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C! <br />Overview Memorandum <br />Prospective North Carolina County Opioid Litigation <br />North Carolina is in the midst of a public health crisis stemming from the flood of opioids <br />pouring into the State, as well as North Carolina's Cities and Counties. The opioid epidemic has <br />been fueled by the greed of the corporate elite, such as Fortune 500 behemoth McKesson Corp., <br />deliberately failing to detect and report "suspicious" orders of opioids, despite being required to <br />do so by federal and state law. In 2017, McKesson, the largest drug distributor in the nation, <br />was fined a record $150 million by the federal government for its blatant failure to report <br />suspicious orders in violation of federal law. Cardinal Health, another member of the "Big <br />Three" drug distributors, was fined $44 million for its failure to report suspicious narcotic <br />orders to the DEA. <br />Substantially all prescribed opioids must flow through the distributors: federal law <br />requires that opioids be distributed through a closed system. Accordingly, the distributors are <br />legally required to spot and report red flags in the distribution chain. <br />McKesson, Cardinal, and their fellow distributors admit that they are the gatekeepers — <br />the watch dogs — for preventing opioid abuse, stating in their self - created Industry Compliance <br />Guidelines: "distributors are uniquely situated to perform due diligence in order to help <br />support the security of the controlled substances... and reduce the possibility that controlled <br />substances within the supply chain will reach locations they are not intended to reach."� <br />Unfortunately, the distributors wholly ignored their admitted legal obligations. Instead of <br />putting in controls to stop opioid abuse and alerting authorities to suspicious orders, the <br />' See Healthcare Distribution Management Association (HDMA) Industry Compliance <br />Guidelines: Reporting Suspicious Orders and Preventing Diversion of Controlled Substances <br />( "industry Compliance Guidelines" or "Guidelines "). <br />North Carolina County Opioid Litigation - Privileged and Confidential <br />