Five states have sued super-rich members of the family that controls Purdue Pharma. Together they are accused of encouraging an opioid addiction epidemic that has killed more than 200,000 Americans in two decades. Recently a coalition of more than 500 US counties, cities and Native American tribes also named the Sacklers in a case in New York, bringing the family into a bundle of 1,600 opioid cases, reports The New York Times. Local and state governments are seeking settlements to fund opioid addiction costs and treatment initiatives.
The New York Timesran a series of three articles in late March and early April, probing legal actions against alleged opioid-related sale, distribution and other misconduct. Together, it says, the cases lay out the extensive involvement of a family that has largely escaped personal legal consequences for Purdue Pharma’s role in the opioid epidemic.
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Purdue Pharma and Sacklers reach $270 million settlement in opioid lawsuit
Purdue Pharma, the maker of OxyContin, and its owners, the Sackler family, agreed to pay $270 million to avoid going to a state court trial over the company’s role in the opioid addiction epidemic that has killed more than 200,000 Americans over the past two decades, writes Jan Hoffman for The New York Timeson 26 March 2019.
The payment, negotiated to settle a case brought by the state of Oklahoma, was far larger than two previous settlements Purdue Pharma had reached with other states. It could jolt other settlement talks with the company, including those in a consolidated collection of 1,600 cases overseen by a federal judge in Cleveland.
“Purdue appears to have concluded that it was less risky to settle the Oklahoma case than have the allegations publicly aired against it during a televised trial and face exposure to what could have been an astronomical jury verdict,” said Abbe R. Gluck, a professor at Yale Law School who directs the Solomon Center for Health Policy and Law.
“That said,” she continued, “the settlement does put a stake in the ground for the other cases. It telegraphs what these cases might be worth and makes the elephant in the room even larger – namely, do Purdue and the Sacklers have sufficient funds to give fair payouts in the 1600-plus cases that remain?”
The New York Timesreported that Purdue Pharma’s chief executive Dr Craig Landau said in a statement after the settlement announcement: “Purdue is very pleased to have reached an agreement with Oklahoma that will help those who are battling addiction now and in the future.”
Opioid crisis ‘arch-villain’
While numerous other drug manufacturers, distributors and pharmacy chains have been targets of lawsuits, Purdue, in particular, has been painted as the arch-villain of the opioid disaster, and the company has been feeling exceptional heat in recent months.
Not only was Purdue staring down an impending trial date of 28 May in Oklahoma, with cameras in the courtroom, but documents made public recently in a case brought by the state of Massachusetts accused Sackler family members of directing efforts to mislead the public about OxyContin’s potency and addictive properties.
A number of museums and cultural institutions around the world have recently stopped taking donations from the Sacklers, who have a long record of philanthropy, The New York Timesreport continued.
As headlines mounted, the company began exploring the possibility of filing for Chapter 11 bankruptcy restructuring, a step that could temporarily insulate it from big judgments. While it has yet to decide, the possibility of bankruptcy exerted powerful leverage at the bargaining table in Oklahoma, people familiar with the negotiations said.
Once a company files for Chapter 11 protection, only secured creditors, such as banks, can expect to be repaid in full. While an Oklahoma jury could potentially have hit Purdue with a stratospheric civil judgment, the likelihood of the state collecting even a significant portion from bankruptcy court — never mind how much appellate courts would reduce the award — would be remote and at some point far in the future. Legal experts said the settlement amounts to a bird-in-the-hand decision.
Legal experts said similar calculations could come into play in the 35 other state cases still pending against Purdue, as well as in the federal litigation, which combines 1,600 suits brought by cities, counties, Native American tribes and others.
“There is blood in the water now, and with the threat of bankruptcy, the concern is that counties and states may settle on the cheap early to avoid getting little to nothing later on,” said Elizabeth Chamblee Burch, a law professor at the University of Georgia.Purdue Pharma and Sacklers Reach $270 Million Settlement in Opioid Lawsuit
New York sues sackler family members and drug distributors
As investigators closed in on Purdue Pharma, the maker of the opioid painkiller OxyContin, more than a decade ago, members of the family that owns the company began shifting hundreds of millions of dollars from the business to themselves through offshore entities, the state of New York alleged in a lawsuit late last month, writes Roni Caryn Rabin for The New York Times.
The legal complaint, released at a news conference by the state attorney general Letitia James, was heavily redacted. Even so, it contains striking details alleging systematic fraud not only by the Sacklers but by a group of large but lesser-known companies that distributed alarming amounts of prescription painkillers amid a rising epidemic of abuse that has killed hundreds of thousands of people nationwide.
The major pharmaceutical distributors — Cardinal Health, McKesson and Amerisource Bergen — warned pharmacies when their monthly opioid limits were approaching, then helped them manipulate the timing and volume of orders to circumvent the limits, the complaint charged. On the rare occasion when a distributor would conduct “surprise” audits of its customers, it would often alert them in advance, the complaint says.
Over the past two decades, more than 200,000 people have died in the United States from overdoses involving prescription opioids, according to the Centers for Disease Control and Prevention. About 200,000 more have died from overdoses involving illegal opioids, like heroin.
In New York State, where prescriptions for opioids increased ninefold between 2000 and 2011, opioid-related deaths have more than doubled since 2013, the lawsuit said. Nine New Yorkers die each day.
The suit, filed in New York State Supreme Court in Suffolk County, names eight Sacklers: Richard, Jonathan, Mortimer, Kathe, David, Beverly and Theresa Sackler, as well as Ilene Sackler Lefcourt. It seeks to claw back funds that it alleges were transferred from Purdue Pharma to private or offshore accounts held by family members in an effort to shield the assets from litigation; to order the Sacklers to return any transferred assets; and to restrain them from disposing of any property.
A spokesman for the Sackler family called the allegations “a misguided attempt to place blame where it does not belong for a complex public health crisis. We strongly deny these allegations, which are inconsistent with the factual record, and will vigorously defend against them.”
A spokesman for Purdue Pharma said the company and its former directors “vigorously deny” the charges set forth in the complaint and will defend themselves against the “misleading allegations.”
The Sacklers are one of the richest families in the United States, known for generous philanthropy in the arts. But they have come under increasing scrutiny after new documents came to light in a Massachusetts case suggesting that some family members helped direct misleading marketing efforts for OxyContin and ignored evidence that the drug was being abused. Over the past several weeks, a number of cultural institutions in the United States and abroad have said they will no longer accept the family’s money.
The New York lawsuit alleges that Sackler family members abolished quarterly reports, insisted that numbers be recounted only orally to board members, and voted to pay themselves millions of dollars, often through offshore companies.
It further charges that in 2007, while Purdue was being investigated by federal prosecutors, the family created a new company to sell opioids, called Rhodes, which a former Purdue official said was specifically set up as a “landing pad” for the Sacklers because of the crisis surrounding OxyContin, according to the lawsuit, reports The New York Times.
Rhodes, which is owned by trusts benefiting the Sacklers and is overseen by members of the family, started selling generic opioids in 2009, the lawsuit says. By 2016, Rhodes had a far greater share of the opioid market than did Purdue, according to a Financial Timesarticle quoted by the lawsuit.
By 2014, fearing that Purdue could face catastrophic financial judgments, the Sacklers directed Purdue to pay family members hundreds of millions of dollars a year in distributions, sending money to offshore companies, the lawsuit claims, an act of clear “bad faith.”
As a result of these distributions, the lawsuit says, “assets are no longer available to satisfy Purdue’s future creditor, the state of New York.”
The distributors are far less known than opioid makers and retailers, but they are among the wealthiest companies in the United States.
The suit (which also names a regional distributor, Rochester Drug) alleges that the distributors turned “a collective blind eye as orders for opioids in New York skyrocketed” and drugs known to be dangerous “came to be dispensed like candy.”
A spokeswoman for Cardinal Health said the company has a rigorous system in place to flag and report suspicious orders and has enhanced the program over time.New York Sues Sackler Family Members and Drug Distributors
Lawsuits lay bare sackler family’s role in opioid crisis
The Sacklers had a new plan. It was 2014, and the US company the family had controlled for two generations, Purdue Pharma, had been hit with years of investigations and lawsuits over its marketing of the highly addictive opioid painkiller OxyContin, at one point pleading guilty to a federal felony and paying more than $600 million in criminal and civil penalties.
But, write Danny Hakim, Roni Caryn Rabin and William K Rashbaumfor The New York Times, as the country’s addiction crisis worsened, the Sacklers spied another business opportunity. They could increase their profits by selling treatments for the very problem their company had helped to create: addiction to opioids.
Details of the effort, named Project Tango, have come to light in lawsuits filed by the attorneys general of Massachusetts and New York. Together, the cases lay out the extensive involvement of a family that has largely escaped personal legal consequences for Purdue Pharma’s role in an epidemic that has led to hundreds of thousands of overdose deaths in the past two decades.
The filings cite numerous records, emails and other documents showing that members of the family continued to push aggressively to expand the market for OxyContin and other opioids for years after the company admitted in a 2007 plea deal that it had misrepresented the drug’s addictive qualities and potential for abuse.
The business potential of adding addiction treatment to the mix was illustrated in internal company charts and diagrams, reports The New York Times.
“Pain treatment and addiction are naturally linked,” one Project Tango document, included in the New York complaint, said. It depicted a big blue funnel. The fat end was labeled “pain treatment”; the narrow end was labeled “opioid addiction treatment.”
The company, the document said, could make money at both ends of the funnel as an “end-to-end pain provider.” Dr Kathe Sackler, one of the eight family members sitting on Purdue’s board, instructed employees to devote “immediate attention” to the effort, according to an email included in the Massachusetts filing, reports The New York Times.
Burst of litigation
The two lawsuits are part of a burst of recent litigation that has taken aim at the Sacklers, a far-flung billionaire family that has a network of trusts and companies in the United States and abroad.
Their philanthropic gifts have built namesake wings housing the Temple of Dendur at the Metropolitan Museum of Art in New York and oriental antiquities at the Louvre in Paris, as well as a library at the University of Oxford and a scientific institute at Columbia University, according to The New York Times.
In addition to New York and Massachusetts, Connecticut, Rhode Island and Utah have filed suit against members of the family. Last month, a coalition of more than 500 counties, cities and Native American tribes named the Sacklers in a case in the Southern District of New York, bringing the family into a bundle of 1,600 opioids cases being overseen by a federal court judge in Cleveland.
(The various legal claims also identify many other manufacturers, distributors and pharmacy chains as bearing responsibility for the epidemic.)
The suits are not only an effort to get at the Sacklers’ personal fortunes — estimated by Forbes to be $13 billion — but to expose the extent to which the Sacklers themselves have been calling the shots, writes The New York Times.
“If these allegations against the Sacklers are proven to be correct, that could dramatically change the potential reach of where the litigation goes to collect funds on behalf of the cities and states that are so desperately trying to get money to deal with the opioid crisis,” said Adam Zimmerman, an expert on complex litigation at Loyola Law School in Los Angeles.
Other side of the story
In a joint statement to The New York Times, representatives of the eight Sackler family members named as defendants in the New York and Massachusetts cases said the lawsuits were “filled with claims that are demonstrably false and unsupportable by the actual facts.” The statement also contended that the claims would be refuted by the family’s response to the Massachusetts lawsuit.
The statement said the lawsuits “ignore the fact that the Sackler family has long been committed to initiatives that prevent abuse and addiction,” citing what it characterized as a philanthropic donation from the family to an addiction research and treatment center in Tulsa, Oklahoma. In fact, the $75 million contribution, to be made over five years, was a condition of the court-approved settlement of an opioid lawsuitbrought by the Oklahoma attorney general against Purdue.
Regarding Project Tango, a separate statement from some of the Sacklers named in the suits said that “no board member proposed Tango, or authored any documents in support of it,” The New York Timesreports.
Purdue, for its part, said in a court filing in Massachusetts this year that it “neither created nor caused the opioid epidemic” there and in a statement last week said the company and its former directors “vigorously deny” the New York claims.
Prescription opioids are Food and Drug Administration-approved medications that have legitimate uses for certain patients with advanced cancer or short-term severely acute pain, and are still prescribed, despite limited evidence, for some patients with chronic pain.
The awareness issue
A central concern of the investigations and legal cases against Purdue Pharma over the years, including the 2007 federal investigation, has been whether the company, its executives and owners were aware in the late 1990s that OxyContin was being abused. The new lawsuits are notable for the detail they provide about the family’s own continued push to sell opioids in more recent years, as the opioid epidemic became a full-blown national crisis, writes The New York Times.
In 2009, two years after the federal guilty plea, Mortimer DA Sackler, a board member, demanded to know why the company wasn’t selling more opioids, email traffic cited by Massachusetts prosecutors showed.
In 2011, as states looked for ways to curb opioid prescriptions, family members peppered the sales staff with questions about how to expand the market for the drugs. Mortimer asked if they could sell a generic version of OxyContin in order to “capture more cost sensitive patients,” according to one email.
Kathe, his half sister, suggested studying patients who had switched to OxyContin to see if they could find patterns that could help them win new customers, according to court filings in Massachusetts.
The family’s statement said they were just acting as responsible board members, raising questions about “business issues that were highly relevant to doctors and patients.”
Purdue’s business was fundamentally changed after the F.D.A. approved OxyContin in 1995. The company marketed the drug as a long-acting painkiller that was less addictive than shorter-acting rivals like Percocet and Vicodin, a strategy aimed at reducing the stigma attached to opioids among doctors.
The court filings detailed a multipronged approach used by the pharmaceutical industry at that time to reshape public perceptions about pain and chip away at physicians’ reluctance to prescribe opioids, long known to be addictive, by describing an “epidemic” of untreated pain affecting 100 million Americans.
Manufacturers funded “front groups” that were “disguised as ‘unbiased’ sources of cutting-edge medical research and information,” according to the New York attorney general’s office, ostensibly to educate the public about chronic pain and the benefits of opioids. Physicians were paid as consultants to further spread their message. The companies claimed that opioids were safer than high doses of acetaminophen and other anti-inflammatory agents and that there was a minuscule risk of addiction.
At Purdue, sales representatives focused on doctors who were high-volume opioid prescribers, as well as inexperienced providers and primary care physicians who knew little about pain management, encouraging them to prescribe higher and higher doses for longer stretches of time, according to the court filings. Sales representatives could earn tens of thousands of dollars in bonuses and were rewarded with trips to tropical islands.
Since OxyContin came on the market, more than 200,000 Americans have died of overdoses related to prescription opioids. As reports of overdoses grew, Richard Sackler urged the company to blame the patients. “We have to hammer on abusers in every way possible,” he wrote in a 2001 email disclosed in documents filed in the Massachusetts case. “They are the culprits and the problem. They are reckless criminals,” says The New York Times.Lawsuits Lay Bare Sackler Family’s Role in Opioid Crisis