CENTRAL ISLIP, N.Y. (Legal Newsline) - A former Drug Enforcement Agency official said Tuesday that nearly every dose of Oxycontin painkiller sold in two New York counties was likely diverted to improper use, a stunning total which if true would grossly exceed any other known estimate.
Testifying in a pretrial hearing to determine whether he can offer his opinions as an expert witness, James Rafalski said he agreed with an analysis produced by an economist that found 88.9% of the Oxy distributed by CVS in Nassau County was diverted. The economist, who also serves as a paid expert witness for plaintiff lawyers in securities class actions, found that from 72% to nearly all the Oxycontin in Nassau and Suffolk counties represented “suspicious” orders that likely wound up in the wrong hands.
“So we’ve got close to 100% diversion in Nassau County – there’s only 10% legitimate distribution in Nassau County, yes or no,” asked Paul W. Schmidt, a partner with Covington Burling who represents drug distributors being sued by New York for allegedly causing the state’s opioid crisis.
“Yes,” answered Rafalski, who later hedged by using a legal standard for civil liability, “more likely than not.”
Rafalski’s estimate is thousands of times higher than his former employer’s own estimates of diversion, which in a 2019 report the DEA put at a fraction of 1%. Questioned later by Jayne Conroy of Simmons Hanly Conroy, one of the private attorneys representing the state, Rafalski said he disagrees with the DEA estimate because the agency didn’t try to measure all types of diversion.
Diversion estimates are central to the case in New York and all opioid litigation, since the plaintiffs – mostly cities, counties, states and other public entities – blame drug manufacturers, distributors and pharmacies for causing a “public nuisance” by allowing too many pills to be sold in their communities without providing evidence of any illegal sales.
The defendant companies argue they were licensed and overseen by the DEA and state regulators and sold their products through a tightly regulated channel where each dose was prescribed by a medical professional. In New York, the state and counties have agreed in advance not to present evidence that a single pill was distributed to a person not licensed to receive it or pursuant to a legal prescription.
Rafalski was the second expert to testify in pretrial hearings to determine whether he is qualified to serve as an expert under New York’s Frye standard, which requires expert opinions to be based upon methods generally accepted in the professional community. Under rapid-fire questioning from Schmidt, the former DEA diversion investigator acknowledged he spent only 13.5 hours working on New York-specific elements of his report and large parts of it were copied word-for-word from a plaintiff complaint drafted by lawyers months before.
Plaintiff lawyers supplied the materials he used to compose the report, although Rafalski said he added hundreds of footnotes showing he had read most of the primary documents supporting the allegations in the complaint.
His diversion estimates were calculated by Craig McCann, an expert with Securities Litigation Consulting Group, who considered “suspicious” any order exceeding the largest monthly order in the preceding six-month period. If the company didn’t investigate the matter in a manner Rafalski and McCann considered sufficient, they treated every subsequent order as suspicious.
“Have you ever seen the DEA or any scientist or public health official trying to measure actual diversion using this method you’ve come up with?” Schmidt asked, and Rafalski answered he hadn’t.
Rafalski also acknowledged he hadn’t checked McCann’s calculations and didn’t know the “judgment calls” and other decisions McCann made to adjust the results produced by his algorithm. He agreed that a central mission of the DEA is to maintain the flow of medical painkillers through licensed channels, but rejected the idea that would be compromised if distributors halted shipments using the suspicious order management system he recommends.
New York is building its case entirely upon experts like Rafalski and former Food and Drug Administration Commissioner David Kessler, who testified earlier. With no evidence that the companies they are suing sold any opioids illegally, they require expert opinions that the companies nonetheless facilitated the opioid crisis by failing to catch suspicious orders by physicians and other prescribers.
The plaintiffs say the distributors and pharmacies had a duty to catch this behavior, while the defendants say the states themselves failed to discipline doctors by revoking their license to prescribe. The Office of Inspector General, in a 2019 report, also criticized the DEA for being slow to respond to evidence of mounting opioid misuse and failing to properly vet applicants for licenses to dispense and prescribe controlled substances.
New York’s pending trial is one of several that are increasing the pressure on defendants to settle. State attorneys general are reportedly close to a $27 billion agreement with Amerisource Bergen, Cardinal Health, McKesson and Johnson & Johnson that would pay private lawyers more than $2 billion in fees.