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19 <br />orders for these products," as they were required to do by law. As noted above, the distributors <br />admit that they "are uniquely situated to perform due diligence in order to help support the security" <br />of controlled substance distribution.3 <br />The Guidelines set out "Know Your Customer Due Diligence" standards with respect to all <br />distributor customers — which, in the context of the Guidelines, comprise pharmacies and other legal <br />dispensaries. These due diligence standards include gathering detailed information on the customer <br />base of a pharmacy, the quantity of prescriptions filled each day, the quantity of controlled <br />substance prescriptions filled each day, and the percentage of controlled substance purchases <br />compared to overall purchases, and then utilizing this information to compare orders to a <br />"threshold" profile to identify orders of unusual size, frequency or pattern. When confronted with <br />"unusual" orders, the distributors' own Guidelines dictate that they should stop the shipments, <br />investigate the orders under steps that are listed in the Guidelines, and report the suspicious activity <br />to the DEA. These industry standards clearly establish that the duty of care for pharmaceutical <br />distributors includes identifying, investigating, and reporting suspicious orders of controlled <br />substances. <br />Distributors have chosen to abandon their duties, thereby enabling the diversion of opioids <br />and helping to create the present epidemic. The distributors have not performed adequate due <br />diligence and have failed to report suspicious orders, breaching the very industry standards they, <br />themselves, created. In doing so, the distributors have violated their duties of care and both federal <br />and state law. <br />D. "ARCOS" Data Contains Key Evidence of the Distributors' Breaches. <br />One of the ways wholesale distributors are to maintain controls against the diversion of <br />prescription opiates is by inputting all distributions in the DEA Automation of Reports and <br />Consolidated Orders System (ARCOS) database.4 This database contains monthly reports from <br />each wholesale distributor and documents the number of doses of each controlled substance sold to <br />every pharmacy on a monthly basis. <br />The wholesale distributors were required to monitor this data for suspicious orders. When <br />"suspicious orders" were identified based on this regularly reported data, the wholesale distributors <br />were required to halt shipment, perform an on -site investigation, determine whether a risk of <br />diversion is present, and report the threat of diversion directly to the relevant authorities, including <br />the DEA. "Suspicious orders" are defined by guidance letters provided by the DEA as well as <br />corporate policies and industrial practices, federal law, and state law, which further define the term. <br />3 ,See HDMA Industry Compliance Guidelines. <br />4 See United States v. Four Hundred Sixty Three Thousand Four Hundred Ninety Seven Dollars & Seventy Two Cents <br />($463,497.72) in U.S. Currency From Best Bank Account, 779 F. Supp. 2d 696, 709 (E.D. Mich. 2011). <br />4 <br />