'Tragic and cataclysmic': Shreveport drug wholesaler on DEA suspension

The president of a Shreveport pharmaceutical wholesaler got emotional while testifying Tuesday about the nation's opioid crisis, the future of his family-owned business and the patients whom he says desperately need his medicine.

Paul Dickson was the sole person to take the stand during a nearly seven-hour hearing in U.S. District Court in Shreveport.

At the end of the hearing, which stretched into early evening, U.S. District Court Judge Elizabeth Foote ruled that the Morris & Dickson Co. of Shreveport could temporarily resume selling controlled substances.

Morris & Dickson filed suit after a Drug Enforcement Administration order of May 2 that had stopped the company from selling controlled substances. The company's lawsuit sought to set aside the DEA order.

The DEA had alleged that Morris & Dickson failed to report suspicious and excessive opioid orders made by independent pharmacies.

Dickson testified Tuesday that the DEA order was "tragic and cataclysmic."

Dickson told the court Tuesday that the order would kill his business in a matter of days and leave nearly 800 employees without jobs, almost all of whom work in Texas and Louisiana. An overwhelming majority of them are based in Shreveport.

The suspension imposed by the DEA was the first immediate suspension of opioid sales to a wholesaler since 2012.

Morris & Dickson is the largest private, family-owned pharmaceutical distributor in the United States and has operated in Shreveport for 177 years. It competes with the "Big Three" of drug distribution companies: AmerisourceBergen Corp., Cardinal Health Inc., and McKesson Corp., which collectively account for almost 90 percent of wholesale drug sales in the U.S.

More: DEA: Shreveport wholesaler must stop selling controlled drugs

Morris & Dickson sells drugs to hospitals, pharmacies and other alternative care facilities in 17 states throughout the southern United States. The bulk of its customers are in Louisiana and Texas.

The company accounts for less than 2 percent of the nation's pharmaceutical distribution. It also has the largest inventory of pediatric pharmaceuticals in the nation. , according to testimony from Dickson.

The order, Dickson said, had forced the company's customers to seek other wholesalers because Morris & Dickson could not fulfill orders for controlled substances.

Since the DEA's suspension order issuance last week, Morris & Dickson sales have dropped 14 percent, Dickson said. Morris & Dickson could not survive long enough for an administrative hearing to determine if the company's registration would be permanently revoked, Dickson said.

Customers, following an initial appeal from Dickson, emailed "hundreds of letters" expressing their concerns. Dickson became emotional as he recalled the letters from patients and caregivers on behalf of loved ones who were dying or near death.

"I prayed for every one of those patients," he said, choking up. "All I'm worried about is the people."

Much of Tuesday's hearing focused on Morris & Dickson's software system that identifies suspicious drug orders. The DEA requires distributors to operate a system to disclose suspicious orders of controlled substances. The federal agency defines suspicious orders as "orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency."

In announcing its order against Morris & Dickson on Friday, the DEA said it became aware in October 2017 that the company made high-volume sales of oxycodone and hydrocodone to five of Louisiana's top 10 purchasing pharmacies. The two drugs are highly addictive opioid pain medications.

Some of the pharmacies served by Morris & Dickson were placing monthly orders for 10 times the average for Louisiana pharmacies, the DEA said.

"DEA records indicated that Morris & Dickson Company had not filed any suspicious order reports on any of the pharmacies in question in Louisiana," the agency wrote.

During the hearing, Dickson outlined his company's investigation of orders that appeared to be unusual.

He said the company used a vendor to create customer profiles and other monthly purchasing data to determine, among other things, if pharmacies were selling or ordering more opioids than is normal or if an abnormally high number of pharmacy customers paid for drugs with cash.

Using the vendor information, Morris & Dickson then internally investigated suspicious orders. Most times, Dickson said, the large orders were the result of clerical errors.

MORE: Opioid distributor apologizes for shipping large volumes of painkillers to West Virginia

The company deemed some large orders as not suspicious after considering the pharmacy's location. For example, Dickson said, a pharmacy that prescribes more oxycodone or hydrocodone and takes payments in cash may on the surface seem strange. But if the pharmacy is in a working-class neighborhood where residents may not have insurance, those factors make more sense, he said.

Uniform standards such as comparing drug orders from pharmacies in the same zip codes don't work because the pharmacies served by Morris & Dickson serve a niche clientele, Dickson said.

The company asked its employees, ranging from sales field representatives to truck drivers, to report anything suspicious that they saw while visiting independent pharmacies. These measures, Dickson testified, fell under the DEA's "Know Your Customer" guidelines, which require distributors to review customer ordering habits and conduct proper customer due diligence.

In cross-examination, lawyers for the DEA and the U.S. Department of Justice said that Morris & Dickson reported surprisingly few suspicious opioid orders since 2014 — only three.

The lawyers for the DEA and DOJ spent much of their cross-examination of Dickson listing off orders that seemed large or unusually frequent.

Prior to 2014, Dickson said, his company dropped nearly 140 clients that it deemed high risk, which he said eliminated the need to report some orders to the DEA. If the clients weren't suspicious, the orders likely wouldn't be, Dickson said.

Records on orders that were investigated internally by the company were not kept or provided to the DEA, he said.

Dickson said that the reporting system wasn't perfect and that he should have kept better records. He argued that the reporting system was still good.

"I didn't design this to please the DEA," Dickson said of his company's reporting system. "I designed this to stop diversion" — a reference to drugs that are diverted for illegal distribution.

Dickson said he and his sons personally know people who have overdosed on opioids.

"This matters to me," Dickson said as he again got choked up and asked for a drink of water.

Dickson added that his company had taken further steps to improve its reporting system by hiring an outside firm with former DEA employees on staff.

Judge Foote granted Morris & Dickson a temporary restraining order, allowing it to resume selling controlled substances.

Foote said Tuesday that she did not have access to the statistical data or other DEA records to justify the suspension order and that the federal agency failed to show specific evidence that the drugs were transferred to unlawful channels for distribution or use.

Further, Foote said, the suspension order could cause substantial harm to Morris & Dickson.

The judge granted the temporary restraining order until at least May 22 but said it may be extended an additional 14 days. A hearing to determine whether to turn the restraining order into a preliminary injunction is scheduled for May 22.

"(Tuesday's) ruling means that tens of thousands of patients, many of whom are critical care, are able to get their desperately-needed medications," Dickson, the company president, said after the hearing. "Morris & Dickson remains committed to doing everything it can to combat the diversion of controlled drugs, and to assist the DEA in fighting the opioid epidemic."