Nursing & Healthcare News

Purdue to Pay the Piper?

Pharma giant agrees to accept criminal liability for opioid marketing

By Aaron SeversonNovember 9, 2020

1 min read

Purdue agrees to civil and criminal penalties
Its opioid business would become a public trust
State attorneys general are outraged

Purdue Pharma and the U.S. Department of Justice (DOJ) have agreed to a settlement deal that would see the embattled OxyContin manufacturer accept some criminal liability for its role in the opioid crisis while continuing Purdue’s opioid business as a public benefit company.

$8.3 Billion Plea Deal

Purdue Pharma applied for federal bankruptcy protection in September 2019, but the company’s legal troubles are far from over. Purdue and its owners, the Sackler family, are still facing many civil and criminal complaints at both the state and federal levels, including allegations that the company violated federal anti-kickback laws and lied to the DEA about opioid diversion.

Under the proposed federal settlement deal — which must still be approved by the bankruptcy court — the corporation would plead guilty to three criminal conspiracy charges and pay a $3.5 billion fine. Purdue would also pay an additional $2.8 billion to settle civil claims under the federal False Claims Act. Since the company doesn’t have that much cash, these amounts would be treated as additional unsecured bankruptcy claims, like most of Purdue’s other outstanding debts.

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Public Benefit Company

In addition to the fines, the settlement calls for a $2 billion forfeiture judgment. However, Purdue would pay only $225 million of this amount in cash, with the rest credited to the post-bankruptcy reorganization of Purdue Pharma as a public benefit company that would continue sales of OxyContin and overdose rescue drugs. DOJ says benefits from this public trust would “be directed toward State and local opioid abatement programs.”

The agreement would NOT protect any of Purdue’s owners, officers or employees from individual criminal or civil liability, nor would it provide any restitution for anyone harmed by Purdue’s actions.

States Cry Foul

Drug Enforcement Administration (DEA) Assistant Administrator Tim McDermott says the federal settlement “closes a particularly sad chapter in the ongoing battle against opioid addiction.”

However, many state attorneys general are outraged by the proposed deal. “DOJ failed,” declares Massachusetts Attorney General Maura Healey. Healey and her colleagues in 23 other states strenuously object to the plan to reorganize Purdue’s opioid business as a public trust, an idea the Sackler family had proposed when Purdue Pharma filed for bankruptcy last year.

On October 14, a week before the federal settlement agreement was publicly announced, 24 state attorneys general, including Healey and California A.G. Xavier Becerra, sent DOJ a strongly worded letter of protest, saying the proposed settlement “compromises the proper roles of the private sector and government” and would hamper states’ own enforcement actions.

Special Treatment for Billionaires?

In their October 14 letter, the attorneys general argue that creating a public benefit company would effectively put U.S. taxpayers in the opioid business while protecting Purdue Pharma’s most lucrative assets from being liquidated to pay fines and civil penalties in state courts.

“I expect current management to try to remain in control of the corporation,” adds Connecticut Attorney General William Tong, who cosigned the letter. “This would be even more outrageous.”

The letter’s 24 signatories would rather see the company’s assets sold to private buyers so the proceeds could be used “to compensate people who were injured and to abate the opioid epidemic.”

“The last business our States should protect with special public status is this opioid company,” the letter declares. “If DOJ insists that the Sacklers get their way and their OxyContin business is elevated into a public trust, Americans will question whether billionaires bought special treatment in this case, while working families across the country suffered.”

In this Article: Legal Action and Enforcement, Substance Abuse and Opioids