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The Big 3 Are Fueling the Opioid Epidemic. Now They Need a Watchdog.

October 20, 2017, 2:59 PM UTC

The startling Washington Post60 Minutes investigation into the hobbling of drug enforcement activities against opioids has sent shockwaves through Washington. President Trump’s nominee for drug czar has withdrawn his name for consideration, while politicians on both sides of the aisle have begun to ask tough questions about the federal government’s role in the opioid epidemic.

But while outrage ferments across the country, there’s one arena where a deafening silence remains: the nation’s largest wholesale drug distributors.

McKesson (MCK), Cardinal Health (CAH), and Amerisource Bergen (ABC)—collectively known as the “Big Three”—distribute a vast majority of the country’s prescription opioids. And the investigation found that they’ve spent millions of dollars on well-connected lobbyists and campaign contributions to get Congress to look the other way while they poured hundreds of millions of opioids into our communities, fueling the rampant epidemic of opioid addiction. They successfully stymied the Drug Enforcement Administration’s anti-diversion enforcement efforts and saddled the government’s ability to combat suspicious opioid orders.

Not only was this a deadly abuse of corporate power, it was duplicitous. After a decade of repeated enforcement actions by the DEA resulting in hundreds of millions of dollars in fines for failures to report suspicious orders of prescription opioids, the Big Three knew they needed to shift public perception. So the companies made public promises to strengthen their anti-diversion programs and compliance practices to avoid further scrutiny. However, behind the scenes, they continued to divert critical resources to circumvent the existing regulatory system.

Viewed in this light, the industry’s much-touted recruitment of former DEA employees appears more an exercise in gaming the system than developing best-in-class compliance practices.

Rather than help stem the overwhelming tide of prescription opioids into our communities, the Big Three let the pills pour in, contributing to the mounting death toll we now see in every corner of our country. This strategy has created material financial and reputational risks for the companies, which is cause for concern for employees and shareholders alike.

Sunday’s revelations shift the debate over the companies’ failings entirely—from questions of negligence or ignorance to something potentially far more sinister and insidious: the ruthless pursuit of profits at any cost.

In the wake of millions of lives lost, it has never been clearer that we need to hold these companies accountable. Washington may be taking notice, but government action is only part of the battle. Corporate governance matters, too.

That’s why the International Brotherhood of Teamsters is leading a growing investor effort calling for crucial changes to corporate governance and compensation practices at McKesson, AmerisourceBergen, and Cardinal Health. The Teamsters, long-term shareholders in each company, have called on the boards of the Big Three to set up an independent committee to investigate their company’s opioid sales practices, sales incentives, and compliance programs. And we’ve called for an overhaul of the companies’ governance and executive pay structures so as to improve oversight and establish accountability in the C-suite, such as appointing an independent chair, clawing back CEO compensation, and zeroing out bonuses in the event of compliance failures. At Cardinal, for example, even as the company was paying out tens of millions in regulatory claims, its board and CEO authorized above-target bonuses for the chief legal and compliance officer from 2010 to 2016—a shocking disconnect between the company’s supposed commitment to compliance and the reality on the ground.

American families that have lost loved ones to the opioid epidemic because of the reckless business practices of wholesale drug distributors deserve real answers and accountability. As Cardinal Health prepares for its annual meeting next month, shareholders have the opportunity to vote for independent board leadership.

Sunday’s piece ought to have made for painful, if not shameful, viewing for board members of the Big Three. After all, it was on their watch that the companies’ attorneys and management teams surreptitiously sought to undermine the very rules and regulations governing the distribution of highly addictive prescription painkillers.


The boards of the Big Three can no longer remain in the background.

Similarly, no responsible shareholder can see this corporate behavior as justified, even under the mantra of shareholder value. We saw the same type of unchecked corporate lobbying in the lead-up to the financial crisis, and our nation paid the price. As roughly 100 Americans die each day from an opioid overdose, in the midst of the greatest public health crisis of our time, we have no patience for business as usual.

We need a massive overhaul at the drug wholesalers starting at the top. The need for independent oversight and leadership of the boards of these corporations has never been more urgent.

Ken Hall is General Secretary-Treasurer of the International Brotherhood of Teamsters. He lives in West Virginia.