DOJ Announces Guilty Pleas, $8B Settlement in Purdue Opioid Cases

Deborah Brauser

October 21, 2020

The US Department of Justice (DOJ) today announced global criminal and civil resolution of investigations into opioid manufacturer Purdue Pharmaceutical and civil investigation into Sackler family shareholders for opioid-related misconduct.

The opioid manufacturer "has agreed to plead guilty in federal court in New Jersey to a three-count felony information charging it with one count of dual-object conspiracy to defraud the United States and to violate the Food, Drug, and Cosmetic Act, and two counts of conspiracy to violate the Federal Anti-Kickback Statute," the DOJ reported in a press release.

The resolution includes a criminal fine of $3.544 billion plus $2 billion in criminal forfeiture, making these the "largest penalties ever levied against a pharmaceutical manufacturer," the agency stated.

These resolutions are subject to bankruptcy court approval, but an important condition is that the company stops operations and emerges from bankruptcy as a public benefit company (PBC).

In addition, the manufacturer agreed to a $2.8 billion civil settlement, which will resolve its civil liability under the False Claims Act.

A civil resolution regarding individual shareholders from the Sackler family was also announced today. They agreed to a payment of $225 million to resolve civil liability under the False Claims Act.

The DOJ pointed out that there is no criminal release of any individual, including those in the Sackler family or other executives/employees of Purdue, because of these resolutions.

"With criminal guilty pleas, a federal settlement of more than $8 billion, and the dissolution of a company and repurposing its assets entirely for the public's benefit, the resolution in today's announcement re-affirms that the Department of Justice will not relent in its multi-pronged efforts to combat the opioids crisis," Jeffrey A. Rosen, deputy attorney general, said in the release.

"Purdue, through greed and violation of the law, prioritized money over the health and well-being of patients," added Steven M. D'Antuono, assistant director in charge of the Federal Bureau of Investigation's (FBI's) Washington Field Office. "The FBI remains committed to holding companies accountable for their illegal and inexcusable activity."

"Particularly Sad Chapter"

In its criminal plea, Purdue will admit that for 10 years it conspired to defraud the country by presenting itself to the Drug Enforcement Administration (DEA) as having an effective antidiversion program "when in fact" the company marketed its opioids to more than 100 providers "the company had good reason to believe" were engaged in diversion, the DOJ reported. To boost manufacturing quotas, misleading data were also given to the DEA, including prescriptions from doctors believed to be diverting opioids.

"The conspiracy also involved aiding and abetting violations of the Food, Drug and Cosmetic Act by facilitating the dispensing of its opioid products, including OxyContin, without a legitimate medical purpose, and thus without lawful prescriptions," the DOJ statement notes.

In addition, between 2009 and 2017, the manufacturer made payments through its doctor speaker program to entice more prescriptions for their opioid products, violating the federal Anti-Kickback Statute. It also paid an electronic health records company in exchange for the referral, recommendation, and ordering of its extended-release opioids.

The $225 million civil settlement with the Sackler family resolves the alleged misconduct of Richard, David, Mortimer, Kathe, and Jonathan Sackler, including their request to "recapture lost sales and increase Purdue's share of the opioid market." In addition, they approved a program in 2013 that intensified marketing of OxyContin to high-volume prescribers. Also, Purdue transferred assets into Sackler family holding companies and trusts at the named Sacklers' request.

"A key piece of today's resolution is based on the future of Purdue Pharma," Rosen noted in a prepared statement.

If approved, the resolution will require the company to be dissolved, with the Sacklers relinquishing all ownership and control of the company. The assets will then be transferred to the new PBC, which will be owned by a trust to benefit the American public.

"To be clear, the Sackler family will have no role in creating or controlling the PBC," Rosen added.

The resolutions "close a particularly sad chapter in the ongoing battle against opioid addiction. The devastating ripple effect of Purdue's actions left lives lost and others addicted," Tim McDermott, DEA assistant administrator, said in the DOJ release.

"Unfortunately, Purdue's reckless actions and violation of the law senselessly risked patients' health and well-being. With our law enforcement partners, we will continue to combat the opioid crisis, including holding the pharmaceutical industry and its executives accountable," added Gary L. Cantrell, deputy inspector general for investigations, US Department of Health and Human Services' Office of the Inspector General.

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