Purdue Pharma Agrees to $8 Billion DOJ Settlement Over Opioid Marketing Practices
Purdue Pharma plans to plead guilty to three counts of criminal activity as part of a more than $8 billion settlement with the federal government. The settlement stems from multi-year criminal and civil investigations into Purdue’s marketing practices related to its powerful prescription painkiller, OxyContin, which critics have argued facilitated the opioid epidemic.
The news follows the drug maker’s filing for Chapter 11 bankruptcy in September 2019 after a tentative $12 billion agreement with U.S. state governments. And in August 2020, Purdue faced a preliminary $12 billion charge from the U.S. government for opioid-related damages.
According to a recent statement made by the U.S. Department of Justice (DOJ) to the Associated Press, Purdue will plead guilty in the settlement for violating federal anti-kickback laws. Violations include providing monetary incentives for doctors to write more opioid prescriptions and using electronic health record data to increase the rate of prescriptions for pain medication.
A case against Purdue in Massachusetts, for instance, showed that former Purdue president Richard Sackler encouraged staff to seek a “blizzard of prescriptions” during a launch party for its OxyContin product shortly after the drug was approved by the U.S. Food and Drug Administration.
Additionally, Purdue will plead guilty to conspiracy to defraud the U.S. government by falsely representing the maintenance of a program to avoid opioid diversion. The company was instead “disregarding red flags their own systems were sending up,” despite reporting to the Drug Enforcement Administration (DEA) it had “robust controls” in place to avoid diversion. Purdue will also admit to reporting misleading information to the DEA to increase manufacturing quotas.
Under an $2 billion criminal forfeiture umbrella, the U.S. government will receive a direct payment of $225 million from Purdue. The opioid maker also has a $3.54 billion criminal fine hanging over its head, but the bankruptcy process will likely preclude full collection of this fee. To resolve its civil liability, Purdue will agree to pay $2.8 billion in damages. Money from the settlement will go to assist drug programs that combat the opioid epidemic, officials said.
In a statement on the settlement, Purdue says it takes responsibility for any misconduct that occurred with its marketing practices prior to June 2017. Steve Miller, the company’s Chairman of the Board as of July 2018, said, “Purdue deeply regrets and accepts responsibility for the misconduct detailed by the Department of Justice in the agreed statement of facts.”
Miller added that the resolution of the DOJ investigations will lead the way through Purdue’s bankruptcy process.
“The settlement agreement will pave the way for Purdue to submit a plan of reorganization to the bankruptcy court that will transfer all of Purdue’s assets to a public benefit company, and ultimately deliver more than $10 billion in value to claimants and communities,” Miller said.
Following the settlement, Purdue will transform itself into a public benefit company. The company will be governed by a trust that balances the interests of the trust against the interests of the American public and public health. The Sackler family, who are under an ongoing criminal investigation, will not be involved in the new company. The family has handed over the company plus up to $3 billion to resolve thousands of suits.
New trustees of Purdue will work toward offering “for free or at cost millions of doses of lifesaving opioid addiction treatment and overdose reversal medicines,” according to Purdue’s statement.
This settlement represents biggest demonstration of the federal government holding a major pharmaceutical giant responsible for the opioid epidemic, delivering on early term promises made by President Donald Trump.
Despite this step, roughly half of the states oppose the settlement and have written to Attorney General William Barr asking him not to make a deal with the federal government. Reasoning behind the opposition is driven by an ethical dilemma that allows the government to receive OxyContin earnings through additional sales of the drug to fund programs that combat the opioid crisis. The states are working in bankruptcy court to determine how much the Sackler family made from the sale of their opioid product over the past several years.