Company admits painkiller deceit

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Drug maker Purdue Pharma LP yesterday pleaded guilty to misleading the public about the addictive and harmful effects of OxyContin.

A federal investigation uncovered an extensive effort by the company to generate the maximum amount of money from the sale of OxyContin through illegal marketing practices.

The federal lawsuit, initiated by the U.S. Attorney's Office for the Western District of Virginia in Roanoke, culminated yesterday when the company agreed to pay more than $700 million to resolve criminal and civil liabilities. The fine is one of the largest amounts ever paid by a drug company in an illegal marketing case.

"Purdue trained its sales representatives to make false representations to health care providers about the difficulty of exacting oxycodone, the active ingredient, from the OxyContin tablet," said the lead investigative agency, the Food and Drug Administration.

OxyContin is a potent long-lasting pain-relief drug with sales in the billions of dollars largely because of the perception that it posed a lower threat of abuse and addiction to patients than do other prescription painkillers.

From 2000 through 2006, OxyContin sold $9.6 billion in the U.S., making it one of 25 top-selling drugs. But OxyContin also became a household name because of its recreational use by drug users. Soon after its U.S. introduction in 1996, a nationwide epidemic ensued as people became addicted to OxyContin's narcotic highs.

"Nearly six years and longer ago, some employees made, or told other employees to make, certain statements about OxyContin to some health care professionals that were inconsistent with the FDA-approved prescribing information for OxyContin," the company said yesterday. "The misstatements were made prior to July 2001 and related to the risks of addiction, abuse, withdrawal, and tolerance compared to other pain medications."

The government went after officials in the company as well as the company itself. The president of Purdue Pharma, Michael Friedman; the top lawyer, Howard Udell; and Paul Goldenheim, former medical director, all pleaded guilty to misdemeanor violations of misbranding OxyContin and will pay fines ranging from $8 million to $19 million.

"We felt it was appropriate to demand individual and corporate accountability," said U.S. Attorney John Brownlee. "Those people pleading guilty to a crime is significant."

The federal lawsuit included a civil settlement in which the company will pay $130 million to patients and private plaintiffs. Whether that will cover the scope of people harmed by OxyContin or cause additional lawsuits is not clear. If after two years, the $130 million is more than enough to settle private claims, the remainder of the money will go the government, Mr. Brownlee said.

"If not, they will pay more," he said.

The amount of the penalty for false advertising is the largest in recent years and will be a wake-up call for drug companies, said August Horvath, chairman of the Consumer Protection Committee of the American Bar Association's section of antitrust law.

"As a legal matter, there is nothing shocking here," said Mr. Horvath, who is also a trade regulation lawyer in the New York office of Heller Ehrman. "But the amount of the fine will cause drug companies to be very careful about promoting non-indicated uses for drugs. They're going to have to watch what their salespeople say closely."

In January 2003, the FDA sent Purdue Pharma a warning letter concerning illegal advertising of OxyContin. The letter contained similar charges leveled at the company in the lawsuit, including overstating the safety. But the FDA lacks the authority to impose civil monetary penalties for any prescription drug violation, therefore the company did not have to pay a fine.

"They were being told for years it was being abused, and we wanted to know why rural parts of Virginia were being devastated by OxyContin," Mr. Brownlee said. "Now we know why."