• Congress investigating local drug distributor
The rise of the drug distributor is a tale of small company that was started more than 50 years ago from nothing to a medium-sized Midwest distributor that reached $165 million in revenue in 2015 before it was sued for millions of dollars by several states and communities for its alleged responsibility in driving the opioid addiction crisis.
Today, Miami-Luken’s attorney told the Dayton Daily News the company is winding down operations in Springboro after facing mounting lawsuits, the DEA seeking to take away its licenses and settling a lawsuit with West Virginia for $2.5 million. A lawyer in October told members of Congress the company was closed.
It’s not clear what the company closing means for the states and communities that are suing Miami-Luken.
Outgoing Ohio Attorney General Mike DeWine is among those to file suit against Miami-Luken. Dan Tierney, spokesman for the office of the Ohio Attorney General, said the litigation “remains active and ongoing” but because of an order from the judge, he can’t comment on any potential settlement discussions.
Miami-Luken was started in Dayton in 1962 by Robert Mastandrea, an Italian immigrant who came to the U.S. when he was 13. He was still involved as a consultant for the company at 96 years old, and when he died in 2010. Before he went to the hospital for the last time, he had spent the day at his desk at Miami-Luken doing what he had done for 48 years, according to a company history.
The chairman of the company until its closing was his son, Joseph Mastandrea, who is a physician and previously said he had helped out at the family business from a young age.
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In 1991, it built its Springboro warehouse and corporate headquarters. It had listed a subsidiary that included a group of small pharmacies, REM Corporation. A message was left with REM about whether it was still tied to Miami-Luken and if the closing impacts those pharmacies mostly located in small Ohio and West Virginia towns.
Miami-Luken had operated for years without much name recognition but in recent years it became notorious for its distribution operation.
Its shipments were featured in a Pulitzer Prize-winning investigation by the Charleston Gazette-Mail. It was called out by a Washington Post investigation into how drugs end up in the hands of illegal drug users, saying senior company officials ignored concerns about a southern Ohio pain clinic, Unique Pain Management, in Wheelersburg. The clinic's physicians later pleaded guilty to federal crimes.
Mastandrea answered “yes” when asked at a May hearing before a congressional committee if he thought actions distributors took contributed to the opioid crisis. Prior to 2013, the company made “rudimentary efforts” to monitor suspicious orders and decisions on what constituted a suspicious order were made based on “one’s feeling,” Mastandrea said.
Mastandrea pointed some blame toward management that since left the company.
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“How in God’s name we participated in supplying this individual product when, in hindsight, clearly this was drug diversion. A picture of this pharmacy would be next to the definition in the dictionary. No one was paying attention. It’s an abomination,” Mastandrea had said, in reference to one of the over-supplied pharmacies.
The CEO during the years of suspicious shipments was Anthony Rattini, who became president and CEO in 2008 and was removed amid DEA inquiries. Mastandrea told the committee that “it was apparent to us that we needed someone more capable in that position” and he was replaced by the board by new president and CEO Michael Faul.
The Post reported that a senior pharmaceutical buyer told investigators in 2015 that she eventually “stopped talking to (Rattini) about her concerns because he wasn’t doing anything about it. It was as if it was falling on deaf ears. Tony never stopped an order.”
The Dayton Daily News has been unable to reach Rattini for comment.
Since 2014, Mastandrea said the company reduced the sale of oxycodone by 61 percent and hydrocodone by 50 percent. Miami-Luken did not implement a functional suspicious order monitoring system until 2015.
Miami-Luken provided DEA with more than 35 suspicious order reports from 2014 to 2017 and also stopped selling controlled substances to at least 20 pharmacies.
One case was used by the U.S. Energy and Commerce Committee in its final report to Congress to illustrate the problem of suspicious shipments in prior years.
As early as 2011, Miami-Luken was aware that Westside Pharmacy in Oceana, West Virginia, (population 1,394) was filling prescriptions for doctors located hours away, and that a large number of prescriptions for hydrocodone and oxycodone were paid for with cash. Yet, the committee stated the company continued to supply the pharmacy with more than 3.36 million opioids over the next four years.
Between 2009 and 2015, Miami-Luken shipped more than 4.38 million doses of hydrocodone and oxycodone to Westside Pharmacy.
In November 2015, Miami-Luken approved an increase to Westside Pharmacy’s oxycodone threshold despite being aware of the pharmacy’s prior deceit and red flags related to its dispensing practices and prescribing physicians.
“Man-made” public health crisis
Mostly driven by opioids, U.S. overdose deaths more than tripled from 1999 to 2015 from 16,849 to 52,404, and increased by 11.4 percent in the past year alone to reach the highest level ever recorded, according to the Congressional report.
The opioid epidemic is a “man-made plague” that’s 20 years in the making, according to a Dec. 19 ruling from U.S. District Court Judge Dan Polster, who is overseeing the massive collection of opioid lawsuits against physicians, distributors and drug makers.
"The pain, death, and heartache it has wrought cannot be overstated," Polster wrote. "As this Court has previously stated, it is hard to find anyone in Ohio who does not have a family member, a friend, a parent of a friend, or a child of a friend who has not been affected."
It, however, has yet to be decided whether the companies being sued have committed the allegations that they bear part of the responsibility, either through their actions or inactions, Polster said, in a ruling allowing the case to continue to move forward.
One of the defendants in pending lawsuits in his court is Miami-Luken. Local and state governments, Native American tribes and health networks are among the plaintiffs who are suing opioid makers, distributors and physicians.
The plaintiffs in the landmark group of suits have joined together as the National Prescription Opiate Litigation, which said in a statement “We are aware of Miami-Luken going out of business and we are seeking their cooperation on what happened in the past that has led to this current public health epidemic.”
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Before the lawsuits started to mount, West Virginia's Attorney General settled in 2016 with Miami-Luken.
Miami-Luken did not admit wrongdoing but agreed to pay $2 million up front and $500,000 in installment payments. The company had a net revenue of $165 million in fiscal year 2015.
The distributor's insurance also didn't have to cover costs that came from fighting a federal investigation, an Ohio judge ruled this summer.
Distributors, such as Miami-Luken, are middlemen and have pointed out that they are filling orders and aren’t the ones abusing, over-prescribing or marketing drugs.
But the firms, licensed by the DEA, also have a legal obligation to report when they get suspicious orders. A scathing report released from the U.S. Energy and Commerce Committee said they failed at this duty and the DEA failed to enforce compliance.
Dennis Cauchon, founder of Harm Reduction Ohio, which has programs to reduce the harmful consequences of drug use, said while there are different view points within his organization, he said in general he sees it as unfair to blame the distributors when they are middlemen.
“It’s like blaming the postal service for fentanyl,” he said, adding that he is not familiar with the specifics of Miami-Luken’s case.
Miami-Luken isn’t the only one facing legal challenges. Three large pharmaceutical distributors are also facing lawsuits. Many of the pharmacies investigated for large shipments have since shut down and over-prescribers have lost licenses or been convicted of crimes.
“There are many reasons for this crisis and everyone has a responsibility to be part of the solution, including manufacturers and distributors,” Ohio Senator Sherrod Brown said in a statement. “They must work with the federal, state and local governments to help stem the tide of addiction to prescription painkillers.”
West Virginia has the highest drug overdose rate in the country, which the committee said means the distributors should have been particularly attuned to any red flags when conducting due diligence on pharmacies in the state.
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Distributors can get data from pharmacies such as the total volume of controlled substances and can also see if high numbers of customers are paying cash, which is a sign of drugs being bought for illicit use.
The DEA also failed to enforce, the report states.
Years later when the DEA filed an order against Miami-Luken in 2015, it cited the company’s high controlled substance shipments to several West Virginia pharmacies, including Tug Valley. Yet, the committee states that if the controlled substance shipments to Tug Valley Pharmacy were concerning to the DEA, the agency had information about the pharmacy’s suspect dispensing practices since 2008.
1962: Company founded by Robert Mastandrea as Miami Valley Wholesale Drug Co.
1971: Company acquired A.G. Luken Drug Co. and renamed Miami-Luken
1991: New warehouse and corporate headquarters built in Springboro
2010: Founder Rober Mastandrea passed away
Feb. 2016: Miami-Luken settled for $2.5 million with West Virginia’s attorney general
Sept. 2017: Congressional committee opens investigation into Miami-Luken
May 2018: Chairman Joseph Mastandrea testifies before congressional committee
June 2018: Miami-Luken starts running down its inventory
October 2018: Miami-Luken closes its doors