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U.S. Officials: OxyContin Maker To Plead Guilty To 3 Criminal Charges

This May 8, 2007, file photo shows the Purdue Pharma logo at its offices in Stamford, Conn. (Douglas Healey/AP File)
This May 8, 2007, file photo shows the Purdue Pharma logo at its offices in Stamford, Conn. (Douglas Healey/AP File)

Purdue Pharma, the company that makes OxyContin, the powerful prescription painkiller that experts say helped touch off an opioid epidemic, will plead guilty to three federal criminal charges as part of a settlement of more than $8 billion, Justice Department officials told The Associated Press.

The company will plead guilty to three counts, including conspiracy to defraud the United States and violating federal anti-kickback laws, the officials said. The resolution will be detailed in a bankruptcy court filing in federal court.

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 officials were not authorized to discuss the investigation publicly and spoke on condition of anonymity.

The settlement is the highest-profile display yet of the federal government seeking to hold a major drugmaker responsible for an opioid addiction and overdose crisis linked to more than 470,000 deaths in the country since 2000.

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 Donald 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.

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.”

Massachusetts Attorney General Maura Healey said Wednesday that the Department of Justice failed with the settlement, accusing the DOJ of "rushing a settlement to beat an election."

"The Sacklers and Purdue are going to pay a relatively small amount of money and be able to walk away and continue to sell opioids," Healey said." It is heartbreaking and devastating for families and survivors. This is not justice."

Healey said she was particularly disappointed by the part of the settlement that calls to convert Purdue into a "public benefits company" that would be managed by a trust that has to balance public health interests. The Sacklers would not be involved in the new entity, and federal officials said it would work on medications to treat addiction and reverse overdoses. Healey was among more than two dozen state attorneys general who urged in a letter to the DOJ urging that the proposal not be included in any settlement.

"I find that perverse and totally inappropriate," Healey said. "We brought this case against Purdue and the Sacklers to seek justice and accountability — not to become a government-backed drug company."

Healey said Massachusetts will not get any money from the federal settlement and her suit will proceed.

"It's very disappointing, but I can tell you that I'm not done with Purdue or the Sacklers, and we're never gonna sell out like that," Healey said.

Some local advocates for those struggling with addiction also expressed disappointment.

Maureen Cavanaugh, founder of Magnolia New Beginnings, a support group for those dealing with addiction, said she's concerned the settlement does not involve criminal charges against Purdue's owners, the Sackler family. "They're no different," she said, than people who deal drugs on the street.

"They're responsible for the deaths of hundreds of thousands of people," Cavanaugh said. "They've been able to get away with it because they have money."

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 also 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.

As the maker of the best-known prescription opioid, Purdue is the highest-profile player in the opioid crisis, but it’s far from the other one. Trials against other drugmakers and distributors that were scheduled for this year have been pushed back due to the coronavirus.

Mulvihill reported from Davenport, Iowa. With additional reporting from WBUR's Deborah Becker.

This article was originally published on October 21, 2020.

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