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Purdue Pharma Strikes $8B Plea Deal Over Marketing of OxyContin

The $8.34 billion fine ranks as the largest penalty against a drugmaker, but Purdue Pharma can receive nearly $2 billion in credits through bankruptcy reorganization.

The Sackler Family will no longer be able to control Purdue Pharma, under a settlement with the Justice Department for its role in marketing OxyContin, but it will pay only $225 million in fines. 

FILE - This Tuesday, May 8, 2007, file photo shows the Purdue Pharma logo at its offices in Stamford, Conn. Arizona's attorney general is asking the U.S. Supreme Court to force the Sackler family, which owns OxyContin-maker Purdue Pharma, to return billions of dollars they took out of the company. The court filing on Wednesday, July 31, 2019, marks the first time the high court has been asked to weigh in directly on the nation's opioid crisis. (AP Photo/Douglas Healey, File)

TRENTON, N.J. (CN) — The maker of OxyContin pleaded guilty on Wednesday to three charges of fraud and conspiracy and will pay more than $8 billion in fines.

Purdue Pharma admits that from 2007 through early 2017 it conspired to defraud the United States by continuing to market OxyContin to dodgy doctors while falsely claiming it had an effective anti-diversion program, all to boost the company’s bottom line.

Entering the plea in New Jersey, the company also admitted to kicking back money to two doctors and an electronic health records company to write more prescriptions of the Purdue’s opioid products and making referrals. 

While the $8.34 billion price tag is considered the largest penalty against a pharmaceutical manufacturer, the true number is slightly less. Purdue Pharma is bankrupt, facing $2 billion criminal forfeiture and $3.5 billion in criminal fines.

By emerging from bankruptcy court as a public benefit company owned by a trust and functioning entirely in the public interest, however, it can receive credits for some of $1.775 billion of the $2 billion forfeiture. The company also must donate or discount life-saving overdose recue drugs.

Five members of the Sacklers — the wealthy family that controls the company — face $225 million in fines. No members of the family face criminal charges. 

But Deputy Attorney General Jeffrey Rosen demurred when asked during a press conference whether the Sackler family was getting off light.

“That’s not the right way to look at this,” he said, pointing out that the Sackler Family “will have no future involvement” with Purdue Pharma after it emerged from bankruptcy court.

“Instead of being the owners of a major pharmaceutical company, they will have no stake in that company,” Rosen said.

The settlement does not resolve claims by states against Purdue, nor does it preclude debtors’ ability to recover fraudulent transfers, the settlement states. 

In a statement, Purdue Board Chairman Steve Miller said that the settlement will lead to a better company that will deliver more than $10 billion in value to claimants and communities. “Purdue today is a very different company,” he said. “We have made significant changes to our leadership, operations, governance, and oversight.”

In a separate statement following the settlement, the Sackler family defended their conduct. “Members of the Sackler family who served on Purdue’s board of directors acted ethically and lawfully, and the upcoming release of company documents will prove that fact in detail,” the family wrote, adding that “no member of the Sackler family was involved in that conduct or served in a management role at Purdue during that time period.”

The Sackler family is considered one of the wealthiest families in America, with an estimated net worth of $13 billion in 2016. Much of that wealth was built on the back of OxyContin, a slow-release form of oxycodone that Purdue Pharma manufactured in the late 1990s. 

In its initial marketing push, the company told reluctant doctors that OxyContin did not produce euphoric feelings, that withdrawal was not a problem, and that fewer than 1% of patients faced addiction.

But the drug quickly gained notoriety as the opioid addiction and overdose swept through the Midwest and later throughout the rest of the country. According to the Centers for Disease Control and Prevention, two additional waves of the opioid epidemic came in 2010 and 2013. The epidemic has claimed more than 450,000 lives, the CDC states.

Purdue Pharma, which has made more than $30 billion off the drug by some estimates, has for years been in the crosshairs for its role in the epidemic. In 2007, Purdue Pharma paid the relatively paltry sum of $634 million in fines and pleaded guilty to charges of misbranding the drug with the intent to defraud and mislead.

But the company has been unable to slip away from the infamy — or the legal ramifications — over OxyContin.

Nearly every state has sued the company and members of the Sackler family, claiming they promoted OxyContin for off-label use and urged prescribers to write higher doses to maximize sales. 

According to one of those suits, filed by New York Attorney General Letitia James, “so deep and wide is the swatch cut by these corporate wrongdoers that for the first time since the Second World War, the average life expectancy of an American has no fallen — for three consecutive years.”

In a statement, Steven D’Antuono, assistant director of the FBI’s Washington Field Office, said the company “through greed and violation of the law, prioritized money over the health and well-being of patients.”

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Categories / Business, Criminal, Health

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