OxyContin maker Purdue Pharma to plead guilty to three criminal charges

By Associated Press, The Guardian, Oct. 21, 2020.

Purdue Pharma, the company that makes OxyContin, the powerful prescription painkiller that experts say helped touch off an opioid epidemic, will plead guilty to three federal criminal charges as part of a settlement of more than $8bn, according to the US justice department.

“Purdue Pharma actively thwarted the United States’ efforts to ensure compliance and prevent diversion,” Tim McDermott, assistant administrator with the Drug Enforcement Administration (DEA), said in a statement. “The devastating ripple effect of Purdue’s actions left lives lost and others addicted.”

The company will plead guilty to a criminal complaint being filed on Wednesday in federal court in New Jersey to three counts, including conspiracy to defraud the United States and violating federal anti-kickback laws.

The deal does not release any of the company’s executives or owners – members of the wealthy Sackler family – from criminal liability. A criminal investigation is ongoing.

The settlement will be the highest-profile display yet of the federal government seeking to hold a major drugmaker responsible for an opioid addiction and overdose crisis linked to more than 470,000 deaths in the country since 2000.

As part of the resolution, Purdue will admit that it impeded the DEA by falsifying an effective drug diversion program by reporting misleading information to the agency in order to boost the company’s manufacturing quotas. A justice department official said Purdue had been misrepresenting “robust controls”, but instead had been “disregarding red flags their own systems were sending up”.

Purdue also admitted to using a speakers program to violate federal anti-kickback laws by paying doctors, inducing them to write more prescriptions for the company’s opioids and for using electronic health records software to influence the prescription of pain medication.

As part of the plea deal, Purdue will make a direct payment to the government of $225m, which is part of a larger $2bn criminal forfeiture. In addition to that forfeiture, Purdue also faces a $3.54bn criminal fine, though that money probably will not be fully collected because it will be taken through a bankruptcy, which includes a large number of other creditors.

Purdue will also agree to $2.8bn in damages to resolve its civil liability.

Since the company doesn’t have $8bn in cash available to pay the fines, it agreed to transform into a public benefit company, meaning it would be governed by a trust that has to balance the trust’s interests against those of the American public and public health, the officials said.

The Sacklers would not be involved in the new company and part of the money from the settlement would go to aid in treatment and drug programs to combat the opioid epidemic. That arrangement mirrors a key element of the company’s proposal to settle about 3,000 lawsuits filed by state, local and Native American tribal governments.

The company also admits it violated federal law and “knowingly and intentionally conspired and agreed with others to aid and abet” the dispensing of medication from doctors “without a legitimate medical purpose and outside the usual course of professional practice”, according to a copy of the plea agreement obtained by the AP.

The company is also required to cooperate with the ongoing federal investigation and potential other prosecutions.

Before the deal was announced, the plea deal faced resistance from state attorneys general, Democratic members of Congress and advocates who wrote the attorney general, William Barr, asking him not to make the bargain with the company and the family. They said it does not hold them properly accountable and they raised concerns about some of the details.

“Millions of American families impacted by the opioid epidemic are looking to you and your department for justice.,” 38 Democratic members of Congress wrote, adding the only real consequence “is that a handful of billionaires are made slightly less rich”

About half the states oppose that settlement, and also wrote to Barr in disapproval. The deputy attorney general, Jeffrey Rosen, in announcing the settlement, defended the deal allowing the new company to continue to sell highly addictive drugs.

Purdue – but not the family – declared bankruptcy as a way to work out that plan, which could be worth $10bn over time.

The Sackler family – was once listed among the nation’s wealthiest by Forbes magazine – has already pledged to hand over the company itself plus at least $3bn to resolve thousands of suits against the Stamford, Connecticut-based drugmaker. A 2019 court filing said they had made up to $13bn over the years from the drug, though a lawyer said they brought in far less after taxes and reinvestment.

Until recently, the Purdue name could be found on museum galleries and educational programs around the world because of gifts from family members. Under pressure from activists, institutions from the Louvre in Paris to Tufts University in Massachusetts have dissociated themselves.

It is not the first time Purdue has admitted wrongdoing: in 2007, the company and three executives pleaded guilty to federal criminal charges, paying more than $630m in a settlement at the time. The nation’s opioid crisis only worsened after that.

Purdue, in its new form, will be permitted to continue producing OxyContin and other painkillers, including drugs to combat the opioid overdose crisis.

Article link: https://www.theguardian.com/us-news/2020/oct/21/oxycontin-purdue-pharma-pleads-guilty-8bn-settlement