm had been shipping copious amounts of hydrocodone—a highly addictive opioid laced into the popular pill commonly known as Vicodin—to just six pharmacies in Tampa, Florida. Between October 10 and October 21, 2005, McKesson distributed more than two million doses of hydrocodone to those drugstore clients. The pharmacies then sold the pills over the internet to just about anyone with a credit card.

As the chief of the DEA’s Office of Diversion Control, the unit responsible for policing the pharmaceutical industry, Joe saw prescription opioids as a threat far more deadly than the crack and meth epidemics of the 1980s and ’90s. Euphoria-inducing, heroin-like pain pills such as Vicodin and OxyContin and their generic cousins, hydrocodone and oxycodone, were killing ten to fifteen thousand people a year—almost as many as the U.S. military lost in Vietnam in 1968, the bloodiest year of the war. Joe’s job was to make sure prescription drugs were not diverted from the legitimate supply chain to the black market.

Joe couldn’t blame transnational cartels for smuggling the drugs into the country, like he did when he was a special agent based in Detroit battling heroin, cocaine, and crystal meth. He didn’t hold the Playboy Gangster Crips or the Black Mafia Family or MS-13 responsible for selling them on the street. He faced a far more formidable foe: the executives who ran some of the nation’s most respected Fortune 500 corporations—the drug manufacturers, the pharmacies, and the little-known distributors that serve as the middlemen in the supply chain of prescription pain pills. Three distributors—companies that purchase the pills from manufacturers wholesale and ship them to their pharmacy clients on the retail level—transport nearly 95 percent of all pharmaceuticals in the United States: Cardinal Health, Inc., AmerisourceBergen Corp., and McKesson, the last the focus of Joe’s fury on this first Tuesday of 2006.

Joe had summoned the executives to Arlington to make good on a threat. The shipments to Tampa were clearly suspicious. Why would six small drugstores need two million tablets of hydrocodone over eleven days? The DEA had already warned McKesson that the outlets were pushing pain pills to the internet; the agency had shown McKesson’s executives paperwork cataloging the vast quantities of pills the stores had been requesting and demanded that the corporation stop filling the orders. Under the law—the Controlled Substances Act of 1970—Joe told the executives that it was up to them to figure out why the stores wanted so many doses. If McKesson didn’t get a plausible explanation, the company was obligated to stop the shipments and report the pharmacies to the DEA. Instead, McKesson had been shipping the pills to its drugstore customers without saying a word—a practice it continued after the DEA warnings.

Joe and his team sat down at the conference table across from three McKesson executives and their lawyer from a Washington law firm, Hyman, Phelps & McNamara, which specialized in representing drug industry clients. One of the executives was McKesson’s leader of Six Sigma, an elite business training program. Another held dual undergraduate degrees in biology and pre-med. The third held an MBA from Carnegie Mellon. The lawyer from Hyman had worked as an attorney in Joe’s division at the DEA before going into private practice to represent drug industry clients.

The McKesson executives worked for John H. Hammergren. At forty-seven, boyish and bespectacled, Hammergren was a quiet yet intensely ambitious businessman, the son of a traveling salesman, who rose through the ranks of McKesson to become one of the highest-compensated corporate executives in the United States. He owned a 23,000-square-foot mansion in Orinda, California, nestled in the hills east of Berkeley. The 3,100-square-foot Tudor-style carriage house on his nine-acre estate was filled with high-end sports cars, including a pair of Ferraris and a rare Ford GT40. He also owned a 3,456-square-foot summer home near Lake Winnipesaukee, not far from the White Mountains of New Hampshire. McKesson’s shareholders covered his $66,000 round-trip flights between California and New Hampshire aboard the company’s Dassault Falcon 900 jet.

Hammergren was a quarry far different from the targets Joe pursued in the early years of his career. Joe realized that his life was far less complicated when he was a special agent in Detroit. He missed the camaraderie of working the streets, the informants, the undercover buys, the all-night surveillance in “beater” cars that blended into the background. Street drug cases had a rhythm. Leads, interviews, wiretaps, controlled buys, court appearances, and if it all went well, convictions. There were good guys and bad guys, he believed, and not much in between.

A life in law enforcement was not an unexpected choice for Joe, but it strained his relationship with his father, who had hoped his son would take a different career path. Joe worked his way through college and had a pharmacy degree from Butler University in Indiana, and his father anticipated that would be a stepping-stone to medical school. Stephen Rannazzisi was a high school chemistry and biology teacher on Long Island, and he wanted Joe to rise above the family’s modest Victorian home in a working-class Freeport neighborhood on Long Island’s unfashionable South Shore.

Joe loved Freeport. During the 1960s, he lived an idyllic Wonder Years kind of life there, a tableau of minibikes and slot cars, baseball cards and go-carts. Cops and firefighters lived on every block, and Joe wanted to be one of them. They had a sense of purpose, and they knew how to have fun, drinking beers in the blue-collar bars and catching bands at the raucous Oak Beach Inn near Jones Beach.

Joe thought that med school was for the kids who grew up on the North Shore, the sons and daughters of doctors and lawyers, Wall Street traders and hedge fund managers. His father couldn’t understand why Joe studied pharmacology only to become a cop. But Joe longed for a job that would combine his fascination with science and law enforcement.

While attending Butler, Joe volunteered as a firefighter. He basked in the brotherhood. To stay in fighting form, he liked to box and jogged more than forty miles a week. A rock and roll fan, he played guitar and worshipped Neil Young. Weekends, he went to downtown cop bars, hanging with a law enforcement crowd. “Joe Rann,” as everyone called him, had found his second home.

His life choices bewildered his father. “Why are you spending all of this money to go to pharmacy school just to be a cop?” his father asked during a phone call in Joe’s senior year, his voice a mixture of anger and disappointment. “Why don’t you go to med school? Why are you wasting your time?”

“Well, that’s what I want to be,” Joe said. “It’s a noble profession and I can’t see myself doing pharmacy or doing medicine the rest of my life. I just can’t see it.”

What about a master’s degree? his father asked. What about a research position?

“Dad, I’m tired,” he replied. “I gotta go to sleep.”

The line went dead. His father had hung up. It would be a year before they spoke again.

After graduating, Joe joined the DEA in 1986 as a diversion investigator before becoming a special agent two years later in the Indianapolis field office and then in Detroit. With his educational background, passion for the work, and propensity to put in twelve- to fourteen-hour days, he was quickly seen as an agent with a big future. He won a promotion to supervise a task force of federal and local officers to solve drug-related murders, nicknamed Redrum, “murder” spelled backwards. He then became coordinator of the clandestine lab group in Detroit, knocking over meth labs in hazmat suits. In his spare time, he attended the Detroit College of Law at Michigan State University, adding a law degree to his qualifications in 1999.

By 2006, at age forty-five, Joe had secured a post at DEA headquarters as head of the Office of Diversion Control, where he managed a staff of 320. The office had long been derided as a backwater inside the agency, pursuing prescription pill cases—ridiculed as “kiddie dope” prosecutions—not prestige takedowns of the big drug rings that peddled cocaine and heroin. But now kiddie dope was killing tens of thousands of Americans, as much or more each year than heroin or cocaine.

The carnage had to stop. DEA leadership expected Joe’s division to lead the charge. He began by targeting unscrupulous doctors and small-town pharmacies illegally selling massive quantities of opioids on the internet. But he soon realized that he needed to move higher up the chain and target the drug distribution companies to choke off the supply. Less than a year into his new job, Joe and his colleagues launched the “Distributor Initiative,” shifting the DEA’s focus to some of the biggest corporations in America, companies such as McKesson.

Joe didn’t care that the McKesson executives sitting across from him at the conference table had highly specialized training in the pharmaceutical world. To him, they were little more than drug dealers dressed in suits.

“How did this happen?” Joe erupted. “All of these kids are going on the internet and collecting hydrocodone like baseball cards.”

The executives seemed taken aback, but they shouldn’t have been. For months, Joe and his team had been warning McKesson and dozens of other drug companies that they were violating the law and in danger of losing their DEA registrations to sell controlled substances like hydrocodone. He had sent every drug company in the nation letters outlining their responsibilities to report unusually large orders of drugs from their customers and prevent them from being diverted to the streets. If a distributor receives an order from a pharmacy that is unusually large, unusually frequent, or deviates substantially from previous orders, the distributor is required under federal law to “maintain effective controls” to prevent the drugs from reaching the black market and to notify the DEA, he told them. The same rules apply to drug manufacturers who receive suspicious orders from drug distribution companies like McKesson.

Joe and his team had briefed seventy-six companies in total, warning them that they were breaking the law by funneling huge amounts of pain pills to online pharmacies that were nothing more than fronts for corrupt doctors and drug dealers.