Oxycontin maker Purdue Pharma will plead guilty to three criminal charges

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.

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.

As part of the resolution, Purdue will admit that it impeded the Drug Enforcement Administration by falsely representing that it had maintained an effective program to avoid drug diversion and by reporting misleading information to the agency to boost the company’s manufacturing quotas, the officials said.

A Justice Department official said Purdue had been representing to the DEA that it had ‘robust controls’ to avoid opioid diversion but instead had been ‘disregarding red flags their own systems were sending up.’

Purdue will also admit to violating federal anti-kickback laws by paying doctors, through a speaking program, to induce them to write more prescriptions for the company’s opioids and for using electronic health records software to influence the prescription of pain medication, according to the officials. 

DOJ officials said in the press conference Purdue was pleading guilty to an illegal kickback to electronic health record company Practice Fusion. 

In 2015, Purdue negotiated with Practice Fusion to create a series of alerts in the software to get doctors to increase prescriptions of opioids, they said. 

In September 2015, Purdue agreed to pay nearly $1 million in exchange for embedding alerts in software for one year.

The drug giant described the move as a ‘marketing tactic that would drive ERO demand and grow ERO prescriptions.’ 

Purdue will make a direct payment to the government of $225 million, which is part of a larger $2 billion criminal forfeiture. 

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.

Purdue would 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 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.

But even 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 for 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.

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. 

The Sackler family was once listed among the nation’s wealthiest by Forbes magazine.

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.

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.  

It’s not the first time Purdue has admitted wrongdoing. 

The company and three executives pleaded guilty to federal criminal charges in 2007 and paid more than $630 million in a settlement. 

But after that, the nation’s addiction crisis only deepened.

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.