Purdue Pharma LP agreed to plead guilty to criminal charges over the handling of its prescription opioid OxyContin in a deal with U.S. prosecutors that effectively sidestepped paying billions of dollars in penalties and stopped short of criminally charging its executives or wealthy Sackler family owners.
In a far-reaching agreement unveiled on Wednesday, Purdue formally admitted to criminal conduct related to distribution of its painkillers and agreed to pay $225 million US to resolve U.S. Justice Department investigations.
Prosecutors imposed significant penalties exceeding $8 billion against Purdue though the lion’s share will go largely unpaid.
Purdue agreed to pay $225 million toward a $2 billion criminal forfeiture, with the Justice Department foregoing the rest if the company completes a bankruptcy reorganization dissolving itself and shifting assets to a “public benefit company” or similar entity that steers the unpaid portion to thousands of U.S. communities suing it over the opioid crisis.
A $3.54 billion criminal fine and $2.8 billion civil penalty are likely to receive cents on the dollar as they compete with trillions of dollars of other claims from those communities and other creditors in Purdue’s bankruptcy proceedings, according to court documents and people familiar with the matter.
Sacklers pay civil penalty over false claims
Members of the billionaire Sackler family who own Purdue agreed to pay a separate $225 million civil penalty for allegedly causing false claims for OxyContin to be made to government healthcare programs such as Medicare, according to court records.
Neither the Sacklers nor any Purdue executives were criminally charged. The agreement does not release any individuals associated with Purdue from potential criminal liability. A separate Justice Department criminal investigation scrutinizing individuals is ongoing, according to a person familiar with the matter.
Purdue conspired to engage in criminal conduct over the years that kept medically questionable prescriptions of its opioids flowing, prosecutors said. The Stamford, Conn.-based company has agreed to plead guilty to three felonies, two of them violations of a federal anti-kickback law and another charge of defrauding the U.S. and violating the Food, Drug and Cosmetic Act.
Representatives for Purdue, its Sackler family owners and the Justice Department had no immediate comment or did not immediately respond to requests.
Opposition from lawmakers
The settlement had already come under fire before its unveiling from Democrats on Capitol Hill, who called for Purdue and its owners to face more severe consequences for their alleged roles in the opioid crisis, criticism that followed Reuters reporting details of the looming agreement.
Dozens of state attorneys general, meanwhile, oppose a plan that would essentially put government litigants in charge of a restructured company continuing to sell OxyContin.
Purdue reaped more than $30 billion from sales of OxyContin over the years, enriching Sackler family members while funnelling illegal kickbacks to doctors and pharmacies, U.S. and state officials have alleged.
The cases against Purdue and the Sacklers reflect an attempt by officials to hold accountable alleged perpetrators of an epidemic that has claimed the lives of more than 400,000 people since 1999, prompting the Trump administration to declare it a public health emergency.
Purdue’s misconduct included paying illegal kickbacks to doctors and to a vendor called Practice Fusion that created a software alert designed to push the drugmaker’s opioids on physicians, prosecutors said. Practice Fusion earlier this year entered a deferred prosecution agreement and admitted that it received kickbacks from an opioid company, which Reuters reported was Purdue.
Restructuring into public benefit company not certain
Purdue also ignored doctors suspected of improperly prescribing opioids that were flagged by its internal controls and failed to report OxyContin prescriptions from these physicians to the Drug Enforcement Administration as legally required, officials said.
Purdue, which filed for bankruptcy protection last year under an onslaught of litigation, has proposed settling thousands of lawsuits in a deal it values at more than $10 billion. That is contingent on donations of opioid reversal and addiction treatment medications it has under development and a $3 billion cash contribution from the Sacklers. The Sacklers would cede control of Purdue.
The part of that plan reshaping Purdue as a public benefit company is no longer assured, said people familiar with the matter. Attorneys general from two dozen states and Washington, D.C., last week said it would improperly entangle them with a restructured Purdue’s continued OxyContin sales while they attempt to hold alleged perpetrators of the opioid crisis accountable.
Purdue asked its bankruptcy judge on Wednesday to approve the plea agreement, including the $225 million payment it owes.