OxyContin maker Purdue Pharma agrees to plead guilty in $8B opioid settlement
By Evie Fordham | FOXBusiness
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OxyContin maker Purdue Pharma has agreed to plead guilty to three federal criminal charges as part of a settlement of more than $8 billion, Justice Department officials announced Wednesday.
Purdue Pharma is expected to plead guilty to one count of dual-object conspiracy for defrauding the U.S. and to violate the Food, Drug, and Cosmetic Act and two counts of conspiracy to violate the Federal Anti-Kickback Statute. The criminal resolution includes a criminal fine of more than $3.5 billion and $2 billion in criminal forfeiture, plus a civil settlement of $2.8 billion.
The deal does not release any of the company’s executives or owners — members of the wealthy Sackler family — from criminal liability. A criminal investigation is ongoing.
The company is in the middle of bankruptcy proceedings, and a bankruptcy court would need to approve the settlement.
"The agreed resolution, if approved by the courts, will require that the company be dissolved and no longer exist in its present form," Deputy Attorney General Jeffrey Rosen said at a news conference.
OxyContin is a powerful prescription painkiller that experts say helped touch off the opioid epidemic that resulted in nearly 450,000 American deaths between 1999 and 2018, according to the Centers for Disease Control and Prevention.
The settlement comes less than two weeks before a presidential election where the opioid epidemic has taken a political back seat to the coronavirus pandemic and other issues. But the deal does give President Trump’s administration an example of action on the addiction crisis, which he promised early in his term.
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.
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.
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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 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 U.S. 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.
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.
The Associated Press contributed to this report.
Walmart files pre-emptive lawsuit against federal government in opioid case
By Brent Kendall, Sara Randazzo | The Wall Street Journal
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Walmart Inc. sued the federal government in an attempt to strike a pre-emptive blow against what it said is an impending opioid-related civil action from the Justice Department.
The retail giant said in its lawsuit that the Justice Department and Drug Enforcement Administration are seeking to scapegoat the company for the federal government’s own regulatory and enforcement shortcomings in the opioid crisis.
Walmart said the government is seeking steep financial penalties against the retailer for allegedly contributing to the opioid crisis by filling questionable prescriptions.
The suit names the department and Attorney General William Barr as defendants, as well as the DEA and its acting administrator, Timothy Shea. It is asking for a declaration from a federal judge that the government has no lawful basis for seeking civil damages from the company based on claims pharmacists filled valid prescriptions that they should have known raised red flags.
Walmart, which operates more than 5,000 in-store pharmacies in the U.S., said the government’s “threatened action would be unprecedented.” It said the government hasn’t alleged that the company was filling altered prescriptions, or that its pharmacists had inappropriate relationships with patients or doctors.
“In the shadow of their own profound failures, DOJ and DEA now seek to retroactively impose on pharmacists and pharmacies unworkable requirements that are not found in any law and go beyond what pharmacists are trained and licensed to perform,” the company said in the lawsuit, filed in federal court in the Eastern District of Texas.
The Justice Department and DEA declined to comment.
Walmart’s lawsuit is an unusual and aggressive tactic for a company in high-stakes talks with the department. Its suit won’t necessarily head off any Justice Department action, but a court ruling embracing the company’s view of the law could give it a weapon against any government case.
Quicken Loans Inc. tried a similar tactic against the federal government in 2015 to avoid being pegged with mortgage fraud, but the Justice Department sued weeks later in a case Quicken settled last year.
Walmart said the department has identified hundreds of specific doctors as having written problematic prescriptions that company pharmacists allegedly shouldn’t have filled, according to the government. But nearly 70% of those doctors continue to have active DEA registrations, the company said.
“In other words, defendants want to blame Walmart for continuing to fill purportedly bad prescriptions written by doctors that DEA and state regulators enabled to write those prescriptions in the first place and continue to stand by today,” Walmart said in the suit.
Walmart is one of several large companies that have been targeted in lawsuits by state and local governments for allegedly helping to fuel the opioid crisis. About 3,000 of the cases have been consolidated in a federal court in Ohio, where a judge has pressed both sides to settle for nearly three years.
Plaintiffs focused less on Walmart in the early days of the opioid litigation, though the company has since been sued by counties and a handful of states across the country for its role as both a distributor of opioids to its own stores and as a pharmacy.
Walmart pharmacists felt pressure to fill prescriptions quickly, the plaintiffs alleged, and had incentive bonuses tied to volume. Walmart stopped serving as its own distributor of controlled substances in 2018.
Walmart has denied the allegations and said that opioid dispensing is a small part of its business.
The Justice Department previously launched a criminal investigation, based out of the U.S. Attorney’s Office for the Eastern District of Texas, related to Walmart’s dispensing of opioids. The department’s leadership in Washington decided in 2018 against bringing charges, according to the company’s lawsuit. The department’s decision not to prosecute was reported previously by ProPublica.
Walmart in its complaint Thursday alleged federal prosecutors “tried to use the threat of criminal indictment to pressure the company into paying a massive civil penalty.” One U.S. attorney suggested the company could afford to pay $1 billion, the lawsuit said.
The company argues in the lawsuit that the federal government was placing it in an untenable position because pharmacists face professional and legal risks -- and potential harm to patients -- if they reject prescriptions, but face federal liability if they do fill them and the government determines they shouldn’t have.
Initial civil settlement talks in the broader opioid litigation have focused on the three biggest drug distributors in the country, Cardinal Health Inc., AmerisourceBergen PLC and McKesson Corp. , as well as major drugmakers including Johnson & Johnson. States are nearing a $26.4 billion settlement with those four companies and are in settlement discussions with others up and down the pharmaceutical supply chain.
Some targets in the litigation, including OxyContin maker Purdue Pharma LP, have filed for bankruptcy to try to resolve the cases. Purdue agreed this week to plead guilty to three felonies related to its marketing and distribution of OxyContin, as part of an $8.34 billion settlement of civil and criminal investigations pursued by the Justice Department.
Walmart was among six pharmacies slated to go to trial in federal court in November in the cases of Ohio’s Cuyahoga and Summit counties. The judge, however, recently delayed the trial indefinitely, citing the coronavirus pandemic. That trial was set to focus on the pharmacies’ roles as distributors of opioids to their own stores but wouldn’t have included allegations related to dispensing drugs to customers.
