Purdue Pharma Pleads Guilty, Reaching $8.3 Billion Settlement

Dani Alexis Ryskamp, J.D.

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— Updated on December 7, 2020

Purdue Pharma Pleads Guilty, Reaching $8.3 Billion Settlement

Purdue Pharma, makers of opioid painkiller OxyContin, recently reached an agreement with the U.S. Department of Justice (DOJ), pending the approval of the bankruptcy court. The agreement is an important step towards resolving a long legal battle over the drugmaker’s role in the nation’s opioid epidemic.

Details of the $8.3 Billion Settlement

Under the terms of the agreement, Purdue Pharma will pay $8.34 billion in damages and will plead guilty to a three-count felony information in New Jersey.  The charges against the company include one count of conspiracy to defraud the United States and violate the Food, Drug, and Cosmetic Act, and two counts of conspiracy to violate the Federal Anti-Kickback Statute.

In order to resolve the case, Purdue Pharma will pay a $3.54 billion criminal fine, $2 billion in criminal forfeiture, and a civil settlement of $2.8 billion for civil liability under the False Claims Act. Pursuant to its guilty plea, Purdue Pharma is expected to admit that between May 2007 and March 2017, the company conspired to defraud the United States by falsely claiming it was working to prevent opioid painkillers from getting into the hands of people who did not medically need them. In fact, according to the U.S. Department of Justice, Purdue Pharma was marketing those opioids directly to doctors it knew—or had good reason to suspect—were providing them to non-pain patients.

By helping to dispense OxyContin and other opioids outside the legal channels for treating medical conditions with a valid prescription, the DOJ states, Purdue Pharma engaged in a conspiracy to aid and abet violations of the federal Food, Drug, and Cosmetic Act. Purdue will also admit to paying two doctors through its speaker program incentive to write more OxyContin prescriptions. This, according to the DOJ, constitutes a conspiracy to violate the Federal Anti-Kickback statute.

Civil Settlements For the Sackler Family

In addition to the guilty plea, Purdue Pharma reached a civil settlement resolving federal claims against both Purdue and its individual shareholders—including the Sackler family, who founded and own the company. The civil settlement includes a bankruptcy claim against the company by the United States for $2.8 billion, resolving claims that Purdue Pharma was involved in defrauding various federal healthcare programs, that it paid kickbacks to certain parties, and that it contracted with specialty pharmacies to fill opioid prescriptions after other pharmacies had refused, describing the prescriptions as not medically necessary.

The terms of a separate civil settlement require five members of the Sackler family to pay a collective $225 million. This settlement resolves claims that the five Sacklers pushed for increased sales of OxyContin starting in 2012, endorsing a program that marketed the drug specifically to doctors who wrote large numbers of OxyContin prescriptions. It also addresses claims that in 2018 and 2019, Purdue Pharma transferred assets to the five Sackler family members for improper or fraudulent reasons. The Sackler family will also no longer be in charge of Purdue Pharma, which will become a public benefit company.

What to Expect in Future Opioid Litigation

While the settlement addresses a number of federal claims against Purdue Pharma and its owners, it does not address any state-level claims against the parties. States may continue to pursue their claims against Purdue Pharma and any members of the Sackler family. The deal also does not address criminal charges against any members of the Sackler family as individuals. Criminal investigations against individual Sacklers are still ongoing and could yield additional charges in the future.

Purdue Pharma has proposed to settle outstanding claims with a deal that could be worth $8 billion to $12 billion dollars, once all claims are paid. Some state attorneys and others, however, are pushing for a larger settlement, pointing to evidence that the Sackler family transferred over $10 billion out of the company between 2008 and 2017.

The $3.54 billion criminal fine is part of Purdue Pharma’s bankruptcy proceeding. As a result, it remains to be seen whether and to what extent that fine will be paid. The federal government has indicated that money collected from the fine will be used to fund opioid treatment programs. This plan, however, has received some pushback from state governments.

The complex nature of the claims against Purdue Pharma means that settlements will continue to be complicated as well. Many states will likely continue to pursue state-level claims against the company. Its bankruptcy and status as a public benefit company could continue to complicate the process of obtaining settlements and resolving claims.

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