Following his 1987 acquittal on 100 criminal counts charged against him by the Justice Department, former Labor Secretary Raymond Donovan asked rhetorically — but pointedly — “Which office do I go to, to get my reputation back?”
As difficult as it is for an individual exonerated of charges against him or her to remove the tarnish to reputation of criminal charges, it is more difficult still for a corporation to recoup lost reputation in such circumstances.
Not all corporations exonerated in court suffer as greatly as Arthur Andersen, driven into dissolution prior to its pyrrhic victory of having its conviction overturned by the Supreme Court in 2005. The list of corporations harmed severely by federal prosecutors making “examples” of them continues to grow.
One of the most recent examples of this troubling phenomenon is Purdue Pharma, manufacturer of the widely prescribed and highly effective pain-management drug, OxyContin. Shortly after the drug gained Food and Drug Administration (FDA) approval in 1995, it began to be vilified by the federal Drug Enforcement Administration (DEA) and its parent agency, the Justice Department. Federal agents publicly denigrated the pain medication as “hillbilly heroin” because it had achieved a level of abuse in the Appalachian region, and issued incorrect but easily quotable statistics purporting to establish that OxyContin abuse rapidly had become an “epidemic.”
Once the government labeled the drug thus, it was only a matter of time before that same government would have to “correct” the problem it had defined. The handwriting was on the wall and Purdue Pharma’s nightmare began in earnest in 2001.
Aided by a series of inflammatory and irresponsible media stories describing in awful and largely erroneous detail the deaths and otherwise debilitating harm visited on “victims” of OxyContin abuse, the U.S. Attorney for the Western District of Virginia launched a relentless investigation of the drug’s manufacturer. Several years and hundreds of subpoenas and search warrants later, the government had its scalp; or rather, three small strands of corporate hair.
In July 2007, a Purdue Pharma associated company, Purdue Frederick Co., its former president and CEO, its chief legal officer, and its former chief medical officer, pleaded guilty. The three men admitted to the strict liability misdemeanor offense of “misbranding” a drug in violation of FDA regulations. Their actual offensive conduct? — “allowing” a small percent of the company’s large sales force to mischaracterize to some doctors the drug’s potential for abuse, even though the company’s rules prohibited any deviation from the lengthy prescribing information FDA requires for approved medicines.
The government then publicly and falsely labeled these misstatements as the cause of the drug’s abuse “epidemic,” a charge never made in court.
Government lawyers were unable to establish that any of the officials charged even knew about the misstatements. However, the risk of catastrophic losses to the company, and the threat of jail time if a jury were to convict, figured in the practical decision by the company to plead rather than fight.
As distasteful as last summer’s guilty pleas must have been to the three Purdue Pharma officials, the release just four months later, in November 2007, of a research study concluding that OxyContin’s role in drug abuse is “quite low,” and that the medicine is not any more widely abused than other pain-killing drugs, must be causing real gnashing of teeth by the misdemeanants.
Of broader importance — even beyond the harm done the manufacturer of a revolutionary pain management drug by being unfairly targeted by overzealous federal investigators and prosecutors — is the fact that the exhaustive study of OxyContin’s minimal role in drug abuse has received not even a small percentage of the attention afforded the earlier prejudicial and negative stories launched against it by the media and the government. Even former New York Mayor Rudolph Giuliani, hired in 2002 to help Purdue Pharma defend against the attacks launched against it, was smeared by the media for having thus sullied himself by defending a pharmaceutical manufacturer.
If history is any guide, neither Mr. Giuliani nor his client should hold their breath awaiting an apology from the federal government or those media outlets that attacked them in 2001 and thereafter. Just ask Ray Donovan, remembered after 20 years not as the innocent former Cabinet official who beat the U.S. government, but as the first Cabinet secretary in history to be indicted while serving. Former President Reagan, who had appointed Mr. Donovan to the Labor post, at least praised him publicly following his acquittal. The current administration of George W. Bush has uttered nary a peep in favor of a company and its officers now shown clearly to have been besmirched and unfairly harmed by the actions of its agents.
Bob Barr is a former Republican member of the U.S. House of Representatives from Georgia and a former U.S. attorney there.