DOJ Targets Black Market Prescription Drug Diversion, Signaling Possible New Enforcement Trend

Over the past year the U.S. Department of Justice (DOJ) has publicized two criminal enforcement cases targeting black market prescription drug diversion. In these cases, the DOJ targeted pharmacists, pharmaceutical distributors and sales representatives, and their associates—charging them with knowingly providing prescription medications for non-medical use to third parties for sale on the black market.

Given that the DOJ publicized these cases—with press releases issued less than six months apart—it appears that this could be a new enforcement trend going forward. With this in mind, other individuals who believe they may be at risk of facing scrutiny related to their prescription drug distribution practices would be well-served to seek advice and representation from an experienced federal drug diversion attorney promptly.

The DOJ’s Recent Efforts to Target Black Market Prescription Drug Diversion 

Here is a look at the DOJ’s two most-recent drug policy efforts to target black market prescription drug diversion: 

1. Pharmacy Owner and Associate Convicted of Conspiracy to Commit Black Market Prescription Drug Diversion and Healthcare Fraud 

In July 2024 the DOJ announced the sentencing of a pharmacy owner and an associate who had previously been convicted of engaging in a black market prescription drug diversion conspiracy. They were also convicted of health care fraud based on their submission of false claims for the diverted drugs to Medicare. As summarized in the DOJ’s July 2024 press release:

“According to court documents and evidence presented at trial, . . . [pharmacy owner] conspired to submit fraudulent claims to Medicare . . . for prescription drugs that were never dispensed to beneficiaries and instead were provided to her co-conspirators to sell on the black market. [pharmacy owner’s] co-conspirators created fraudulent prescriptions, and [pharmacy owner] recommended the combinations of prescription drugs to be written and checked the eligibility of the patients for reimbursement.”

The DOJ’s press release also explains that the second defendant in the case, the pharmacy owner’s associate, was convicted of working with co-conspirators to obtain Medicare beneficiaries’ information that she then used, “to write or cause to be written false and fraudulent prescriptions for expensive prescription medication[s] . . . [which] were not dispensed to patients, but rather were provided to a co-conspirator to sell on the black market.”

The pharmacy owner was convicted of conspiracy to commit healthcare fraud and conspiracy to engage in the unlicensed wholesale distribution of prescription drugs. The pharmacist convicted was sentenced to 27 months in federal prison. The pharmacy owner’s associate was convicted of healthcare fraud, conspiracy to commit healthcare fraud, and conspiracy to engage in the unlicensed wholesale distribution of prescription drugs. She was sentenced to 23 months in federal prison. 

2. Pharmaceutical Distributor Executives and Sales Representatives Charged in DOJ’s Largest Ever Criminal Enforcement Action Targeting Black Market Prescription Drug Diversion 

In October 2024 the DOJ announced a federal jury convicted pharmaceutical distributor executives and sales representatives and brokers who are accused of, “the unlawful distribution of nearly 70 million opioid pills and over 30 million doses of other commonly abused prescription drugs to alleged . . . pill-mill pharmacies.” As the DOJ’s October 2024 press release goes on to explain:

“[T]he opioids allegedly distributed — oxycodone, hydrocodone, and hydromorphone — were available in numerous strengths and forms, but the distributors allegedly sold the drugs almost exclusively in their most abused, most powerful immediate-release pill forms — i.e., the ones that sold for the most money on the black market. The distributors also allegedly sold prescription drug potentiators — alprazolam, carisoprodol, and promethazine with codeine syrup — known for their reputation of enhancing the high from the opioids. The distributors allegedly charged their . . . customers far more . . . than what a legitimate pharmacy could or would pay.”

The press release also quotes the head of the DOJ’s Criminal Division as stating, “The defendants, including pharmaceutical drug distributors, allegedly exploited the opioid crisis for profit — selling dangerous and addictive drugs to pill-mill pharmacies at above-market prices, knowing that the drugs would end up on the black market.” Some of the specific allegations against the defendants include: 

• The defendants followed a “blueprint” for avoiding scrutiny from the U.S. Drug Enforcement Administration (DEA) that included charging high prices with low purchasing limits and implementing compliance measures “that only served appearances.” 
• The defendants knowingly supplied prescription opioids and other prescription drugs to pill-mill pharmacies and coached pharmacists on how to avoid triggering scrutiny from the DEA and other authorities, such as the National Institute on Drug Abuse (NIDA) and Centers for Disease Control and Prevention. 
• The defendants sourced prescription drugs from pharmacies across the country while specifically targeting pill mill pharmacies in Houston, a “known ‘hot zone’ for drug diversion.” 

The defendants each face a variety of charges based on their specific role in the alleged black market prescription drug diversion scheme. These include charges for unlawfully distributing and dispensing controlled substances for chronic diseases, conspiracy to unlawfully distribute and dispense controlled substances, and conspiracy to defraud the United States.

Understanding the Federal Risks Involved in Diverting Prescription Drugs to the Black Market 

The risks involved in diverting prescription drugs to the black market are substantial. All parties involved can face serious federal criminal charges—including charges that carry years or decades of federal imprisonment. Here is a more in-depth look at some of the charges filed in the cases discussed above: 

• Healthcare Fraud – Individuals accused of billing Medicare and other government programs for diverted prescription drugs can be charged with healthcare fraud and other related crimes. Under 18 U.S.C. Section 1347, healthcare fraud carries statutory fines and up to 10 years of imprisonment, or up to 20 years of imprisonment in cases involving serious bodily injury. 
• Unlicensed Wholesale Distribution of Prescription Drugs – The unlicensed wholesale distribution of prescription drugs violates 21 U.S.C. Section 841 and can potentially trigger a variety of other drug-related charges as well. The penalties under Section 841 vary depending on the specific drug(s) and quantity(ies) involved, though the statutory maximum penalty starts at 20 years behind bars. 
• Unlawfully Distributing and Dispensing Controlled Substances – Unlawfully distributing and dispensing controlled substances also falls under 21 U.S.C. Section 841. In addition to imposing statutory maximum penalties, Section 841 also imposes statutory minimum penalties for offenses involving certain types of drugs. 
• Healthcare and Drug-Related Conspiracies – Even individuals who are only tangentially involved in black market prescription drug diversion schemes can face conspiracy charges under the federal attempt and conspiracy statutes, 18 U.S.C. Section 1349 and 21 U.S.C. Section 846. Individuals convicted of participating in a conspiracy are subject to the penalties imposed for the underlying offense(s) involved. 
• Conspiracy to Defraud the United States – The DOJ can pursue charges for conspiracy to defraud the United States under 18 U.S.C. Section 371 in cases involving healthcare fraud, obstruction of the DEA, and other diversion-related activities. Section 371 imposes penalties including statutory fines and up to five years of federal imprisonment. 

Again, these are just examples. Prosecutors at the DOJ can potentially pursue a wide range of other charges in federal black market drug diversion cases as well. Collectively, these charges can expose defendants to hundreds of thousands, if not millions, of dollars in criminal fines and an effective life sentence. As a result, having an effective defense strategy in place is critical; and, when facing scrutiny from the DEA or the DOJ, targeting a resolution that avoids formal charges will be the most advantageous approach in most cases.

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Chris J. Quick

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Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen

Former Supervisory Special Agent (FBI)

What to Do if You Have Concerns About the DOJ’s Recent Enforcement Efforts 

With all of this in mind, what should you do if you have concerns about the DOJ’s recent efforts to target black market prescription drug diversion?

In this scenario, engaging experienced federal defense counsel to help you make informed decisions is essential. While you cannot undo what has already been done, there are steps you can take to mitigate your risk going forward and prepare for the possibility of facing DEA or DOJ scrutiny. Knowing that the DOJ is specifically targeting black market prescription drug diversion, this is not a possibility that you can afford to ignore, and an experienced federal drug diversion attorney will be able to help you make informed and strategic decisions based on the specific circumstances at hand. 

In this same vein, what you should not do is continue operating without putting protective mechanisms in place. If you receive a subpoena or federal agents show up at your door with a search warrant, you need to be prepared. An experienced federal drug diversion attorney will be able to help you prepare, and will be able to intervene in the DEA or DOJ’s investigation on an emergency basis if necessary. 

Schedule a Confidential Consultation with a Federal Drug Diversion Attorney at Oberheiden P.C.

If you need to know more about the DOJ’s recent efforts to target black market prescription drug diversion, we strongly encourage you to get in touch. Our senior attorneys, including our former DOJ prosecutors, can explain everything you need to know. To schedule a confidential consultation with a federal drug diversion attorney at Oberheiden P.C. as soon as possible, call 888-680-1745 or tell us how we can reach you online now.