City of Chicago Lawsuit Against Opioid Manufacturers

Case: 1:18-cv-01639 Document #: 1 Filed: 03/05/18 Page 1 of 49 PageID #:1
IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CITY OF CHICAGO, a municipal Civil Action No.:

corporation,
Plaintiff,
vs.
CARDINAL HEALTH, INC.;

MCKESSON CORPORATION;
AMERISOURCEBERGEN DRUG
CORPORATION,
Complaint
Defendants.
(Jury Trial Demanded)
PRELIMINARY STATEMENT
1. Plaintiff, the City of Chicago (“City”), brings this action to redress
AmerisourceBergen Drug Corporation’s, Cardinal Health, Inc.’s and McKesson Corporation d/b/a
McKesson Drug Company’s (together “Defendants”) unfettered and unlawful distribution of
opioids into the City. Defendants distribute opioid medications, including hydrocodone,
oxycodone, and other opioids, to pharmacies and other dispensaries across the country and within
the City. The City alleges as follows:
I. INTRODUCTION
2. Prescription opioids are narcotics. They are derived from and possess properties
similar to opium and heroin, and they are regulated as controlled substances. While opioids can
dampen the perception of pain, they also can create a euphoric high and are highly addictive. At
higher doses, they can slow the user’s breathing, causing potentially fatal respiratory depression.
Because the medical community recognized these dangers, they originally used opioids cautiously
and sparingly, typically only for short-term acute pain or for palliative (end-of-life) care.1
Consequently, the prescribing of opioids was sharply constrained.
3. In the mid-1990s, however, pharmaceutical companies (which the City sued
separately in 2014) aggressively and deceptively marketed opioids for common chronic conditions
like back pain, migraines, and arthritis. By the mid-2000s, chronic opioid therapy—the prescribing
of opioids long-term to treat chronic pain—became widespread and the use of opioids skyrocketed.
According to the CDC opioid prescriptions, as measured by number of prescriptions and morphine
milligram equivalent (“MME”) per person, tripled from 1999 to 2015. In 2015, on an average day,
more than 650,000 opioid prescriptions were dispensed in the U.S.
1
In this Complaint, “chronic pain” means non-cancer pain lasting three months or longer.
2
4. Together, Defendants account for approximately 90% of all revenues from
prescription drug distribution in the U.S. Known colloquially as the “Big Three,” Defendants
dominate the wholesale drug distribution market, including in the City.
5. Taking advantage of this mass market, Defendants flooded many communities with
opioids, without conducting the due diligence required by law to prevent the diversion of opioids
to an illicit market in these drugs that predictably developed, and that Defendants helped to create,
expand, and maintain.
6. Defendants are paid to securely deliver opioids made by the various manufacturers
and are the closest link to pharmacies throughout the country. As registered distributors of
controlled substances, Defendants are placed in a position of special trust and responsibility.
Because of their direct relationship with pharmacies in the supply chain, they are uniquely capable
of determining whether a pharmacy is facilitating the diversion of prescription opioids.
7. Defendants have a duty under federal and state law to exercise due diligence in
order to prevent diversion and to monitor and report, and reject suspicious orders of controlled
substances into the City. Such orders include, for example, orders of opioids that exceed
reasonable volume, are of an unusual frequency, or that raise other red flags. Yet, Defendants
shipped orders that they knew or should have known were being diverted or used other than for
legitimate medical purposes.
8. Sales and distribution data available to Defendants, as well as their own
observations, would, or should, have put them on notice of potential diversion. Yet, upon
information and belief, Defendants consistently failed to report or suspend these illicit orders,
deepening the crisis of opioid abuse, addiction, and death in the City. Defendants had financial
incentives to continue to supply opioids to pill mills (doctors, clinics, or pharmacies that prescribe
3
or dispense opioids inappropriately or for non-medical reasons) because they may entitle them to
volume-based rebates and discounts that they may then leverage to further increase their sales
volumes and profits.
9. As a direct and foreseeable result of Defendants’ conduct, the nation and the City
are now swept up in what the Centers for Disease Control (“CDC”) has called a “public health
epidemic” and what the U.S. Surgeon General has deemed an “urgent health crisis.”2 From 1999
to 2015, more than 183,000 people died in the U.S. from overdoses related to prescription
opioids—more than the number of Americans who died in the Vietnam War. In 2016, the Centers
for Disease Control (“CDC”) reported that, in contrast to other developed countries, and despite
having some of the world’s highest spending on medical care, our nation saw life expectancy at
birth decline for the second straight year, with the increasing number of people who died of
overdoses representing the most significant factor in this alarming trend.
10. The careless, even reckless distribution of opioids into the City correlates directly
to skyrocketing addiction, overdose, and death; black markets for diverted prescription opioids;
and a concomitant rise in heroin and fentanyl abuse by individuals who could no longer legally
acquire—or simply could not afford—prescription opioids.
11. The City has not escaped this deadly trend. Chicago suffered 741 opioid-related
overdose deaths in 2016, a roughly 75% increase from the year before. The cost of this human
tragedy cannot be calculated or ever adequately compensated. But the financial burden to the City
is staggering. In 2017, the Chicago Department of Public Health (“CDPH”) began investing an
additional $700,000 a year in opioid addiction treatment and supportive services, with a focus on
2
CDC, Examining the Growing Problems of Prescription Drug and Heroin Abuse (Apr. 29, 2014),
available at http://www.cdc.gov/washington/testimony/2014/t20140429.htm; Vivek H. Murthy,
Letter from the Surgeon General, August 2016, available at http://turnthetiderx.org.
4
medication-assisted treatment (“MAT”). In 2018, CDPH is increasing its investment again in
opioid addiction treatment and services, including funding for MAT and recovery homes to serve
an estimated 500 more residents annually. These increases are on top of the $1.5 million the City
was already investing annually on substance use treatment overall, including on outpatient
treatment, medical detoxification services, residential treatment and recovery homes.
12. Defendants’ conduct has violated, and continues to violate, the Municipal Code of
Chicago (“MCC”) § 2-25-090, MCC § 1-20-020, and the Illinois’ Drug Dealer Liability Act, 740
ILCS 57/5 et seq. Additionally, Defendants’ conduct constitutes a common law public nuisance,
negligence, and unjust enrichment.
13. Accordingly, Plaintiff brings this action to hold Defendants accountable for their
conduct, and seeks abatement, civil penalties, damages, and any other injunctive and equitable
relief within this Court’s powers to redress and halt these unlawful practices.
II. PARTIES
A. PLAINTIFF
14. Plaintiff, the City, is a municipal corporation organized and existing under the laws
of the State of Illinois.
15. The City’s Corporation Counsel has the authority to “[a]ppear for and protect the
rights and interests of the city in all actions, suits and proceedings brought by or against it or any
city officer, board or department.” MCC § 2-60-020.
B. DEFENDANTS
16. AmerisourceBergen Drug Corporation (“AmerisourceBergen”) is a wholesaler of
pharmaceutical drugs that distributes opioids throughout the country. AmerisourceBergen is the
eleventh largest company by revenue in the United States, with annual revenue of $147 billion in
2016.
5
17. AmerisourceBergen’s principal place of business is located in Chesterbrook,
Pennsylvania, and it is incorporated in Delaware.
18. AmerisourceBergen has been licensed as a wholesale distributor of dangerous
drugs in Illinois since at least 2002. AmerisourceBergen operates a distribution center in
Romeoville, Illinois.
19. Cardinal Health, Inc. (“Cardinal”) describes itself as a “global, integrated health
care services and products company,” and is the fifteenth largest company by revenue in the U.S.,
with annual revenue of $121 billion in 2016. Cardinal distributes pharmaceutical drugs, including
opioids, throughout the country.
20. Cardinal is an Ohio corporation and is headquartered in Dublin, Ohio.
21. Cardinal has been licensed as a wholesale distributor of dangerous drugs in Illinois
since 1986. Cardinal operates distribution centers in Burr Ridge, Illinois and Aurora, Illinois. In
2012, Cardinal purchased Chicago-area regional wholesaler Dik Drug Company. Based on
Defendant Cardinal’s own estimates, one of every six pharmaceutical products dispensed to U.S.
patients travels through the Cardinal Health network.
22. McKesson Corporation (“McKesson”) is fifth on the list of Fortune 500 companies,
ranking immediately after Apple and ExxonMobil, with annual revenue of $191 billion in 2016.
McKesson is a wholesaler of pharmaceutical drugs that distributes opioids throughout the country.
23. McKesson is incorporated in Delaware, with its principal place of business in San
Francisco, California.
24. McKesson has been licensed as a wholesale distributor of dangerous drugs in
Illinois since at least 1996. McKesson operates a distribution center in Aurora, Illinois.
6
III. JURISDICTION AND VENUE
25. Jurisdiction is proper in this Court pursuant to 28 U.S.C. § 1332, because there is
complete diversity between Plaintiff and Defendants, and the amount in controversy is greater than
$75,000.
26. This Court has personal jurisdiction over Defendants pursuant to 735 ILCS § 5/2-
209 because they conduct business in Illinois, purposefully direct or directed their actions toward
Illinois, consented to be sued in Illinois by registering an agent for service of process, consensually
submitted to the jurisdiction of Illinois when obtaining an Illinois wholesale distributor license,
and have the requisite minimum contacts with Illinois necessary to constitutionally permit the
Court to exercise jurisdiction.
27. Venue as to each Defendant is proper in this court under 28 U.S.C. § 1391(b)(2)
because a substantial part of the events and omissions giving rise to the claim occurred in the
Eastern Division of the Northern District of Illinois.
IV. JURY DEMAND
28. The City demands a jury trial pursuant to Federal Rule of Civil Procedure 38.
V. FACTUAL ALLEGATIONS
A. DEFENDANTS DELIBERATELY DISREGARDED THEIR DUTIES TO MAINTAIN

EFFECTIVE CONTROLS AGAINST DIVERSION.
1. Defendants have a duty to report suspicious orders, and to not ship those
orders unless due diligence disproves their suspicions.
29. Until the mid-1990s, opioids were widely thought to be too addictive for use for
chronic pain conditions, which would require long-term use of the drugs at increasingly high doses.
By the mid-2000s, the medical community had abandoned its prior caution, and opioids were
entrenched as an appropriate—and often the first—treatment for chronic pain conditions. This
created both a vastly and dangerously larger market for opioids in the City, and a lucrative
7
opportunity for Defendants, who compounded this harm by failing to implement effective controls
against diversion and by supplying opioids they knew or should have known were being abused
or diverted. Defendants’ failure to investigate, report, and terminate orders that they knew or
should have known were suspicious breached both their statutory and common law duties.
30. First, by failing to exercise due diligence to refrain from filling, and by failing to
report orders that it knew or should have known were likely being diverted for illicit uses,
Defendants breached their duty to exercise reasonable care in delivering controlled, narcotic
substances, and both created, and failed to prevent, a foreseeable risk of harm to the Plaintiff.
31. Second, each Defendant assumed a duty, when speaking publically about opioids,
and their efforts and commitment regarding diversion of prescription opioids, to speak accurately
and truthfully. Defendants violated this duty by engaging in concealed misconduct at odds with
their public pronouncements.
32. Third, as wholesalers, Defendants violated their obligations under the MCC § 2-
25-090, as well as the Illinois Consumer Fraud and Deceptive Business Practices Act (“CFDBA”),
by engaging in unfair acts or practices. They also violated statutory obligations under Illinois and
federal controlled substances laws, which create a standard of conduct and care below which
reasonably prudent distributors would not fall.
33. The federal Controlled Substances Act (“CSA”), 21 U.S.C. § 801 et seq. and its
implementing regulations impose a duty on registrants (entities, like Defendants, licensed to
distribute controlled substances) to monitor, detect, report, investigate, and refuse to fill suspicious
orders. See 21 U.S.C. § 823; 21 C.F.R. 1301.74.3 Defendants must “design and operate a system
3
See also Letter from Joseph T. Rannazzisi, Deputy Assistant Adm’r, Office of Diversion Control,
Drug. Enf’t Admin., U.S. Dep’t of Justice, to Cardinal Health (Sept. 27, 2006), filed in Cardinal
8
to disclose to the registrant suspicious orders of controlled substances.” 21 C.F.R. § 1301.74(b).
Further, registrants are not entitled to be passive (but profitable) observers, but rather “shall inform
the Field Division Office of the Administration in his area of suspicious orders when discovered
by the registrant.” Id. Suspicious orders include orders of unusual size, orders deviating
substantially from a normal pattern, and orders of unusual frequency. Id. Other red flags may
include, for example, “[o]rdering the same controlled substance from multiple distributors.”4
34. Wholesale distributors, including Defendants, must also be licensed by the Illinois
Department of Financial and Professional Regulation (“IDFPR”) to distribute controlled
substances in the State of Illinois, including in the City. Like the federal CSA, Illinois’ Controlled
Substances Act (“ICSA”), requires that registration, or licensure, be consistent with the public
interest, which, in turn, requires “maintenance of effective controls against diversion of controlled
substances into other than lawful medical, scientific, or industrial channels,” and “compliance with
applicable Federal, State and local law.” 720 ILCS 570/303.
35. An “applicant for registration is registered under the Federal law to manufacture,
distribute or dispense controlled substances, . . . , upon filing a completed application for licensure
in this State and payment of all fees due . . . shall be licensed in [Illinois] to the same extent as his
or her Federal registration, unless, within 30 days after completing his or her application in th[e]
State, the Department of Financial and Professional Regulation notifies the applicant that his or
her application has not been granted.” 720 ILCS 570/303. Thus, registration in the state of Illinois
Health, Inc. v. Holder, No. 1:12-cv-00185-RBW (D.D.C. Feb. 10, 2012), ECF No. 14-51
(hereinafter “2006 Rannazzisi Letter”); Letter from Joseph T. Rannazzisi, Deputy Assistant
Adm’r, Office of Diversion Control, Drug. Enf’t Admin., U.S. Dep’t of Justice, to Cardinal Health
(Dec. 27, 2007), filed in Cardinal Health, Inc. v. Holder, No. 1:12-cv-00185-RBW (D.D.C. Feb.
10, 2012), ECF No. 14-8 (hereinafter “2007 Rannazzisi Letter”).
4
See 2006 Rannazzisi Letter.
9
may rely on the applicant’s representations of compliance with the federal registration
requirements.
36. Illinois regulations mandate that “[a]ll applicants and licensees shall provide
effective controls and procedures to guard against theft and diversion of controlled substances.”
77 Ill. Adm. Code 3100.310 (explaining that “[i]n order to determine whether a person has
provided effective controls against diversion, the Division shall use the security requirements set
forth in this Section as standards for the physical security controls and operating procedures
necessary to prevent diversion”). Further, “[w]holesale drug distributors shall operate in
compliance with applicable federal, state and local laws and regulations.” Ill. Admin. Code tit. 68,
§ 1510.50 (emphasis added); accord 21 C.F.R. § 205.50 (mandating that wholesale drug
distributors that deal in controlled substances register with the appropriate state controlled
substance authority and with the Drug Enforcement Administration (DEA), and comply with all
applicable State, local, and DEA regulations).
37. In sum, under both federal and state law, Defendants have several responsibilities
with respect to suspicious orders of opioids. First, they must set up a system designed to detect
such orders. That would include reviewing their own data, relying on their observations of
prescribers and pharmacies, and following up on reports or concerns of potential diversion. All
flagged orders must be reported to relevant enforcement authorities.5 Further, Defendants must
also stop shipment of any order which is flagged as suspicious and only ship orders which were
5
Id.
10
flagged as potentially suspicious if, after conducting due diligence, they can determine that the
order is not likely to be diverted into illegal channels.6
38. Any of the red flags identified by law trigger a duty to report; however, this list is
not exclusive. Other factors—such as whether the order is skewed toward high dose pills, or orders
that are skewed towards drugs valued for abuse, rather than other high-volume drugs, such as
cholesterol medicines, also should alert distributors to potential problems. Defendants also
regularly visit pharmacy customers and their own observations—cash transactions or young and
seemingly healthy patients filling prescriptions for opioids at a pharmacy they supply—can trigger
reasonable suspicion. A single order can warrant scrutiny, or it may be a pattern of orders, or an
order that is unusual given the customer’s history or in comparison to other customers in the area.
2. Defendants understood the importance of their reporting obligations.
39. The reason for the reporting rules is to create a “closed” system intended to reduce
the diversion of these drugs out of legitimate channels into the illicit market, while at the same
time providing the legitimate drug industry with a unified approach to narcotic and dangerous drug
control.7 Because distributors both handle such large volumes of controlled substances, and are
uniquely positioned, based on their knowledge of their customers and orders, as the first line of
defense in the movement of legal pharmaceutical controlled substances from legitimate channels
into the illicit market, their obligation to maintain effective controls to prevent diversion of
6
See Southwood Pharm., Inc., 72 Fed. Reg. 36,487, 36,501 (Drug Enf’t Admin. July 3, 2007)
(applying federal requirements no less stringent than those of Ohio); Masters Pharmaceutical, Inc.
v. Drug Enforcement Administration, 861 F.3d 206 (D.C. Cir. 2017) (same).
7
See 1970 U.S.C.C.A.N. 4566, 4571-72.
11
controlled substances is critical. Should a distributor deviate from these checks and balances, the
closed system of distribution, designed to prevent diversion, collapses.8
40. Defendants were well aware they had an important role to play in this system, and
also knew or should have known that their failure to comply with their obligations would have
serious consequences. For example, trade organizations to which all Defendants belong have
acknowledged that wholesale distributors such as Defendants have been responsible for reporting
suspicious orders for more than 40 years.9 The Healthcare Distribution Management Association
(“HDMA,” now known as the Healthcare Distribution Alliance (“HDA”)), a trade association of
pharmaceutical distributors to which all Defendants belong, has long taken the position that
distributors have responsibilities to “prevent diversion of controlled prescription drugs” not only
because they have statutory and regulatory obligations do so, but “as responsible members of
society.”10
41. Guidelines established by the HDA also explain that distributors, “[a]t the center of
a sophisticated supply chain . . . are uniquely situated to perform due diligence in order to help
8
See Rannazzisi Decl. ¶ 10, filed in Cardinal Health, Inc. v. Holder, No. 1:12-cv-00185-RBW
(D.D.C. Feb. 10, 2012), ECF No. 14-2.
9
See Brief for Healthcare Distribution Management Association and National Association of
Chain Drug Stores as Amici Curiae in Support of Neither Party, Masters Pharmaceuticals, Inc. v.
Drug Enforcement Administration, 2012 WL 1321983, at *4 (D.C. Cir. Apr. 4, 2016) (stating that
regulations “in place for more than 40 years require distributors to report suspicious orders of
controlled substances to DEA . . .”) (emphasis omitted).
10
See Amicus Curiae Br. of HDMA in Support of Cardinal Health, Inc.’s Motion for Injunction
Pending Appeal, No. 12-5061 (D.C. Cir. Mar. 7, 2012), Doc. No. 1362415 at 4; Brief for HDMA
and National Association of Chain Drug Stores as Amici Curiae in Support of Neither Party,
Masters Pharmaceuticals, Inc. v. Drug Enforcement Administration, 2012 WL 1321983, at *2
(D.C. Cir. Apr. 4, 2016).
12
support the security of the controlled substances they deliver to their customers.”11 The FTC, too,
has recognized the unique role of distributors. Since their inception, Defendants have continued
to integrate vertically by acquiring businesses that are related to the distribution of pharmaceutical
products and health care supplies. In addition to the actual distribution of pharmaceuticals, as
wholesalers, Defendants also offer their pharmacy, or dispensing, customers a broad range of
added services. For example, Defendants offer their pharmacies sophisticated ordering systems
and access to an inventory management system and distribution facility that allows customers to
reduce inventory carrying costs. Defendants are also able to use the combined purchase volume
of their customers to negotiate the cost of goods with generic manufacturers and offer services that
include software assistance and other database management support. See Fed. Trade Comm’n v.
Cardinal Health, Inc., 12 F. Supp. 2d 34, 41 (D.D.C. 1998) (granting the FTC’s motion for
preliminary injunction and holding that the potential benefits to customers did not outweigh the
potential anti-competitive effect of a proposed merger between Cardinal and Bergen Brunswig
Corp.). As a result of their acquisition of a diverse assortment of related businesses within the
pharmaceutical industry, as well as the assortment of additional services they offer, Defendants
have a unique insight into the ordering patterns and activities of their dispensing customers.
42. The DEA also repeatedly has made clear that Defendants’ obligations under federal
law, mirrored in and incorporated by Illinois law, see infra Section III.A.1, obligate them to report
and decline to fill suspicious orders. Responding to the proliferation of pharmacies operating on
the internet that arranged illicit sales of enormous volumes of opioids to drug dealers and
11
HDMA Industry Compliance Guidelines: Reporting Suspicious Orders and Preventing
Diversion of Controlled Substances, filed in Cardinal Health, Inc. v. Holder, No. 12-5061 (D.C.
Cir. Mar. 7, 2012), Doc. No. 1362415 (App’x B at 1).
13
customers, the DEA began a major push to remind distributors of their obligations to prevent these
kinds of abuses and educate them on how to meet these obligations. Since 2007, the DEA has
hosted at least five conferences that provided registrants with updated information about diversion
trends and regulatory changes. Each of the Defendants attended at least one of these conferences.
The DEA has also briefed distributors regarding legal, regulatory, and due diligence
responsibilities since 2006. During these briefings, the DEA pointed out the red flags distributors
should look for to identify potential diversion.
43. For example, in a September 27, 2006 letter (“9/27/06 DEA Letter”) sent to every
commercial entity registered to distribute controlled substances (which included Defendants), the
DEA advised them that they are “one of the key components of the distribution chain. If the closed
system is to function properly . . . distributors must be vigilant in deciding whether a prospective
customer can be trusted to deliver controlled substances only for lawful purposes. This
responsibility is critical, as . . . the illegal distribution of controlled substances has a substantial
and detrimental effect on the health and general welfare of the American people.”12 The 9/27/06
DEA Letter also expressly reminded them that registrants, in addition to reporting suspicious
orders, have a “statutory responsibility to exercise due diligence to avoid filling suspicious orders
that might be diverted into other than legitimate medical, scientific, and industrial channels.”13
The 9/27/06 DEA Letter reminds distributors of the importance of their obligation to “be vigilant
in deciding whether a prospective customer can be trusted to deliver controlled substances only
12
See 2006 Rannazzisi Letter (“This letter is being sent to every commercial entity in the United
States registered with the Drug Enforcement Agency (DEA) to distribute controlled substances.
The purpose of this letter is to reiterate the responsibilities of controlled substance distributors in
view of the prescription drug abuse problem our nation currently faces.”).
13
14
for lawful purposes,” and warns that “even just one distributor that uses its DEA registration to
facilitate diversion can cause enormous harm.”14
44. The DEA sent another letter to Defendants on December 27, 2007 (“9/27/07 DEA
Letter”), reminding them that, as registered distributors of controlled substances, they share, and
must each abide by, statutory and regulatory duties to “maintain effective controls against
diversion” and “design and operate a system to disclose to the registrant suspicious orders of
controlled substances.”15 The 9/27/07 DEA Letter reiterated the obligation to detect, report, and
not fill suspicious orders, and provided detailed guidance on what constitutes a suspicious order
and how to report (e.g., by specifically identifying an order as suspicious, not merely transmitting
data to the DEA). Finally, the 9/27/07 DEA Letter references the Revocation of Registration
issued in Southwood Pharmaceuticals, Inc., 72 Fed. Reg. 36,487-01 (July 3, 2007), which
discusses the obligation to report suspicious orders and “some criteria to use when determining
whether an order is suspicious.”16
3. Despite repeated admonitions, Defendants have repeatedly violated their

reporting obligations.
45. Defendants have faced repeated enforcement actions for their failure to comply
with their obligations to report and decline suspicious orders, making clear both that Defendants
were repeatedly reminded of their duties, and that they frequently and systematically failed to meet
them.
46. In May 2014, the United States Department of Justice (“DOJ”), Office of the
Inspector General, Evaluation and Inspections Divisions, reported that the DEA issued final
14
Id.
15
16
15
decisions in 178 registrant actions between 2008 and 2012. These included actions against each
Defendant:
a. On April 24, 2007, the DEA issued an Order to Show Cause and
Immediate Suspension Order against the AmerisourceBergen Orlando, Florida
distribution center (“Orlando Facility”) alleging failure to maintain effective
controls against diversion of controlled substances. On June 22, 2007,
AmerisourceBergen entered into a settlement that resulted in the suspension of its
DEA registration;
b. On November 28, 2007, the DEA issued an Order to Show Cause and
Immediate Suspension Order against the Cardinal Auburn, Washington
Distribution Center (“Auburn Facility”) for failure to maintain effective controls
against diversion of hydrocodone;
c. On December 5, 2007, the DEA issued an Order to Show Cause and

Immediate Suspension Order against the Cardinal Lakeland, Florida Distribution
Center (“Lakeland Facility”) for failure to maintain effective controls against
diversion of hydrocodone;
d. On December 7, 2007, the DEA issued an Order to Show Cause and

Immediate Suspension Order against the Cardinal Swedesboro, New Jersey
Distribution Center (“Swedesboro Facility”) for failure to maintain effective
controls against diversion of hydrocodone;
e. On January 30, 2008, the DEA issued an Order to Show Cause against the
Cardinal Stafford, Texas Distribution Center (“Stafford Facility”) for failure to
maintain effective controls against diversion of hydrocodone;
f. On May 2, 2008, McKesson entered into an Administrative Memorandum

of Agreement (“2008 McKesson MOA”) with the DEA which provided that
McKesson would “maintain a compliance program designed to detect and prevent
the diversion of controlled substances, inform DEA of suspicious orders required
by 21 C.F.R. § 1301.74(b), and follow the procedures established by its Controlled
Substance Monitoring Program”;
g. On September 30, 2008, Cardinal entered into a Settlement and Release

Agreement and Administrative Memorandum of Agreement with the DEA related
to its Auburn, Lakeland, Swedesboro and Stafford Facilities. The document also
referenced allegations by the DEA that Cardinal failed to maintain effective
controls against the diversion of controlled substances at its distribution facilities
located in McDonough, Georgia (“McDonough Facility”), Valencia, California
(“Valencia Facility”) and Denver, Colorado (“Denver Facility”);
16
h. On February 2, 2012, the DEA issued an Order to Show Cause and

Immediate Suspension Order against Cardinal’s Lakeland Facility for failure to
maintain effective controls against diversion of oxycodone; and
i. On December 23, 2016, Cardinal agreed to pay a $44 million fine to the
DEA to resolve the civil penalty portion of the administrative action taken against
its Lakeland, Florida Distribution Center.
j. On January 5, 2017, McKesson entered into an Administrative

Memorandum Agreement with the DEA wherein it agreed to pay a $150,000,000
civil penalty for violation of the 2008 McKesson MOA as well as failure to identify
and report suspicious orders at its facilities in Aurora CO, Aurora IL, Delran NJ,
LaCrosse WI, Lakeland FL, Landover MD, La Vista NE, Livonia MI, Methuen
MA, Santa Fe Springs CA, Washington Courthouse OH and West Sacramento CA.
47. These violations reflect a pervasive pattern and practice over the last decade of
failing to report and stop suspicious orders from which Defendants’ operations in Illinois and the
supply of opioids into the City would not have been exempt. In addition, these violations of federal
law and regulations also constituted violations of Illinois law for Defendants’ operations in this
state.
48. More recently, McKesson admitted to breach of its duties to monitor, report, and
prevent suspicious orders. Pursuant to an Administrative Memorandum of Agreement (“2017
Agreement”) entered into between McKesson and the DEA in January 2017, McKesson admitted
that, at various times during the period from January 1, 2009 through the effective date of the
Agreement (January 17, 2017), it “did not identify or report to [the] DEA certain orders placed by
certain pharmacies which should have been detected by McKesson as suspicious based on the
guidance contained in the DEA Letters.”17 Further, the 2017 Agreement specifically finds that
17
Settlement Agreement and Release between the U.S. and McKesson Corp., at 5 (Jan. 17, 2017)
(hereinafter “2017 Settlement”) (“McKesson acknowledges that, at various times during the
Covered Time Period [2009-2017], it did not identify or report to DEA certain orders placed by
certain pharmacies, which should have been detected by McKesson as suspicious, in a manner
fully consistent with the requirements set forth in the 2008 MOA.”), available at
https://www.justice.gov/opa/press-release/file/928471/download.
17
McKesson “distributed controlled substances to pharmacies even though those McKesson
Distribution Centers should have known that the pharmacists practicing within those pharmacies
had failed to fulfill their corresponding responsibility to ensure that controlled substances were
dispensed pursuant to prescriptions issued for legitimate medical purposes by practitioners acting
in the usual course of their professional practice, as required by 21 C.F.R § 1306.04(a).”18
McKesson admitted that, during this time period, it “failed to maintain effective controls against
diversion of particular controlled substances into other than legitimate medical, scientific and
industrial channels by sales to certain of its customers in violation of the CSA and the CSA’s
implementing regulations, 21 C.F.R. Part 1300 et seq., at the McKesson Distribution Centers,”
which included its distribution center in Aurora, Illinois.19
49. As the Washington Post and 60 Minutes recently reported, DEA staff recommended
a much larger penalty, as much as a billion dollars, and delicensing of certain facilities.20 A DEA
memo outlining the investigative findings in connection with the administrative case against 12
McKesson distribution centers included in the 2017 Settlement stated that McKesson “[s]upplied
controlled substances in support of criminal diversion activities”; “[i]gnored blatant diversion”;
had a “[p]attern of raising thresholds arbitrarily”; “[f]ailed to review orders or suspicious activity”;
and “[i]gnored [the company’s] own procedures designed to prevent diversion.”21 Investigators
18
Id.
19
Other facilities include McKesson’s distribution centers in Aurora, CO; Aurora, IL; Delran, NJ;
LaCrosse, WI; Lakeland, FL; Landover, MD; La Vista, NE; Livonia, MI; Methuen, MA; Santa Fe
Springs, CA; and West Sacramento, CA.
20
Lenny Bernstein and Scott Higham, “‘We Feel Like Our System Was Hijacked’: DEA Agents
Say a Huge Opioid Case Ended in a Whimper, Washington Post (Dec. 17, 2017).
21
Lenny Bernstein and Scott Higham, “‘We Feel Like Our System Was Hijacked’: DEA Agents
Say a Huge Opioid Case Ended in a Whimper, Washington Post (Dec. 17, 2017).
18
also found that McKesson distribution centers “were supplying pharmacies that sold to criminal
drug rings.”22
50. Even the far-less-than recommended civil penalty against McKesson, a $150
million fine, was record breaking. In addition to the monetary penalty, the DOJ required
McKesson to suspend sales of controlled substances from distribution centers in four different
states. Though this penalty too, was far less severe than investigators had recommended, as the
DOJ explained, these “staged suspensions” are nevertheless “among the most severe sanctions
ever agreed to by a [DEA] registered distributor.”23
51. Following the 2017 settlement, McKesson shareholders made a books and records
request of the company. According to a separate action pending on their behalf, the Company’s
records show that the Company’s Audit Committee failed to monitor McKesson's information
reporting system to assess the state of the Company's compliance with the CSA and McKesson’s
2008 Settlements. More particularly, the shareholder action alleges that the records show that in
October 2008, the Audit Committee had an initial discussion of the 2008 Settlements and results
of internal auditing, which revealed glaring omissions; specifically:
(a) some customers had "not yet been assigned thresholds in the system to flag large
shipments of controlled substances for review";
22
Id.
23
DOJ, “McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report
Suspicious Orders of Pharmaceutical Drugs, (Jan. 17, 2017)
https://www.justice.gov/opa/pr/mckesson-agrees-pay-record-150-million-settlement-failure-
report-suspicious-orders.
19
(b) "[d]ocumentation evidencing new customer due diligence was incomplete"; (c)
"documentation supporting the company's decision to change thresholds for existing
customers was also incomplete"; and
(d) Internal Audit "identified opportunities to enhance the Standard Operating
Procedures."24
52. Yet, instead of correcting these deficiencies, after that time, for a period of more
than four years, the Audit Committee failed to address the Controlled Substance Monitoring
Program (“CSMP”) or perform any more audits of McKesson's compliance with the CSA or the
2008 Settlements, the shareholder action’s description of McKesson’s internal documents
reveals.25
53. As a DEA official working on the case noted, McKesson, was “neither rehabilitated
nor deterred by the 2008 [McKesson MOA].”26 Quite the opposite, “‘their bad acts continued and
escalated to a level of egregiousness not seen before’” and reflected the company’s wholesale
failure to comply with state and federal law.27 According to statements of “DEA investigators,
agents and supervisors who worked on the McKesson case” reported in the Washington Post, “the
company paid little or no attention to the unusually large and frequent orders placed by pharmacies,
some of them knowingly supplying the drug rings.”28 “Instead, the DEA officials said, the
24
Verified Shareholder Derivative Compl., Chaile Steinberg derivatively on behalf of McKesson
Corp., v. Bryant et al., No. 2017-0736-SG (Del. Ct. Chancery Dec. 8, 2017) (alteration in original).
25
Id.
26
Id. (alteration in original).
27
Id. (quoting a March 30, 2015 DEA memo).
28
Id.
20
company raised its own self-imposed limits, known as thresholds, on orders from pharmacies and
continued to ship increasing amounts of drugs in the face of numerous red flags.”29
54. Further, in a 60 Minutes interview last fall, former DEA agent Joe Rannazzisi
described Distributor Defendants’ industry as “out of control,” stating that “[w]hat they wanna do,
is do what they wanna do, and not worry about what the law is. And if they don't follow the law
in drug supply, people die. That's just it. People die. ”30 He further explained that:
JOE RANNAZZISI: The three largest distributors are Cardinal Health, McKesson, and
AmerisourceBergen. They control probably 85 or 90 percent of the drugs going
downstream.
[INTERVIEWER]: You know the implication of what you're saying, that these big
companies knew that they were pumping drugs into American communities that were
killing people.
JOE RANNAZZISI: That's not an implication, that’s a fact. Thats exactly what they did.31
55. Another DEA veteran similarly stated that these companies failed to make even a
“good faith effort” to “do the right thing.”32 He further explained that “I can tell you with 100
percent accuracy that we were in there on multiple occasions trying to get them to change their
behavior. And they just flat out ignored us.”33
56. Upon information and belief, each of the Defendants similarly disregarded their
reporting and due diligence obligations under federal and Illinois law in and affecting the City.
B. DEFENDANTS HAD FINANCIAL INCENTIVES TO TURN A BLIND EYE TO RED

FLAGS OF DIVERSION TO SUSTAIN THEIR MARKET AND BOOST THEIR
PROFITS.
29
Id.
30
Bill Whitaker, Ex-DEA Agent : Opioid Crisis Fueled by Drug Industry and Congress, CBS News
(Oct. 17, 1017), https://www.cbsnews.com/news/ex-dea-agent-opioid-crisis-fueled-by-drug-
industry-and-Congress
31
Id.
32
Id.
33
Id.
21
57. Defendants had financial incentives to distribute higher volumes, and thus to refrain
from reporting or declining to fill suspicious orders. Wholesale drug distributors acquire
pharmaceuticals, including opioids, from manufacturers at an established wholesale acquisition
cost. Discounts and rebates from this cost may be offered by manufacturers based on market share
and volume. As a result, higher volumes may decrease the cost per pill to distributors. Decreased
cost per pill in turn, allows wholesale distributors to offer more competitive prices, or alternatively,
pocket the difference as additional profit. Either way, the increased sales volumes result in
increased profits.
58. Upon information and belief, manufacturers engaged in the practice of paying
rebates and/or chargebacks to the Defendants for sales of prescription opioids as a way to help
them boost sales and better target their marketing efforts. The Washington Post has described the
practice as industry-wide, and the HDA includes a “Contracts and Chargebacks Working Group,”
suggesting a standard practice. Further, in a recent settlement with the DEA, Mallinckrodt, a
prescription opioid manufacturer, acknowledged that “[a]s part of their business model
Mallinckrodt collects transaction information, referred to as chargeback data, from their direct
customers (distributors).”34 This exchange of information, upon information, and belief, would
have opened channels providing for the exchange of information revealing suspicious orders as
well.
34
Administrative Memorandum of Agreement between the United States Department of Justice,
the Drug Enforcement Agency, and Mallinckrodt, plc. and its subsidiary Mallinckrodt, LLC at 5
(July 10, 2017), https://www.justice.gov/usao-edmi/press-release/file/986026/download. (“2017
Mallinckrodt MOA”).
22
59. As the leading whole sale distributors, Defendants had close financial relationships
with both manufacturers and customers, for whom they provide a broad range of value added
services that render them uniquely positioned to obtain information and control against
diversion. These services often otherwise would not be provided by manufacturers to their
dispensing customers and would be difficult and costly for the dispenser to reproduce. For
example, “[w]holesalers have sophisticated ordering systems that allow customers to
electronically order and confirm their purchases, as well as to confirm the availability and prices
of wholesalers’ stock.” Fed. Trade Comm'n v. Cardinal Health, Inc., 12 F. Supp. 2d 34, 41
(D.D.C. 1998). Through their generic source programs, wholesalers are also able “to combine the
purchase volumes of customers and negotiate the cost of goods with manufacturers.” Wholesalers
also offer marketing programs, patient services, and other software to assist their dispensing
customers.
C. DEFENDANTS IGNORED RED FLAGS OF ABUSE AND DIVERSION.
60. The data that reveals and/or confirms the identity of each wrongful opioid
distributor is hidden from public view in the DEA’s confidential ARCOS database. 35 The data
necessary to identify with specificity the transactions that were suspicious is in possession of the
Defendants, but has not been disclosed to the public.
61. Yet, publicly available information indicates that Defendants ignored red flags of
suspicious orders. This information, along with the information known only to Defendants and
any manufacturers with whom they entered into charge-back arrangements, would have alerted
them to potentially suspicious orders of opioids in and affecting the City.
62. The City’s information and belief rests upon the following facts:
35
See Madel v. USDOJ, 784 F.3d 448 (8th Cir. 2015).
23
a. distributors have access to detailed transaction-level data on the sale and
distribution of opioids, which can be broken down by zip code, prescriber, and
pharmacy and includes the volume of opioids, dose, and the distribution of other
controlled and non-controlled substances;
b. manufacturers make use of that data to target their marketing and, for that purpose,
regularly monitor the activity of doctors and pharmacies, which information they
would have the ability to share with distributors;
c. manufacturers and distributors regularly visit pharmacies and doctors to promote
and provide their products and services, which allows them to observe red flags of
diversion, as described in paragraph 31; and
d. Defendants together account for approximately 90% of all revenues from
prescription drug distribution in the United States, and each plays such a large part
in the distribution of opioids that its own volume provides a ready vehicle for
measuring the overall flow of opioids into a pharmacy or geographic area.
63. Defendants’ gross inadequacies in the performance of their due diligence
obligations is underscored by several examples of illegal prescribing and diversion in the City. In
2016, a suburban Chicago-land doctor’s license was revoked after he was discovered to have been
running a cash-only pill mill where he prescribed vast quantities of Subsys, a drug containing
fentanyl that was developed exclusively for the treatment of breakthrough pain in cancer patients,
and other prescription opioids. From 2014 to 2016, at least three prescribers in the City were
convicted of crimes in connection with the operation of a pill mill. Based on publicly available
information (also, of course, available to Defendants) provided by the IDFPR, from 2010 to 2015,
at least 88 physicians, nurses, and pharmacy technicians faced some kind of disciplinary action
24
involving drug diversion. Upon information and belief, these prescribers, and the pharmacies at
which their patients filled prescriptions for opioids, yielded orders of unusual size, frequency, or
deviation, or raised other warning signs that should have alerted Defendants to instances of
diversion. Upon information and belief, none of the aforementioned disciplinary actions came
about through the due-diligence efforts or suspicious order report from a wholesale distributor.
Additionally, in 2004, one of Defendant McKesson’s distribution facilities was disciplined by the
IDFPR for practicing within the state of Illinois without a license for approximately five years. In
2009, Defendant Cardinal was also disciplined by the IDFPR for delivering controlled substances
to two Illinois pharmacies after the pharmacies’ Illinois controlled substances licenses had expired.
That Cardinal delivered to these pharmacies despite their lapsed licenses further supports the
inference that Cardinal failed to implement and adhere to adequate compliance policies.
64. This pattern of illicit prescribing and dispensing is linked to and confirmed by the
City’s role in the broader network of illicit opioid distribution that Defendants and opioid
manufacturers helped create, and that supplied the growing population of individuals who were
exposed to and became addicted to opioids as a result of the unlawful marketing and distribution
by Defendants and by opioid manufacturers. According to the Illinois Criminal Justice Authority,
because of “its large transportation industry and accessible highways and roadways, Chicago and
the state of Illinois serve as a major center for heroin and opioid drug trafficking.”36
65. In addition, the increase in fatal overdoses from prescription opioids has been
widely publicized for years. In the City, there were 403 accidental deaths due to opioid overdoses
in 2015. Of those, 68 deaths were attributable to fentanyl, 243 to heroin, and 92 to other
36
See Jessica Reichert and Vernon Smith, Illinois Criminal Justice Information Authority, A state
and national overview of the opioid and heroin crisis, November 16, 2016, available at
http://www.icjia.state.il.us/articles/an-overview-of-national-and-illinois-opioid-and-heroin-crisis
25
prescription opioids. Combining the City and Cook County suburbs, there were 609 total deaths
from opiate overdoses in 2015. The CDC has estimated that for every opioid-related death, there
are 733 non-medical users. Defendants thus had every reason to believe that illegal diversion was
occurring in the City. Given these fatalities and the pattern of disciplinary actions and diversion,
Defendants should have been on notice that the diversion of opioids was likely occurring in and
around the City. Defendants should have investigated and ceased filling suspicious orders for
opioids, and reported potential diversion to law enforcement. In the City, as elsewhere, based
upon information and belief (including the absence of reporting to IDFPR), Defendants failed to
meet these obligations – with grave, and often deadly, consequences to the City and its residents.
D. DEFENDANTS HID THEIR LACK OF COOPERATION WITH LAW

ENFORCEMENT AND FALSELY CLAIMED TO BE ACTIVELY WORKING TO
PREVENT DIVERSION.
66. When a distributor does not report or stop suspicious orders, prescriptions for
controlled substances may be written and dispensed to individuals who abuse them or who sell
them to others to abuse. This, in turn, fuels and expands the illegal market and results in opioid-
related overdoses. Without reporting by those involved in the supply chain, law enforcement may
be delayed in taking, or may not know to take, action.
67. After being caught failing to comply with particular obligations at particular
facilities, Defendants made broad promises to change their ways and insisted that they sought to
be good corporate citizens. As part of McKesson’s 2008 Settlement with the DEA, McKesson
claimed to have “taken steps to prevent such conduct from occurring in the future,” including
specific measures delineated in a “Compliance Addendum” to the Settlement. Yet, in 2017,
McKesson paid $150 million to resolve an investigation by the DOJ for again failing to report
suspicious orders of certain drugs, including opioids.
26
68. More generally, the Defendants publically portrayed themselves as committed to
working with law enforcement, opioid manufacturers, and others to prevent diversion of these
dangerous drugs.
69. For example, Cardinal claims that: “We challenge ourselves to best utilize our
assets, expertise and influence to make our communities stronger and our world more sustainable,
while governing our activities as a good corporate citizen in compliance with all regulatory
requirements and with a belief that doing ‘the right thing’ serves everyone.”37 Cardinal likewise
claims to “lead [its] industry in anti-diversion strategies to help prevent opioids from being
diverted for misuse or abuse.” Along the same lines, it claims to “maintain a sophisticated, state-
of-the-art program to identify, block and report to regulators those orders of prescription controlled
medications that do not meet [its] strict criteria.”38 Cardinal also promotes funding it provides for
“Generation Rx,” which funds grants related to prescription drug misuse.39 A Cardinal executive
recently claimed that Cardinal uses “advanced analytics” to monitor its supply chain; Cardinal
assured the public it was being “as effective and efficient as possible in constantly monitoring,
identifying, and eliminating any outside criminal activity.”40
70. Along the same lines, McKesson publicly claims that its “customized analytics
solutions track pharmaceutical product storage, handling and dispensing in real time at every step
37
Cardinal website, Ethics and Governance, available at http://www.cardinalhealth.com/en/about-
us/corporate-citizenship/ethics-and-governance.html.
38
Cardinal website, Archives, Cardinal Health Values Statement, available at
http://cardinalhealth.mediaroom.com/valuestatement.
39
Cardinal website, available at http://www.cardinalhealth.com/en/about-us/corporate-
citizenship/community-relations/population-health/rx-drug-misuse-and-abuse.html.
40
Lenny Bernstein et al., How Drugs Intended for Patients Ended up in the Hands of Illegal Users:
‘No one was doing their job’, The Washington Post (Oct. 22, 2016), http://wapo.st/2vCRGLt.
27
of the supply chain process,” creating the impression that McKesson uses this tracking to help
prevent diversion.41 McKesson has also publicly stated that it has a “best-in-class controlled
substance monitoring program to help identify suspicious orders,” and claimed it is “deeply
passionate about curbing the opioid epidemic in our country.”42
71. These public statements created the false and misleading impression that the
Defendants rigorously carried out their duty to report suspicious orders and exercise due diligence
to prevent diversion of these dangerous drugs, and also worked voluntarily to prevent diversion as
a matter of corporate responsibility to the communities their business practices would necessarily
impact. Not only were Defendants failing to rigorously adhere to their minimum legal obligations
and the duties they voluntarily assumed through the promises above, they were actively working
to undermine enforcement and controls by the government as well.
72. Defendants and opioid manufacturers coordinated in other ways that, including,
according to articles published by the Center for Public Integrity and the Associated Press,
lobbying through the Pain Care Forum—whose members include Defendants’ trade association,
the HDA—to undermine legal controls and enforcement mechanisms designed to prevent
diversion.”
E. BY IGNORING MANDATORY OBLIGATIONS TO REPORT SUSPICIOUS

ORDERS AND GUARD AGAINST DIVERSION, DEFENDANTS COLLECTIVELY
FUELED THE OPIOID EPIDEMIC AND SIGNIFICANTLY HARMED CHICAGO
AND THEIR RESIDENTS.
41
McKesson website, Pharmaceutical Distribution for Manufacturers, available at
http://www.mckesson.com/manufacturers/pharmaceutical-distribution/.
42
Scott Higham et al., Drug Industry Hired Dozens of Officials from the DEA as the Agency Tried
to Curb Opioid Abuse, Wash. Post, Dec. 22, 2016, available at
https://www.washingtonpost.com/investigations/key-officials-switch-sides-from-dea-to-
pharmaceutical-industry/2016/12/22/55d2e938-c07b-11e6-b527-949c5893595e_story.html.
28
73. Defendants compounded the harms from aggressive marketing that overcame
barriers to widespread prescribing of opioids for chronic pain by supplying opioids beyond even
what this expanded market could bear, and by turning a blind eye to red flags that they were fueling
abuse and diversion of these dangerous drugs.
74. By continuing to fill and failing to report suspicious orders of opioids, Defendants
have enabled an oversupply of opioids and supplied opioid that they knew or should have known
would be used for other than legitimate medical use, would be abused by patients who had become
addicted, or would be diverted to non-patients. They also knew or should have known that by
failing to report, and failing to exercise due diligence not to fill suspicious orders, they would
facilitate access to opioids for both patients who could no longer access or afford prescription
opioids and addicts struggling with relapse.
75. As explained above, Defendants had financial incentives to distribute higher
volumes and not to report suspicious orders or guard against diversion. See infra Section III.A.4.
Wholesale drug distributors acquire pharmaceuticals, including opioids, from manufacturers at an
established wholesale acquisition cost. Discounts and rebates from this cost may be offered by
manufacturers based on market share and volume. As a result, higher volumes may decrease the
cost per pill to distributors. Decreased cost per pill in turn, allows wholesale distributors to offer
more competitive prices, or alternatively, pocket the difference as additional profit. Either way,
the increased sales volumes result in increased profits.
76. Indeed, as the FTC has recognized, Defendants “depend on a revenue model that
makes money by capitalizing the economies of scale, using both physical efficiencies such as ‘just-
in-time’ deliveries and financial efficiencies, for example, by offering discounts for prompt
29
payment.”43 See also Fed. Trade Comm’n v. Cardinal Health, Inc., 12 F. Supp. 2d 34, 39 (D.D.C.
1998) (noting that “over the years, [the major pharmaceutical distributors] have acquired other
drug wholesale companies and consolidated operations to achieve greater economies of scale”).
Because of this revenue model, the more opioids Defendants distribute, the lower their margins
and thus, the greater their profits.
77. The oversupply of opioids to the City has caused significant harm to the City and
its residents. In addition to the harms described above, emergency room visits tied to opioid use
have sharply increased in the City. The U.S. Department of Health and Human Services estimated
that in 2009 in the City, there were 40.4 emergency department visits involving adverse reactions
to opioids per 100,000 people, which, for the City’s population, translates into 1,080 trips to the
emergency room. Emergency department visits due to opioids increased 153 percent between
2004 and 2011. In 2009, over 1,200 emergency department visits involved patients who were
illicitly using opioids.
78. Rising opioid use and abuse also have negative social and economic consequences
beyond overdoses. According to a recent analysis by a Princeton University economist,
approximately one out of every three working age men who are not in the labor force take daily
prescription pain medication. The same research finds that opioid prescribing alone accounts for
20% of the overall decline in the labor force participation for this group from 2014-16, and 25%
of the decline in labor force participation among women. According to addiction treatment
programs interviewed by the City, opioid addiction is affecting residents of all ages, ethnicities,
and socio-economic backgrounds in the City.
43
Kaiser Foundation, Follow the Pill: Understanding the U.S. Commercial Pharmaceutical Supply
Chain (2005), available at http://avalere.com/research/docs/Follow_the_Pill.pdf.
30
79. Further, people who are addicted to prescription opioid painkillers are 40 times
more likely to be addicted to heroin. The CDC identified addiction to prescription pain medication
as the strongest risk factor for heroin addiction. Nationally, roughly 80% of heroin users
previously used prescription opioids. Studies have shown that heroin use is 19-times greater
among individuals who reported past use of prescription pain relievers.
80. A recent, even more deadly problem stemming from the prescription opioid
epidemic involves fentanyl—a powerful opioid prescribed for cancer pain or in hospital settings
that, in synthetic form, has made its way into the City, like elsewhere.
81. As a result of the impacts described above, and others, the City has taken significant
measures to combat the public health crisis created by opioid use. The CDPH has more than
doubled its investments to combat substance use disorders in recent years, with all new dollars
going toward the opioid crisis. Other City departments have increased their spending, as well.
F. DEFENDANTS FRAUDULENTLY CONCEALED THEIR MISCONDUCT.
82. Defendants also fraudulently concealed their misconduct. They have declined to
release the Automated Records and Consolidated Orders System/Diversion Analysis and
Detection System (“ARCOS”) data which provides detailed tracking information about their
shipments. In addition, as explained above, Defendants publicly portray themselves as
maintaining sophisticated technology as part of a concerted effort to thwart diversion and
publically portray themselves as committed to fighting the opioid epidemic. However, their public
pronouncements are at odds with their concealed misconduct.
83. To the extent that information about Defendants’ violations of the federal CSA and
its implementing regulations was disclosed through settlement agreements, that information, until
McKesson’s 2017 Settlement, concerned facilities outside Illinois. Further, such settlement
agreements have typically been followed by or coupled with promises to improve compliance.
31
CAUSES OF ACTION
COUNT ONE - PUBLIC NUISANCE

IL CSA 720 ILCS 570 AND/OR COMMON LAW
AGAINST ALL DEFENDANTS
84. The City incorporates the allegations within all prior paragraphs within this
Complaint as if fully set forth herein.
85. Defendants’ conduct has unreasonably interfered with the health, safety, peace,
comfort, and convenience of the general public in the City by: (a) intentionally, recklessly, or
negligently engaging in conduct proscribed by statute, ordinance or administrative regulation; and
(b) engaging in conduct of a continuing nature that Defendants knew or should have known
produced and continues to produce permanent and long-lasting significant effect of these rights
common to the general public.
86. In particular, Defendants unreasonably interfered with rights common to the
general public of the City by failing to design and operate a system that would disclose the
existence of suspicious orders of controlled substances and/or by failing to report and reject
suspicious orders of opioids as required by the ICSA, 720 ILCS 570 (which also incorporates the
CSA’s obligations) and the CSA, 21 C.F.R. §1301.74(b).
87. The ICSA was enacted, with
the intent of the General Assembly, recognizing the rising incidence in the abuse of
drugs and other dangerous substances and its resultant damage to the peace, health,
and welfare of the citizens of Illinois, to provide a system of control over the
distribution and use of controlled substances which will more effectively: (1) limit
access of such substances only to those persons who have demonstrated an
appropriate sense of responsibility and have a lawful and legitimate reason to
possess them; (2) deter the unlawful and destructive abuse of controlled substances;
(3) penalize most heavily the illicit traffickers or profiteers of controlled substances,
who propagate and perpetuate the abuse of such substances with reckless disregard
for its consumptive consequences upon every element of society; (4) acknowledge
the functional and consequential differences between the various types of
controlled substances and provide for correspondingly different degrees of control
over each of the various types; (5) unify where feasible and codify the efforts of
32
this State to conform with the regulatory systems of the Federal government; and
(6) provide law enforcement authorities with the necessary resources to make this
system efficacious.
720 ILCS 570/100.
88. In light of Defendants’ failures to disclose suspicious orders of opioids and
maintain adequate controls to prevent diversion, the City was unaware of, and could not reasonably
know or have learned through reasonable diligence, that it had been exposed to the risks alleged
herein. Information pertaining to the suspicious orders of opioids Defendants were required to
disclose—but did not—was information that the Defendants, given their placement in the supply
chain, are uniquely positioned to possess and which was otherwise unavailable to the City. At all
times relevant to this Complaint, Defendants were in complete control over the instrumentalities
constituting the public nuisance.
89. All Defendants’ actions were, at the very least, a substantial factor in opioids
becoming widely available and widely used in the City. By failing to report and exercise due
diligence not to fill suspicious orders in the City, Defendants exacerbated the opioid crisis in the
City and failed to limit its reach. Defendants controlled these actions and, therefore, willingly
participated to a substantial extent in creating and maintaining the public nuisance. Without
Defendants’ actions, opioid use, misuse, abuse, and addiction would not have become so
widespread, and the opioid epidemic that now exists would have been averted or much less severe.
90. Defendants’ conduct is unreasonable, intentional, and unlawful.
91. Defendants knew of the public health hazard their conduct would create.
92. The public nuisance is substantial and unreasonable. Defendants’ actions caused
and continue to cause the public health epidemic and state of emergency described in this
Complaint.
33
93. Defendants’ conduct directly and proximately caused injury to the City and its
residents.
94. The public nuisance – i.e. the opioid epidemic - created, perpetuated, and
maintained by Defendants can be abated and further recurrence of such harm and inconvenience
can be abated.
WHEREFORE, the City respectfully requests that this Court enter an order (a) awarding
judgment in its favor and against Defendants on Count One of the Complaint; (b) granting
injunctive relief, (c) for abatement of the public nuisance, and (d) for compensatory damages in an
amount to be determined by a jury, together with all the costs of this action, including prejudgment
interest, post-judgment interest, costs and expenses, attorney fees, and such other relief as this
Court deems just and equitable.
COUNT TWO - NEGLIGENCE / NEGLIGENCE PER SE / GROSS NEGLIGENCE

96. Defendants have a duty to exercise reasonable care in distributing highly dangerous
opioid drugs in the City.
97. Defendants have a duty to exercise reasonable care under the circumstances, in light
of the risks. This includes a duty not to cause foreseeable harm to others.
98. In addition, Defendants, having engaged in a course of conduct that created a
foreseeable risk of injury, had, and still have, a duty to protect others from such injury. Like every
person, Defendants owe a duty of ordinary care to all others to guard against injuries which
naturally flow as a reasonably probable and foreseeable consequences of their actions.
34
99. Defendants are part of a limited class of registrants authorized to legally market,
sell, and distribute controlled substances, which places them in a position of great trust and
responsibility vis-à-vis the City. Their duty cannot be delegated.
100. In addition, 21 U.S.C. § 801 et seq.; 21 C.F.R. § 1301.74; 21 C.F.R. § 205; the
ICSA, including 720 ILCS 570/303; and Ill. Admin. Code tit. 68, § 1510.50, are public safety laws.
Each Defendant had a duty under, inter alia, 21 U.S.C. § 801 et seq., 21 C.F.R. § 1301.74, 720
ILCS 570/303, and Ill. Admin. Code tit. 68, § 1510.50, to maintain effective controls against
diversion of prescription opioids, to report suspicious orders of opioids, and not to fill suspicious
orders unless and until due diligence had eliminated the basis for its suspicion.
101. Defendants also misleadingly portrayed themselves as cooperating with law
enforcement and actively working to combat the opioid epidemic when, in reality, Defendants
failed to satisfy even their minimum, legally-required obligations to report suspicious prescribers.
Defendants voluntarily undertook duties, through their statements to the media, regulators, and the
public at large, to take all reasonable precautions to prevent drug diversion.
102. Upon information and belief, each Defendant repeatedly and recklessly or
intentionally breached its duties. These breaches included:
1. Selling prescription opioids in the supply chain when they knew, or should have
known, that there was a substantial likelihood the sale was for non-medical
purposes and that opioids are an inherently dangerous product when used for
non-medical purposes;
2. Using unsafe distribution practices;
3. Inviting criminal activity into the City by disregarding precautionary measures
built into the CSA, ICSA, and these statutes’ implementing regulations;
35
4. Failing to comply with the public safety laws described above;
5. Failing to acquire or utilize special knowledge or skills that relate to the
dangerous activity of selling opioids in order to prevent or ameliorate such
significant dangers;
6. Failing to review prescription orders for red flags;
7. Failing to report, or refuse to fill, suspicious orders; and
8. Failing to provide effective controls and procedures to guard against theft and
diversion of controlled substances.
103. Each Defendant breached its duty to exercise the degree of care, prudence,
watchfulness, and vigilance commensurate with the dangers involved in selling dangerous
controlled substances.
104. Defendants acted with actual malice in breaching their duties, i.e., they have acted
with a conscious disregard for the rights and safety of other persons, and said actions have a great
probability of causing substantial harm.
105. The foreseeable harm from a breach of these duties is the sale, use, abuse, and
diversion of prescription opioids.
106. The foreseeable harm from a breach of these duties also includes abuse, addiction,
morbidity and mortality in the City.
107. Reasonably prudent distributors of prescription opioids would have anticipated that
the scourge of opioid addiction would wreak havoc on communities, and the significant costs
which would be imposed upon the governmental entities associated with those communities. The
closed system of opioid distribution whereby wholesale distributors are the gatekeepers between
manufacturers and pharmacies, and wherein all links in the chain have a duty to prevent diversion,
36
exists for the purpose of controlling dangerous substances such as opioids and preventing diversion
and abuse to prevent precisely these types of harms. The very purpose of these duties was to
prevent the diversion of highly addictive drugs for non-medical purposes and the resulting harm.
108. Reasonably prudent distributors would know that failing to report suspicious orders
would lead to diversion of the opioids they shipped. Reasonably prudent distributors would also
know that filling such orders without first exercising due diligence would create an environment
in which diversion would occur.
109. The City is not asserting a cause of action under the CSA or ICSA or seeking to
enforce these laws. Rather, the City seeks to remedy harms caused to it by the breach of duty
created by these statutes and under common law.
110. The City seeks recovery for its economic losses (direct, incidental, or consequential
pecuniary losses) resulting from Defendants’ negligence, negligence per se, or gross negligence.
The City does not seek damages for the wrongful death, physical personal injury, serious emotional
distress, or any physical damage to property caused by Defendants’ actions.
111. Defendants’ breach of the duties described in this Count directly and proximately
resulted in the injuries and damages alleged by the City.
112. Defendants’ conduct as described in this Count demonstrates wanton, willful, or
reckless conduct or criminal indifference to civil obligations affecting the rights of others and
justifies an award of punitive damages.
113. The misconduct alleged in this case is ongoing and persistent.
114. The misconduct alleged in this case does not concern a discrete event or discrete
emergency of the sort a municipality would reasonably expect to occur, and is not part of the
37
normal and expected costs of municipal existence. The City alleges wrongful acts which are
neither discrete nor of the sort a municipality can reasonably expect.
115. The City has incurred expenditures for special programs over and above the City’s
ordinary municipal services.
WHEREFORE, the City respectfully requests that this Court enter an order (a)
awarding judgment in its favor and against Defendants on Count II of the Complaint; (b) all legal
and equitable relief as allowed by law, except as expressly disavowed herein, including inter alia
injunctive relief, compensatory and punitive damages, and all other damages allowed by law; (c)
compelling Defendants to pay the cost of the suit, including attorneys’ fees; and (d) awarding the
City such other, further, and different relief as this Honorable Court may deem just.
COUNT THREE - CONSUMER FRAUD—DECEPTIVE PRACTICES

VIOLATIONS OF MCC § 2-25-090
117. The MCC § 2-25-090 makes it unlawful for a business to “engage in any act of
consumer fraud, unfair method of competition, or deceptive practice while conducting any trade
or business in the city,” including but not limited to, “any conduct constituting an unlawful practice
under the Illinois [CFDBPA].” The CFDBPA, 815 ILCS 505/2, makes unlawful, among other
things, “[u]nfair . . . acts or practices . . . . in the conduct of any trade or commerce.” Section 1(f)
defines “trade or commerce” as inclusive of the “distribution of any services and any property,
tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value
wherever situated,” as well as “any trade or commerce directly or indirectly affecting the people
of this State.”
38
118. At all times relevant to this Complaint, Defendants violated the CFDBPA and MCC
§ 2-25-090 by engaging in unfair acts or practices in distributing opioids in the City. These acts
or practices are unfair in that they offend public policy; are immoral, unethical, oppressive, or
unscrupulous; and have resulted in substantial injury to Chicago consumers that is not outweighed
by any countervailing benefits to consumers or competition.
119. Defendants’ unfair acts or practices include, but are not limited to failing to
maintain effective controls against opioid diversion by:
a. Failing to create and maintain and use a compliance program

that effectively detects and prevents suspicious orders of
controlled substances;
b. Failing to report suspicious reports of controlled substances;
c. Filling suspicious or invalid orders for prescription opioids;
d. Failing to exercise due diligence to ensure that pharmacies and

dispensers were not at risk for diversion; and
e. Publicly claiming to use advance analytics and technology to

address suspicious orders and prevent illegitimate use of
prescription opioids while actually failing to maintain effective
controls against diversion.
120. Defendants’ practices as described above offend deep-seated public policies. As
the Illinois legislature recognized in enacting the ICSA, “the rising incidence in the abuse of drugs
and other dangerous substances and its resultant damage to the peace, health, and welfare of the
citizens of Illinois” requires a “system of control over the distribution and use of controlled
substances . . . .”44 The Legislature has also decreed that “drug addiction [is] among the most
serious health problem[] facing the people of the State of Illinois.”45 It is also the public policy of
44
720 Ill. Comp. Stat. 570/100 (West 2012).
45
39
the state of Illinois to “shift, to the extent possible, the cost of the damage caused by the existence
of the illegal drug market in a community to those who illegally profit from that market.”46
Nevertheless, by engaging in the conduct alleged above, Defendants profited from the opioid
epidemic in the City turning a blind eye to orders that Defendants knew or should have known
were likely to be diverted.
121. Defendants’ conduct has caused substantial, indeed grievous, injury to the City—
in lives lost to drug overdoses; addictions endured; emergency room visits; the creation of an illicit
drug market and all its concomitant crime and costs; unrealized economic productivity; and broken
lives, families, and homes.
122. The profound injuries to the City are not outweighed by any countervailing benefits
to consumers or competition since there is no benefit from the deceptive marketing of these
narcotic drugs. In light of Defendants’ lack of transparency and public claims of commitment to
exercising due diligence not to fuel abuse and diversion of prescription opioids, consumers could
not reasonably have avoided their injuries.
123. By reason of Defendants’ unlawful acts, the City and its residents have been
damaged and continue to be damaged, in a substantial amount to be determined at trial.
125. The City’s damages include expenditures incurred for special programs over and
above the City’s ordinary municipal services.
46
40
awarding judgment in its favor and against Defendants on Count III of the Complaint; (b) enjoining
Defendants from performing or proposing to perform any acts in violation of the MCC § 2-25-
090; (c) compelling Defendants to pay civil penalties up to $10,000 per violation pursuant to § 2-
25-0909(f) for each day the violations occurred; (d) compelling Defendants to disgorge their ill-
gotten profits; ; and (e) awarding the City such other, further, and different relief as this Honorable
Court may deem just.
COUNT FOUR - RECOVERY OF CITY COSTS OF PROVIDING SERVICES

VIOLATIONS OF MCC § 1-20-020
127. Section 1-20-020 of the MCC provides, in pertinent part:
Any person who causes the city or its agents to incur costs in order to provide
services reasonably related to such person’s violation of any federal, state or local
law, or such person’s failure to correct conditions which violate any federal, state
or local law when such person was under a legal duty to do so, shall be liable to the
city for those costs. This liability shall be collectible in the same manner as any
other personal liability.
128. At all times relevant to this Complaint, Defendants participated in unlawful acts or
lawful acts in an unlawful manner by, among other unlawful conduct:
a. Violating the CSA, 21 U.S.C. § 801 et seq. and its implementing

regulations by failing to monitor, detect, investigate, refuse to
fill, and report suspicious orders. See 21 U.S.C. § 823; 21 C.F.R.
1301.74;
b. Violating the (“CSA, 21 U.S.C. § 801 et seq. and its

implementing regulations by failing to “design and operate an
adequate system to disclose to the registrant suspicious orders of
controlled substances. See 21 C.F.R. § 1301.74(b);
c. Violating the ICSA, by failing to maintain effective controls

against diversion of controlled substances into other than lawful
41
medical, scientific, or industrial channels. See 720 ILCS

570/303;
d. Violating 77 Ill. Adm. Code 3100.310 by failing to “provide

effective controls and procedures to guard against theft and
diversion of controlled substances;”
e. Violating the Illinois Drug Dealer Liability Act (“DDLA”), 740

ILCS 57/5 et seq., by knowingly distributing, or knowingly
participating in the chain of distribution of, an illegal drug that
was actually used by individual drug users in the City and by
knowingly fueling an illegal drug market in the City
f. Violating, or aiding and abetting in the violation of, MCC § 2-

25-090 and the CFDBA by engaging in unfair acts or practices,
including the distribution of dangerous drugs without
maintaining adequate controls to avoid fostering diversion and
without reporting suspicious orders to law enforcement as
required by law; and
g. Violating, or aiding and abetting in the violation of, MCC § 2-

25-090 and the CFDBA by making and disseminating untrue,
false, or misleading statements regarding their compliance with
federal and state statutes and regulations governing reporting of,
and due diligence with respect to, suspicious orders of controlled
substances.
129. Defendants have known, or should have known, at all times relevant to this
Complaint that their violations of local, state and federal law set forth above, and their failure to
correct these violations despite having the legal obligation to do so, would cause the City to incur
costs.
130. The City’s health plans have also paid costs imposed by long-term opioid use,
abuse, and addiction, such as hospitalizations for opioid overdoses, drug treatment for individuals
addicted to opioids, intensive care for infants born addicted to opioids, long-term disability, and
more. The City’s workers’ compensation program and health benefit plans have expended
approximately $2.4 million on addiction treatment services from May 2013 to May 2015 alone.
Claims data indicate that non-retirees covered by the City’s health plans had 835 days of inpatient
42
therapy between May 2013 and May 2015, causing these employees to miss work, with
corresponding costs to the City.
131. Defendants’ conduct has also imposed costs on the City beyond those incurred by
its health and workers compensation plans. These include costs of providing emergency services
in response to opioid-related deaths, overdoses, addiction, and other injury; costs of funding
addiction treatment, such as the prescription of additional drugs like buprenorphine/naloxone and
naltrexone; and other costs attendant to the epidemic of opioid use and abuse in the City.
awarding judgment in its favor and against Defendants on Count IV of the Complaint; (b)
compelling Defendants to pay the costs the City incurred that were reasonably related to
Defendants’ violations of federal, state, or local law; and, (c) awarding the City such other, further,
and different relief as this Honorable Court may deem just.
COUNT FIVE - DRUG DEALER LIABILITY ACT

VIOLATIONS OF 740 ILCS 57/5 ET SEQ.
43
135. Illinois’ Drug Dealer Liability Act provides a civil remedy for damages to persons,
including governmental entities and others who pay for drug treatment or employee assistance
programs, in a community injured as a result of illegal drug use. 740 ILCS 57/5.
136. The statute recognizes that “[e]very community in the country is affected by the
marketing and distribution of illegal drugs,” and “[t]he civil justice system can provide an avenue
of compensation for those who have suffered harm as a result of the marketing and distribution of
illegal drugs.” 740 ILCS 57/10.
137. Section 20 of the DDLA provides, in pertinent part, that, “[a] person who
knowingly participates in the illegal drug market within this State is liable for civil damages as
provided in this Act. A person may recover damages under this Act for injury resulting from an
individual's use of an illegal drug.” 740 ILCS 57/20(a).
138. The DDLA provides that a governmental entity that funds a drug treatment program
or employee assistance program for an individual drug user or otherwise expended money on
behalf of an individual drug user, may bring an action for damages caused by an individual’s use
of an illegal drug, as can any person injured as a result of the willful, reckless, or negligent actions
of an individual drug user. 740 ILCS 57/25(a).
139. A person entitled to bring such an action may seek damages from:
(1) A person who knowingly distributed, or knowingly participated in the chain of distribution of,
an illegal drug that was actually used by the individual drug user.
(2) A person who knowingly participated in the illegal drug market if:
(A) the place of illegal drug activity by the individual drug user is within the illegal
drug market target community of the defendant;
44
(B) the defendant's participation in the illegal drug market was connected with the
same type of illegal drug used by the individual drug user; and
(C) the defendant participated in the illegal drug market at any time during the
individual drug user's period of illegal drug use.
Under 740 ILCS 57/25:
A person entitled to bring an action under this Section may recover all of the following damages:
(1) economic damages, including, but not limited to, the cost of treatment and rehabilitation,
medical expenses, loss of economic or educational potential, loss of productivity, absenteeism,
support expenses, accidents or injury, and any other pecuniary loss proximately caused by the
illegal drug use; . . .
(3) exemplary damages;
(4) reasonable attorneys' fees;
(5) costs of suit, including, but not limited to, reasonable expenses for expert testimony.
140. 740 ILCS 57/25(c). 740 ILCS 57/15 defines an “[i]llegal drug” as “a drug whose
distribution is a violation of State law.” Defendants’ failure to comply with the CSA and ICSA
make their distribution of opioids within the City illegal.
141. Moreover, it is a violation of state law to, “to acquire or obtain, or attempt to acquire
or obtain, possession of a controlled substance by misrepresentation, fraud, forgery, deception or
subterfuge.” 720 ILCS 570/406.
142. Doctor shopping and pharmacy shopping are likewise violations of state law, 720
ILCS 570/314.5.
45
143. Upon information and belief, by failing to detect, report, and reject suspicious
orders reaching the City, Defendants knowingly distributed, or knowingly participated in the chain
of distribution of, an illegal drug that was actually used by individual drug users in the City.
144. Upon information and belief, Defendants knowingly fueled the illegal drug market
in the City at all relevant times.
145. The City funds drug treatment for individuals who are addicted to opioids,
including individuals who, at some point, would have used prescription opioids or heroin illegally.
In addition to the money the City is already spending annually on substance abuse treatment –
including outpatient treatment, medical detoxification services, and residential treatment and
recovery homes – in 2016, the City added annual funding in order to train and provide naloxone
kits to residents. The CDPH is also investing additional resources to support peer health workers
to be trained to disseminate overdose prevention messages, distribute naloxone, and provide
information on treatment resources to fellow community members. In addition, the City has
incurred economic damages, including from loss of loss of productivity, absenteeism, support
expenses, accidents or injury, and other pecuniary loss.
146. As a direct result of Defendants’ actions alleged in this Count, the City has suffered
injury and damages.
46
awarding judgment in their favor and against Defendants on Count V of the Complaint; (b)
compelling Defendants to pay damages for their violations of the DDLA, including, but not limited
to, the cost of treatment and rehabilitation, medical expenses, loss of economic or educational
potential, loss of productivity, absenteeism, support expenses, accidents or injury, and other
pecuniary loss; (c) compelling Defendants to pay exemplary damages; (d) compelling Defendants
to pay the cost of the suit, including attorneys’ fees and interest; and (d) awarding the City such
other, further, and different relief as this Honorable Court may deem just.
COUNT SIX
UNJUST ENRICHMENT
150. As an expected and intended result of their conscious wrongdoing as set forth in
this Complaint, Defendants have profited and benefited from the increase in the distribution and
purchase of opioids within the City.
151. The City has expended substantial amounts of money in an effort to remedy or
mitigate the societal harms caused by Defendants’ conduct.
152. Upon information and belief, these expenditures include the provision of healthcare
services and treatment services to people who use opioids.
153. These expenditures have helped sustain Defendants’ businesses.
154. The City has conferred a benefit upon Defendants by paying for Defendants’
externalities: the cost of the harms caused by Defendants’ improper distribution practices.
47
155. The City has also conferred a benefit upon Defendants by paying for purchases by
unauthorized users of prescription opioids from the Defendants’ supply chain for non-medical
purposes.
156. By distributing a large volume of opioids to the City and by acting in concert with
third parties, Defendants have unjustly enriched themselves at the City’s expense. The City has
paid for the cost of Defendants’ externalities and Defendants have benefited from those payments
because they allowed them to continue providing customers with a high volume of opioid
products. Because of their conscious failure to exercise due diligence in preventing diversion,
Defendants obtained enrichment they would not otherwise have obtained. The enrichment was
without justification and the City lacks a remedy provided by law.
157. Defendants have unjustly retained a benefit to the City’s detriment, and these
Defendants’ retention of the benefit violates the fundamental principles of justice, equity, and good
conscience.
WHEREFORE, the City respectfully requests that this Court enter an order (a) awarding
judgment in their favor and against Defendants on Count VI of the Complaint; (b) compelling
Defendants to disgorge all unjust profits to the City; and (c) awarding such other, further, and
different relief as this Honorable Court may deem just.
Dated: March 5, 2018 Respectfully submitted,
EDWARD N. SISKEL
Corporation Counsel, City of Chicago
BY: /s/
Thomas P. McNulty
Fiona A. Burke
City of Chicago, Department of Law
30 N. LaSalle St., Suite 1240
Chicago, IL 60602
48
thomas.mcnulty@cityofchicago.org
fiona.burke@cityofchicago.org
Telephone: (312) 744-6939
Linda Singer (pro hac vice to be submitted)

Elizabeth Smith (pro hac vice to be
submitted)
David I. Ackerman (pro hac vice to be
submitted)
MOTLEY RICE LLC
401 9th St. NW, Suite 1001
Washington, DC 20004
jnelson@motleyrice.com
lsinger@motleyrice.com
esmith@motleyrice.com
Telephone: (202) 232-5504
Lisa Saltzburg (pro hac vice to be

submitted)
Jennifer Guy (pro hac vice to be submitted)
Natalie Deyneka (pro hac vice to be
submitted)
MOTLEY RICE LLC
28 Bridgeside Blvd.
Mount Pleasant, SC 29464
lsaltzburg@motleyrice.com
jguy@motleyrice.com
ndeyneka@motleyrice.com
Telephone: (843) 216-9000
Kenneth A. Wexler
Thomas A. Doyle
WEXLER WALLACE LLP
55 W. Monroe Street, Suite 3300
Chicago, IL 60603
kaw@wexlerwallace.com
tad@wexlerwallace.com
Telephone: (312) 346-2222
Attorneys for Plaintiff City of Chicago
49

City of Chicago Lawsuit Against Opioid Manufacturers

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Case: 1:18-cv-01639 Document #: 1 Filed: 03/05/18 Page 1 of 49 PageID #:1

IN THE UNITED STATES DISTRICT COURT

CITY OF CHICAGO, a municipal Civil Action No.:

CARDINAL HEALTH, INC.;

1. Plaintiff, the City of Chicago (“City”), brings this action to redress

McKesson Drug Company’s (together “Defendants”) unfettered and unlawful distribution of

the City. The City alleges as follows:

Consequently, the prescribing of opioids was sharply constrained.

3. In the mid-1990s, however, pharmaceutical companies (which the City sued

more than 650,000 opioid prescriptions were dispensed in the U.S.

4. Together, Defendants account for approximately 90% of all revenues from

dominate the wholesale drug distribution market, including in the City.

expand, and maintain.

of determining whether a pharmacy is facilitating the diversion of prescription opioids.

legitimate medical purposes.

8. Sales and distribution data available to Defendants, as well as their own

volumes and profits.

overdoses representing the most significant factor in this alarming trend.

acquire—or simply could not afford—prescription opioids.

medication-assisted treatment (“MAT”). In 2018, CDPH is increasing its investment again in

treatment, medical detoxification services, residential treatment and recovery homes.

negligence, and unjust enrichment.

of the State of Illinois.

city officer, board or department.” MCC § 2-60-020.

16. AmerisourceBergen Drug Corporation (“AmerisourceBergen”) is a wholesaler of

17. AmerisourceBergen’s principal place of business is located in Chesterbrook,

Pennsylvania, and it is incorporated in Delaware.

18. AmerisourceBergen has been licensed as a wholesale distributor of dangerous

drugs in Illinois since at least 2002. AmerisourceBergen operates a distribution center in

opioids, throughout the country.

20. Cardinal is an Ohio corporation and is headquartered in Dublin, Ohio.

patients travels through the Cardinal Health network.

24. McKesson has been licensed as a wholesale distributor of dangerous drugs in

III. JURISDICTION AND VENUE

Court to exercise jurisdiction.

Eastern Division of the Northern District of Illinois.

IV. JURY DEMAND

A. DEFENDANTS DELIBERATELY DISREGARDED THEIR DUTIES TO MAINTAIN

their public pronouncements.

reasonably prudent distributors would not fall.

implementing regulations impose a duty on registrants (entities, like Defendants, licensed to

to disclose to the registrant suspicious orders of controlled substances.” 21 C.F.R. § 1301.74(b).

Department of Financial and Professional Regulation (“IDFPR”) to distribute controlled

applicable Federal, State and local law.” 720 ILCS 570/303.

necessary to prevent diversion”). Further, “[w]holesale drug distributors shall operate in

applicable State, local, and DEA regulations).

order is not likely to be diverted into illegal channels.6

2. Defendants understood the importance of their reporting obligations.

closed system of distribution, designed to prevent diversion, collapses.8

should look for to identify potential diversion.

system is to function properly . . . distributors must be vigilant in deciding whether a prospective

responsibility is critical, as . . . the illegal distribution of controlled substances has a substantial

facilitate diversion can cause enormous harm.”14

whether an order is suspicious.”16

3. Despite repeated admonitions, Defendants have repeatedly violated their

c. On December 5, 2007, the DEA issued an Order to Show Cause and

d. On December 7, 2007, the DEA issued an Order to Show Cause and

f. On May 2, 2008, McKesson entered into an Administrative Memorandum

g. On September 30, 2008, Cardinal entered into a Settlement and Release

h. On February 2, 2012, the DEA issued an Order to Show Cause and

j. On January 5, 2017, McKesson entered into an Administrative

prevent suspicious orders. Pursuant to an Administrative Memorandum of Agreement (“2017

McKesson “distributed controlled substances to pharmacies even though those McKesson