October 6, 2020

Purdue, OxyContin Manufacturer, Loses Federal Case and Will Shut Down

The Justice Department announced a global resolution of criminal and civil investigations with Purdue Pharma. Pleading guilty, Purdue faces a settlement that involves more than $8 billion, the dissolution of the company, and a repurposing of company assets for public benefit.

Purdue Pharma, the drug manufacturer most known for creating the opioid medication OxyContin (oxycodone), agreed to plead guilty in federal court in New Jersey to a three-count felony. These charges claimed that Purdue deliberately misled members of the public regarding the safety of opioid products in order to sell more drugs, despite risks to the public.

Purdue will admit that from May 2007 through at least March 2017, Purdue conspired to defraud the United States by claiming to maintain an effective anti-diversion program when, in fact, Purdue continued to market its opioid products to more than 100 health care providers whom the company had good reason to believe were diverting opioids and by reporting misleading information to the DEA to boost Purdue’s manufacturing quotas.

In addition, Purdue will admit to two counts of conspiring to violate the Federal Anti-Kickback Statute. Between June 2009 and March 2017, Purdue made payments to two doctors through Purdue’s doctor speaker program to induce those doctors to write more prescriptions of Purdue’s opioid products.

Similarly, from approximately April 2016 through December 2016, Purdue made payments to Practice Fusion Inc., an electronic health records company, in exchange for referring, recommending, and arranging for the ordering of Purdue’s extended release opioid products – OxyContin, Butrans, and Hysingla.

As part of the settlement, Purdue faces a criminal fine of $3.544 billion and an additional $2 billion in criminal forfeiture. Furthermore, Purdue has agreed to a civil settlement in the amount of $2.8 billion to resolve its civil liability under the False Claims Act.

An important condition in the resolution is that the company would cease to operate in its current form and would instead emerge from bankruptcy as a public benefit company (PBC) owned by a trust or similar entity designed for the benefit of the American public, to function entirely in the public interest.

Over the last few years, several other drug manufacturers have faced similar allegations and made various settlements, however, this recent development includes the largest penalties levied against a pharmaceutical manufacturer.

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