Purdue Pharma, the company that makes OxyContin, will plead guilty to three federal criminal charges as part of a settlement of more than $8 billion for its alleged role in fueling America’s opioid epidemic, Justice Department officials confirmed Wednesday.
United States Deputy Attorney General. Jeffrey A. Rosen announced the deal in a press conference Wednesday morning as he vowed to ‘turn the tide on the opioid crisis ravaging the country’. Rosen said the deal is still subject to bankruptcy court approval.
Under the deal the Connecticut-based company, owned by the wealthy Sackler family, will plead guilty to three criminal charges filed in federal court in New Jersey Wednesday.
The three counts include conspiracy to defraud the United States and violating federal anti-kickback laws.
The anti-kickback violation relates to a 2015 deal worth almost $1 million that the pharma giant made with electronic health record company Practice Fusion to send alerts to doctors recommending prescribing opioiods including Oxycontin to patients in order to increase prescriptions of the drugs.
The deal does not release any of the company’s executives or owners – including members of the Sackler family – from criminal liability and a criminal investigation is still ongoing.
However, if the bankruptcy court approves the resolution, the Sackler family will lose any stake in the pharma giant and the company will be dissolved as it currently stands, with its assets re-purposed into a public company instead.
The settlement is the highest-profile display yet of the federal government seeking to hold a major drugmaker responsible for the opioid addiction and overdose crisis that has been linked to more than 430,000 deaths in the country since 2000.
Since OxyContin was introduced in 1996, addiction and overdoses have surged.
In 1999 there were less than 4,000 opioid overdose deaths. By 2018, this figure had risen to 47,000, according to the US Centers for Disease Control and Prevention.
Oxycontin maker Purdue Pharma will plead guilty to three criminal charges and agree to $8 billion plea deal that does NOT release its owners – the wealthy Sackler family – from criminal liability
The DOJ announced what it described as a ‘global resolution’ of both its criminal and civil investigations into Purdue and a ‘civil resolution’ of its civil investigation into individual shareholders from the Sackler family.
Under the plea, Purdue will admit that from May 2007 through at least March 2017 it conspired to defraud the US.
This charge relates to Purdue impeding the Drug Enforcement Administration (DEA) by falsely representing that it had maintained an effective program to avoid drug diversion, the officials said.
Rosen said the pharma giant had claimed to have an effective anti-diversion program when it was actually continuing to market its opioids to more than 100 healthcare providers who the company had good reason to believe were diverting the drugs.
Purdue also reported misleading information to the agency to boost the company’s manufacturing quotas, said Rosen.
Purdue will also admit to violating federal anti-kickback laws by paying two doctors through a speaking program to write more prescriptions for the company’s opioids between June 2009 and March 2017, the DOJ said.
The charge also relates to an illegal kickback from around April 2016 to December 2016, according to the officials.
DOJ officials said Purdue made payments to electronic health records software firm Practice Fusion to influence the prescription of pain medication.
In 2016, Purdue negotiated with Practice Fusion to create a series of alerts in the software to get doctors to increase prescriptions of opioids, they said.
The company agreed to pay nearly $1 million to Practice Fusion in exchange for embedding alerts in its software for one year.
United States Deputy Attorney General. Jeffrey A Rosen announced the deal in a press conference Wednesday morning as he vowed to ‘turn the tide on the opioid crisis’
The drug giant described the move as a ‘marketing tactic that would drive ERO demand and grow ERO prescriptions.’
The civil settlement relates to both Purdue and individual shareholders – members of the Sackler family.
Purdue will make a direct payment to the government of $225 million, which is part of a larger $2 billion criminal forfeiture.
The $225 million will be paid by the Sackler family for the alleged conduct of Dr. Richard Sackler, David Sackler, Mortimer D.A. Sackler, Dr. Kathe Sackler, and Jonathan Sackler, the DOJ said.
This settlement resolves allegations that, in 2012, those Sackler family members knew the legitimate market for Purdue’s opioids had contracted but requested executives recapture lost sales and increase the company’s share of the opioid market.
The family members then approved a new marketing program in 2013 called ‘Evolve to Excellence,’ where sales reps for the company upped their marketing of OxyContin to high-volume prescribers who were already writing ’25 times as many OxyContin scripts’ as their peers, said the DOJ.
The Justice Department said this led to healthcare providers prescribing the highly-addictive drugs for uses that were unsafe, ineffective, and medically unnecessary, and that often led to abuse and diversion.
In addition to that forfeiture, Purdue also faces a $3.54 billion 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 $2.8 billion in damages to resolve its civil liability.
This relates to allegations that from 2010 to 2018, Purdue caused false claims to be submitted to federal health care programs, including Medicare and Medicaid.
Purdue Pharmaceuticals will plead guilty to to three counts of criminal charges filed Wednesday in federal court in New Jersey, officials said
HOW IS OXYCONTIN IMPLICATED IN THE US OPIOID CRISIS?
OxyContin is a prescription painkiller produced and sold by Purdue Pharma.
The drug is strong, addictive and was linked to thousands of overdose deaths in 2017.
Since OxyContin, a time-released opioid, was introduced in 1996, addiction and overdoses have surged.
In both 2017 and 2018, opioids were involved in more than 47,000 deaths, according to the US Centers for Disease Control and Prevention. In 1999, by comparison, there were fewer than 4,000 opioid overdose deaths.
Purdue’s drugs are just a slice of the opioids prescribed, but critics assign a lot of the blame to the company because it developed both the drug and an aggressive marketing strategy.
Purdue will also be dissolved and transformed 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 medically assisted treatment and other drug programs to combat the opioid epidemic, the officials said.
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.
As part of the plea deal, the company 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.
The Raymond and Mortimer Sackler sides of the family that served on Purdue’s Board said in a statement to DailyMail.com that they had acted ‘ethically and lawfully’ during their tenure at the company.
‘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. This history of Purdue will also demonstrate that all financial distributions were proper,’ they said.
‘As members of the board, we adopted rigorous policies requiring Purdue to be in full compliance with the law.
‘The board relied on repeated and consistent assurances from Purdue’s management team that the company was meeting all legal requirements, as shown in hundreds of pages of compliance reports that will become part of the public record.’
The family added that the deal was reached with the DOJ to ‘facilitate a global resolution’ and that the family had ‘deep compassion’ for sufferers in the opioid crisis.
‘We reached today’s agreement in order to facilitate a global resolution that directs substantial funding to communities in need, rather than to years of legal proceedings,’ the statement read.
‘This proposed resolution includes relinquishing our ownership of Purdue and has been valued at $10-$12 billion – more than double all Purdue profits the Sackler family retained since the introduction of OxyContin.
‘States and cities representing more than half the US population support this impactful plan. We have deep compassion for people who suffer from opioid addiction and abuse and hope the proposal will be implemented as swiftly as possible to help address their critical needs.
Numbers of opioid overdose deaths have soared since OxyContin hit the market in 1996, from just 3,442 in 1999 to 17,029 in 2017, official figures show
‘Regarding the plea agreement between the government and Purdue, no member of the Sackler family was involved in that conduct or served in a management role at Purdue during that time period.’
Before the deal was announced, it was facing resistance from state attorneys general, Democratic members of Congress and advocates who wrote 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 of Justice.
‘Justice for the sleepless nights spent worrying about sons and daughters trapped in the grip of substance use disorder, justice for the jobs lost and the lives ruined, and justice for the lives of loved ones lost to overdoses,’ 38 Democratic members of Congress wrote.
‘If the only practical consequence of your Department’s investigation is that a handful of billionaires are made slightly less rich, we fear that the American people will lose faith in the ability of the Department to provide accountability and equal justice under the law.’
The Sackler family has already pledged to hand over the company itself plus at least $3 billion to resolve thousands of suits against the Stamford, Connecticut-based drugmaker.
The company – but not the family – declared bankruptcy as a way to work out that plan, which could be worth $10 billion over time.
About half the states oppose that settlement, and also wrote Barr to ask him not to make the federal deal that includes converting Purdue into a public benefit corporation.
They say it would be wrong for governments to rely on earnings from the sale of more OxyContin to fund programs to mitigate the toll of an opioid crisis wrought by prescription drugs as well as heroin and illicitly produced fentanyl.
With the terms of the Justice Department deal, the federal government gives a strong endorsement to the idea of a version of Purdue continuing as a ‘public benefit corporation.’
If that plan does not end of being the heart of the reorganization through bankruptcy court, the US could make Purdue pay it more, potentially unraveling any other settlement arrangement.
Raymond Sackler pictured with his wife Beverly. The Raymond and Mortimer Sackler sides of the family that served on Purdue’s Board said in a statement to DailyMail.com that they had acted ‘ethically and lawfully’ during their tenure at the company
The middle Sackler brother Mortimer is pictured. The Sackler family was once listed among the nation’s wealthiest by Forbes magazine
The state governments that oppose the settlements are pushing in bankruptcy court for documents that would spell out how much Sackler family members made from the sale of OxyContin over the years.
Officials, who were not authorized to discuss the investigation publicly and spoke on condition of anonymity, told the Associated Press about the deal ahead of the DOJ press conference Wednesday.
The Sackler family was once listed among the nation’s wealthiest by Forbes magazine.
OxyContin was developed by Purdue and hit the shelves back in 2006.
The powerful prescription painkiller promised 12 hours of ‘smooth and sustained pain control’, diminished presence of ‘common opioid-related side effects’, and ‘improved patients’ quality of life, mood, and sleep’, according to a press release at the time.
It was marketed as being less addictive and safer than morphine, leading it to be widely subscribed.
Opoiod addiction soon swept the nation with people crushing the tablets and snorting or injecting them after becoming hooked on the highly addictive drug.
Users often turn to cheaper options such as street heroin once hooked.
In 2007, an affiliate of Purdue – Purdue (Frederick) – and three of Purdue’s executives pleaded guilty to ‘misbranding’ Oxycontin – by saying it wasn’t addictive.
Purdue’s top lawyer Howard Udell, former medical director Paul Goldenheim, and then-president Michael Friedman were sentenced to probation agreed to pay fines in addition to the $600 million in fines and other payments made by Purdue Frederick for their actions.
At the time this was one of the largest pharmaceutical settlements in American history.
Purdue introduced an abuse-deterrent form of the drug in 2010 but it continued to be pushed aggressively to doctors, with the drug reaching peak sales of $3 billion that year.
In 2018, more than 200 states, cities, and counties filed lawsuits against the company for the impact OxyContin has had on their communities.
A 2019 court filing said they had made up to $13 billion over the years from the blockbuster drug, though a lawyer said they brought in far less after taxes and reinvestment in the company.
Purdue applied for bankruptcy status in September after approaching a settlement worth $12billion with local governments across the US.
The company is facing around 2,600 separate lawsuits over drug users’ deaths.
Until recently, the family’s name was on museum galleries and educational programs around the world because of gifts from family members.
But under pressure from activists, institutions from the Louvre in Paris to Tufts University in Massachusetts have dissociated themselves from the family in the last few years.
As the maker of the best-known prescription opioid, Purdue is the highest-profile player in the opioid crisis, but it’s far from the only one.
Trials against other drugmakers and distributors that were scheduled for this year have been pushed back due to the coronavirus.
WHO ARE THE SACKLERS?
Purdue Pharma, which is run by some members of the wealthy Sackler family, has made tens of billions on opioid sales. Here is a breakdown of who the Sacklers are, including those who have and haven’t been involved in Purdue Pharma:
Arthur, a doctor and psychiatrist, founded a research laboratory in 1938, but Arthur’s real genius was in marketing and he leveraged it to sell a number of medications, including the anti-anxiety drug, Valium.
He and his younger brothers Mortimer and Raymond owned a small pharma company called Purdue Frederick that they purchased in 1952. That company produced betadine and earwax.
Arthur remained a relatively silent partner in the old Purdue and died in 1987 before it became the company we know it as today.
He never saw any of Purdue’s OxyContin profits.
He donated the funds to open a number of medical education programs, libraries and museums.
Arthur was inducted into the Medical Marketing Hall of Fame upon his death in 1987.
After his death in 1987, his brothers bought Arthur’s portion of the company.
One of his four children, daughter Elizabeth, has largely taken over his philanthropy work.
Arthur and his heirs have had no involvement in Purdue Pharma or with OxyContin.
Mortimer was an American physician and psychiatrist.
He and his brothers, the older Arthur and the younger Raymond published prolific medical research before buying a number of pharmaceutical companies, including, in 1952, Purdue Frederick.
After Arthur’s death Mortimer and Raymond bought out his descendants’ share of Purdue Frederick, and in 1991 they created the company that would become a pain management giant we now know, Purdue Pharma.
Mortimer became a lavish arts patron, known for equally extravagant donations and parties, beginning in the 1970s.
He died in 2010.
Raymond was a doctor like his older brothers, and the three were partners in all things until each of their deaths.
Together with Mortimer, Raymond found success with their opioid painkiller, OxyContin, which became the Purdue Pharma’s signature drug.
Raymond was milder and more private than his brother, Mortimer.
Raymond had two children, Richard and Jonathan, before his death last year.
Mortimer’s eldest daughter with his first wife.
She was listed as a director of Purdue’s sister company, UK-based Napp Pharamaceutical Holdings, as of December 2016.
She lives in an apartment in an iconic Upper West Side which she owns.
Its total value is estimated to be more than $122million.
Kathe is one of the directors of Napp, a UK-based company which also sold OxyContin.
She owns two suburban properties in Connecticut which are separated by another owned by someone else and she lives in an Upper East Side townhouse with her wife, Susan Shack Sackler.
The house was owned by both Raymond and Mortimer. Their children share it.
Kathe and Ilene had a brother, Robert, is deceased.
JONATHAN AND RICHARD SACKLER
They are Raymond and Beverly’s two sons.
Jonathan and his wife live in Greenwich, Connecticut, in a property next to his mother’s. Richard ‘s former family home is not far away in neighboring Stamford.
They have a cancer research center named after them at Yale and have both held positions at Purdue.
Richard Sackler followed in his father’s footsteps, getting his medical degree at New York University School of Medicine.
He came to Purdue after medical school, leading the research and development that ultimately produced the extended release form of OxyContin that would elevate the family’s fortune to previously unfathomable.
He became president of Purdue in 1991, pioneering marketing campaigns that enticed droves of medical professionals to buy Purdue’s opioid.
Richard became co-chairman in 2003, by which point $1.6 billion in OxyContin had been sold.
His marketing schemes sparked suspicion, and in 2015, Richard was deposed before his company paid out a $24 million settlement.
The company appealed in 2017, but the case has not moved forward.
In addition to his arts philanthropy, Richard’s foundations have donated to controversial causes, including anti-Muslim groups.
Arthur’s daughter has publicly and persistently attempted to distance herself from branch of her family that has profited from OxyContin.
Elizabeth is a licensed psychiatrist and well-known philanthropist.
She is the founder of an eponymous Center for Feminist Art at the Brooklyn Museum in New York.
She has previously expressed disgrace for her uncles’ business.
Elizabeth has previously told DailyMail.com: ‘I, nor my siblings, nor my children have ever owned or benefited from Purdue Pharma or OxyContin or oxycodone.
‘It’s another branch of the family.’
BEVERLY AND THERESA SACKLER
Theresa, 69, owns a $45million Upper East Side apartment building but lives mostly in the UK on a 10-acre estate in the Berkshire countryside.
She is known in the UK as Dame Theresa Sackler, a title she was awarded for her sustained philanthropy and support of the arts.
Theresa is more visible than her sister-in-law.
Beverly, 94, is Raymond’s widow. She lives on a Greenwich, Connecticut waterfront estate which has an estimated land and property value of almost $50million. She also owns a 17-floor Fifth Avenue building in Manhattan.
When her husband was still alive, they donated the Raymond and Beverly Sackler Institute for Biological, Physical and Engineering Sciences at Yale. It now employs 50 people across 20 departments.
MORTIMER DAVID ALFONS SACKLER
Mortimer the only son of founding brother Mortimer, Mortimer II’s mother is Gertraud Wimmer, Mortimer’s second wife.
Mortimer David owns a luxury condo building in Boston and lives in New York City with his 42-year-old wife Jacqueline.
The couple are a regular fixture on the Manhattan social circuit.
DAVID AND JOSS SACKLER
David is intensely private but his wife, Joss, is not.
She runs the members-only women’s social club, LBV.
Among its events are group workouts at the model haven gym Dog Pound and talks such as ‘how to have the money talk with your kids.’