Purdue Pharma reaches US$8 bn settlement, Why did the OxyContin maker plead guilty?

Summary

• In one of the biggest modern healthcare settlements, pharmaceutical company Purdue Pharma took the blame for misleading marketing and reckless selling of OxyContin.
• The Company reached a settlement worth A$11.6 billion.
• The opioid is infamous for causing many deaths in the US, contributing to the total drug addiction in America that started in the early 1900s.
• The philanthropic Sackler family takes responsibility for their Company’s unprofessional actions but have still not been personally trialled.
• The Sackler’s prosperity was estimated at US$13 billion in 2016, which made them the 19^th richest American family.

Purdue Pharma agreed to an A$11.6 billion (US$8 billion) settlement after pleading guilty for uncontrolled selling of its controversial opioid product OxyContin.

The active ingredient oxycodone has caused more than 450,000 American deaths since 1999, due to its addictive nature.

The Department of Justice filed a lawsuit against the pharma giant after they found several reckless prescriptions for the drug. Apart from the DoJ, there were thousands of lawsuits against Purdue Pharma for the same reason, which are still ongoing.

Purdue Pharma’s owners, the wealthy Sackler family, decided to pay A$316 million for civil suits and to resolve further investigations. The Sackler’s feel guilty and accept responsibility for their Company’s misconduct but have not been personally prosecuted for OxyContin.

Even though the DoJ suit is one of many that is about to come, Purdue Pharma looks better in the court’s eyes, so it is more likely the other investigations will consider that. The Company’s Chairman Steve Miller wrote a statement saying that Purdue takes full accountability for their irresponsible actions.

Purdue Pharma’s guilty charges come just a couple of weeks before the election day in November, which tackles some of the many health issues the US is currently facing with the pandemic. However, President Donald Trump did promise to act against opioid matter early in his mandate.

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However, attorneys-generals are not finished with the Sackler family, nor their Company. According to their words, the Sackler’s are ‘perpetrators’ and need to be stopped from further severe wrongdoings. The Company is believed to have agreed on an early settlement so they could dodge the hearing during Biden’s administration if elected.

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The Sackler’s took the blame for three criminal charges, including false representation of OxyContin to the Drug Enforcement Administration while revealing misleading pieces of information so the production quotas could be increased. Purdue also admitted paying doctors so they could write more prescriptions for the drug.

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What are the total costs of the lawsuit?

Total criminal forfeiture costs A$2.8 billion, but Purdue will pay A$315 million directly to the government. The Company is also facing a cost for criminal charges, worth A$4.96 billion, but will probably not pay for it as the fine will be taken after the bankruptcy hearing. Another A$3.9 billion is expected to be paid for civil responsibility.

In total, Purdue Pharma will need to pay A$11.6 billion, including costs for criminal charges. However, the Company filed for bankruptcy last year, so it is not likely they will need to pay anything close to the sum. The most likely scenario will hit Purdue Pharma creditors, as bankruptcy hearings often offer them cents on a dollar.

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Who are the Sackler’s?

The Sackler family is a widely known mogul family that made the majority of its fortune through OxyContin sales. The family was recognised as the 19^th richest in the US, back in 2016.

Their breathtaking wealth was estimated at US$13 billion in 2016, while the foundation of Purdue Pharma brought them US$10.7 billion in total. Brothers Arthur, Mortimer and Raymond Sackler started the Company in 1952, as they had a medical background.

Purdue Pharma started with manufacturing laxatives and earwax removers, but it was not until the OxyContin launch when the family made a fortune.

Since 2007, the family has experienced several legal disputes and million-dollar fines due to misleading marketing for the drug. They also indirectly got several people addicted to the drug after a few pain-relief uses. Some even called the Sackler’s “the family that built a kingdom on pain”.

Even though Purdue Pharma is most likely facing a total shutdown after the most recent lawsuit (and awaiting hundreds of other complaints), the Sackler’s wealth is mostly intact, as they need to pay ‘only’ A$315 million directly to the authorities.

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The opioid crisis in the US

For over two decades, the US is battling a tough fight with opioid addiction. The crisis is even called ‘an epidemic’, as it has taken more than 450,000 lives since 1999. In 2018 alone, nearly 70 per cent of 67,367 deaths in the US were caused by the drug crisis.

The official year when the disaster started was in the 1990s when many Americans died from the opioid overdose. The deaths were mostly caused by natural and semi-artificial drugs, which were mainly circulating at the start of 1993. For reference, OxyContin was created in the mid-1990s.

The second stage began in 2010 when many Americans started abusing vast amounts of heroin. Heroin addiction occurred within all income and social groups, both men and women. Shockingly, heroin took the lives of many people that had private insurance policies and had a stable income. However, most of Americans that are addicted to heroin simultaneously use more opioids like cocaine and prescription drugs.

The third wave started in 2013 and is still ongoing, with most deaths related to synthetic opioids (primarily caused by fentanyl).

Centers for Disease Control and Prevention is the primary US organisation that is trying to combat the crisis and educate the American people about drug addiction. It monitors trends so the epidemic could be beaten more easily. The organisation analyses and collects data about opioid overdoses and estimates what areas need better education and prevention.