PHILADELPHIA (Legal Newsline) - A federal judge allowed the government’s lawsuit against drug distributor Amerisource Bergen to proceed, but cut down the potential size of the government’s claims by ruling Amerisource could only be ordered to pay fines over opioids it shipped after Congress amended the Controlled Substances Act in 2018.
The Justice Department sued Amerisource at the end of 2022, accusing the company of “repeated and systemic failure” to fulfill its requirement to identify, halt and report suspicious opioid transactions to the Drug Enforcement Administration. The government accuses Amerisource of failing to report hundreds of thousands of suspicious orders that could subject it to fines of up to $109,000 per order. The government announced a lawsuit against Walmart on the same day.
The potential magnitude of those fines dropped significantly, however, after U.S. District Judge Gerald Pappert in Pennsylvania ruled the government can only penalize Amerisource for orders it shipped after Congress codified the DEA’s interpretation of the suspicious order reporting. That amendment went into effect Oct. 24, 2018.
The judge otherwise upheld the government’s interpretation of the CSA, rejecting Amerisource’s arguments the rules were unconstitutionally vague and impossible to interpret in advance. The government accuses Amerisource of failing to report orders it knew were suspicious, either because they were larger than normal or because they came from pharmacies known to be sources of diversion with customers who were criminals or who paid in cash.
In a motion to dismiss earlier this year, Amerisource argued the DEA gave only vague guidance about how to operate a suspicious order tracking system, but the judge said that didn’t relieve the company of the responsibility for identifying suspicious orders and either eliminating any “red flags” or reporting them to the government.
“While Amerisource argues that `the term ‘suspicious orders’ is hopelessly vague and subjective,’ the government does not seek to impose novel interpretations of the CSA by ambush,” the judge wrote. “It relies on established applications of the law.”
The judge rejected the government’s argument Amerisource could be ordered to pay financial penalties for suspicious orders as far back as 2014, however. Only after Congress passed the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act of 2018 were the penalties required under the law, as opposed to regulation, the judge said.
“Amerisource has the better of the argument,” the judge wrote. “The CSA, prior to the SUPPORT Act’s enactment, did not explicitly authorize the Attorney General or DEA to seek penalties for violations” of reporting requirements.