Wednesday, August 19, 2020

The Drug Pushers Deal with Prosecutors

A Department of Justice internal memorandum obtained by the Guardian shows that government prosecutors found evidence that executives at the drugs giant Purdue Pharma may have committed multiple crimes, including wire fraud and money laundering, to boost sales of its billion-dollar OxyContin opioid.

A six-page document, dated 6 October 2006,  confirms that a $654m settlement between Purdue Frederick – a company affiliated with Purdue Pharma at the time – and the government over deceptive marketing claims in mid-2007 fell far short of what prosecutors had actually sought just six months earlier. 

The memo suggests that had the government accepted prosecutors’ recommendations and brought a criminal prosecution, Purdue – which the DoJ then estimated to be making $100m a month – might have been put out of business, senior executives jailed and perhaps tens of thousands of opioid-related deaths avoided. 

Instead, the government agreed to limit Purdue’s exposure to claims of deceptive marketing to six years, from 1996, when the drug was introduced with first-year sales of $48m, to 2001, when sales had already reached $1.1bn. Over that period, the government estimated, Purdue’s revenue from OxyContin sales of $2.8bn. 

The six-page memo, titled Proposed Indictment of Purdue Pharma LP recommended indicting the company for mail fraud, wire fraud, money laundering and conspiracy – charges that could have put the company out of business. The memo recommends charging the Purdue executives Michael Friedman, Paul Goldenheim and Howard Udell with felonies that could have sent them to prison. “The Indictment charges a multi-object conspiracy with the overall goal of maximizing the revenues from the sale of OxyContin through fraud, deceit, and false statement, “ wrote Kirk Ogrosky, deputy chief of the fraud section at DoJ in Washington. 

Ogrosky wrote that Purdue’s crimes began in 1992 and were still continuing at the time of the memo in 2006. 

In May 2007, it looked very different from what Ogrosky recommended. The maker of the powerful painkiller OxyContin and three executives pleaded guilty to misleading the public about the drug’s risk of addiction.

The three non-Sackler executives, who included its president and its top lawyer, pleaded guilty as individuals to misbranding, a criminal violation. They agreed to pay a total of $34.5m in fines and were given probation. But none of the three executives had been in charge of Purdue during the years of the alleged crimes – Purdue’s presidents at the time were Raymond Sackler and, from 1999, son Richard.

The investigations of Purdue have dragged on for decades, during which as many as 400,000 Americans have died from opioid-related causes. According to the National Bureau of Economic Research, OxyContin accounted for 65% of the national growth in overdose death rates since 1996.

“We are calling on the government to prevent Purdue and the Sacklers from buying their way out of criminal prosecution and to not repeat the shortcomings of the 2007 settlement,” said Michael Quinn, an attorney for the Ad Hoc Committee on Accountability in the current Purdue Pharma bankruptcy case.

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