To combat an escalating opioid epidemic, the Drug Enforcement Administration trained its sights in 2011 on Mallinckrodt Pharmaceuticals, one of the nation’s largest manufacturers of the highly addictive generic painkiller oxycodone.

It was the first time the DEA had targeted a manufacturer of opioids for alleged violations of laws designed to prevent diversion of legal narcotics to the black market. And it would become the largest prescription-drug case the agency has ever pursued.

Ultimately, the DEA and federal prosecutors would contend that the company ignored its responsibility to report suspicious orders as 500 million of its pills ended up in Florida from 2008 to 2012 – 66 percent of all oxycodone sold in the state. Government investigators alleged in internal documents that the company’s lack of due diligence could have resulted in nearly 44,000 federal violations and exposed it to $2.3 billion in fines, according to confidential government records and emails obtained by The Washington Post.

But six years later, after four investigations spanning five states, the government has taken no legal action against Mallinckrodt. Instead, the company has reached a tentative settlement with federal prosecutors, according to sources familiar with the discussions. Under the proposal, which remains confidential, Mallinckrodt would agree to pay a $35 million fine and admit no wrongdoing.

The case shows how difficult it is for the government to hold a drug manufacturer responsible for the damage done by its product. DEA investigators, appalled by rising overdose deaths, said they worked for years to build the biggest case of their careers, only to watch it falter on uncertain legal territory and in the face of stiff resistance from the company.

“They just weren’t taking this seriously,” said a former law enforcement official who spoke on the condition of anonymity because the case is pending. “People were dying all over the place. It wasn’t their kids, their wives, their husbands, their brothers. It was some hillbilly in central Florida, so who cares?”

In a statement, a Mallinckrodt spokesman said the company has worked hard to fight drug diversion.

“Mallinckrodt has long been a recognized leader in developing and sharing best practices related to the prevention of opioid diversion and misuse, and has continuously invested significant resources to address this serious drug epidemic,” the statement said.

Officials at the DEA declined to comment for this article.

Under federal law and DEA policy, pharmaceutical companies such as Mallinckrodt are required to “know their customers” and monitor the pattern, frequency and amounts of drug orders. When suspicious orders occur, companies must immediately notify the agency or risk losing their DEA licenses to sell or manufacture controlled substances, as well as face civil and criminal penalties.

According to the documents and sources familiar with the settlement talks, Mallinckrodt was willing to acknowledge its responsibility to report suspiciously large orders placed by its customers, a network of wholesale distributors. But the company said that it should not be held responsible for what happens to its drugs once the distributors send them to their customers, such as doctors and pharmacies. Mallinckrodt contended that the DEA has never required manufacturers to know their customers’ customers and that the agency provided the company with conflicting advice about its responsibilities under the law.

The proposed $35 million settlement comes as the nation’s prescription opioid epidemic continues to worsen, with nearly 180,000 lives lost to overdoses since 2000.

The Post reported in October that the DEA’s civil and administrative enforcement efforts against the mammoth wholesale distributors that deliver painkillers to pharmacies stalled in the face of a stepped-up lobbying campaign by the drug industry. The Mallinckrodt case was something different: an aggressive attempt to hold a drug manufacturer accountable.

“When you get to the manufacturing level, it’s hard to prove that they knew what was happening,” said another law enforcement official familiar with the investigation. “But they were making the product, they were selling it to the country’s largest distributors, and they had a responsibility under the law to detect and report orders that were suspicious. These orders were beyond suspicious.”

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