LOS ANGELES — In the waning days of summer in 2008, a convicted felon and his business partner leased office space on a seedy block near MacArthur Park. They set up a waiting room, hired an elderly physician and gave the place a name that sounded like an ordinary clinic: Lake Medical.

The doctor began prescribing the opioid painkiller OxyContin – in extraordinary quantities. In a single week in September, she issued orders for 1,500 pills, more than entire pharmacies sold in a month. In October, it was 11,000 pills. By December, she had prescribed more than 73,000, with a street value of nearly $6 million.

At its headquarters in Stamford, Conn., Purdue Pharma, the maker of OxyContin, tracked the surge in prescriptions. A sales manager went to check out the clinic and the company launched an investigation. It eventually concluded that Lake Medical was working with a corrupt pharmacy in Huntington Park to obtain large quantities of OxyContin.

“Shouldn’t the DEA be contacted about this?” the sales manager, Michele Ringler, told company officials in a 2009 email. Later that evening, she added, “I feel very certain this is an organized drug ring.”

Purdue did not shut off the supply of highly addictive OxyContin and did not tell authorities what it knew about Lake Medical until several years later when the clinic was out of business and its leaders indicted.

By that time, 1.1 million pills had spilled into the hands of Armenian mobsters, the Crips gang and other criminals.

A Los Angeles Times investigation found that, for more than a decade, Purdue collected extensive evidence suggesting illegal trafficking of OxyContin and, in many cases, did not share it with law enforcement or cut off the flow of pills. A former Purdue executive, who monitored pharmacies for criminal activity, acknowledged that even when the company had evidence pharmacies were colluding with drug dealers, it did not stop supplying distributors selling to those stores.


Purdue knew about many suspicious doctors and pharmacies from prescribing records, pharmacy orders, field reports from sales representatives and, in some instances, its own surveillance operations, according to court and law enforcement records, which include internal Purdue documents, and interviews with current and former employees.

Joseph Rannazzisi, who was the top DEA official responsible for drug company regulation until last year, said he was not aware of the scope of evidence collected by Purdue. Under federal law, drugmakers must alert the DEA to suspicious orders. The agency interprets that law, he said, to include a duty to reject orders from customers if the company suspects pills are going to the black market.

“They have an obligation – a legal one, but also a moral one,” he said.

The federal government has not accused Purdue of any wrongdoing in the case of Lake Medical or other suspected drug operations.

In a statement, a Purdue lawyer said the company had “at all times complied with the law.” General counsel Phil Strassburger said Purdue had reduced supplies of OxyContin to distributors servicing some pharmacies it suspected of corruption, but had to be careful such reductions did not to interfere with legitimate patients getting medication.

He defended the company’s decision not to share all its evidence with authorities.

“It would be irresponsible to direct every single anecdotal and often unconfirmed claim of potential misprescribing to these organizations,” Strassburger said.

A private, family-owned corporation, Purdue has earned more than $31 billion from OxyContin. A year before Lake Medical opened, Purdue and three of its executives pleaded guilty to federal charges of misbranding OxyContin in what the company acknowledged was an attempt to mislead doctors about risk of addiction. It was ordered to pay $635 million in fines and fees.

After the settlement, Purdue touted a high-powered internal security team it had set up to guard against the illicit use of its drug. Drugmakers like Purdue are required by law to establish and maintain “effective controls” against the diversion of drugs from legitimate medical purposes.


Purdue had access to a stream of data showing how individual doctors across the nation were prescribing OxyContin. The information came from IMS, a company that buys prescription data from pharmacies and resells it to drugmakers for marketing purposes.

That information was vital to Purdue’s sales department. Employees working on commission could identify doctors writing a small number of OxyContin prescriptions who might be persuaded to write more.

By combing through the data, Purdue also could identify physicians writing large numbers of prescriptions – a potential sign of drug dealing.

Soon after Lake Medical opened, Purdue zeroed in on prescriptions of 80-milligram, maximum-strength OxyContin written by Eleanor Santiago. Once a respected physician, the 70-year-old was drowning in debt when she took the job of clinic medical director.

The 80-milligram pills Santiago prescribed had the strength of 16 Vicodin tablets. Doctors generally reserved those pills for patients with severe, chronic pain who had built up a tolerance over months or years.

In the illegal drug trade, “80s” were the most in demand.

During the years that Lake Medical was in business, the pills could be crushed and smoked or snorted, producing a high similar to the drug’s chemical cousin, heroin. On the street, the pills went for up to $80 apiece.

A physician writing a high volume of 80s was a red flag for anyone trying to detect how OxyContin was getting onto the black market.

The number of prescriptions Santiago was jaw-dropping. Many doctors would go their entire careers without writing a single 80s prescription. Santiago doled out 26 in a day.

Purdue was tracking her prescriptions.

Michele Ringler, the district sales manager for Los Angeles, went to Lake Medical to investigate. When she and one of her sales reps arrived, they found a building that looked abandoned. Inside, the hallways were strewn with trash and lined with a crowd of men who looked like they’d “just got out of LA County jail,” according to the emails. Feeling uncomfortable, Ringler and the rep left without speaking to Santiago.


When a Purdue security committee met in Stamford in December 2008, less than five months after Lake Medical opened, Santiago was under review. The panel, comprised of three company lawyers, could have reported her to the DEA. Instead it opted to add her name to a confidential roster of physicians suspected of recklessly prescribing.

Purdue calls that list Region Zero and has been adding names to it since 2002. A Times investigation in 2013 revealed the existence of the list. At that time, the company acknowledged there were more than 1,800 doctors in Region Zero.

Purdue directed its sales reps to avoid those doctors, and it didn’t tell physicians they had been placed on the list. Company executives told The Times in 2013 that Purdue had reported about 8 percent of doctors on the list to authorities.

One doctor Purdue put in Region Zero was Eric Jacobson, a Long Island, N.Y., physician prescribing huge amounts of OxyContin. The company stopped sending sales reps to his office in 2010. The following year, one of Jacobson’s patients killed four people.

Jacobson was convicted of unlawful distribution of oxycodone. The prosecutor and lead investigator told the Times that Purdue did not disclose what it knew about Jacobson to them either before or after the pharmacy slayings.

In L.A., Santiago kept writing prescriptions in ever larger numbers.

To keep the OxyContin flowing, Lake Medical needed people. Lots of them. For that, a good place was skid row.

For as little as $25, homeless people served as straw patients and collected prescriptions for 80s. It required just a few hours at the clinic, filling out a few forms and sitting through a sham examination. They were then driven, often in groups, to a pharmacy.

Low-level members of the Lake Medical ring known as cappers would then take the pills back to the Lake Medical ring leaders who packaged them in bulk for sale to dealers.

In the months after the Lake Medical ring started, Purdue was informed that homeless people were being used in an OxyContin ring. In December 2008, the same month Santiago was placed on the Region Zero list, a company sales rep visited Central Care Pharmacy, an Encino store filling Lake Medical prescriptions. The pharmacist said there appeared to be some kind of scam going on with 80-milligram pills.

Purdue sent Ringler to follow up and her report on the pharmacist’s concerns reached Purdue’s security and risk management teams the next day.

On June 10, the Encino pharmacist sent an email to her Purdue sales rep with the subject line “urgent question.” The pharmacist said she was being asked to fill prescriptions written by Santiago and other Lake Medical doctors for “lots of Oxy patients.”

“I want to make sure Dr office is legit,” Tihana Skaricic wrote.

The email was forwarded to Ringler, who sent it to a company lawyer, who sent it to an executive responsible for compliance with the federal controlled substances law. No one at Purdue ever got back to Skaricic. the clinic with the authorities, according to law enforcement sources.

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