NEWARK, N.J. — OxyContin maker Purdue Pharma is set to be dissolved and replaced by a company focused on the public good by the week’s end, as a massive legal settlement resolving thousands of lawsuits takes effect.
A federal judge on Tuesday delivered a criminal sentence to the company to resolve a U.S. Department of Justice probe - a last necessary step to clear the way for the settlement.
U.S. District Judge Madeline Cox Arleo made her decision after listening to hours of impact statements from people who lost loved ones or struggled with addiction themselves and requested she reject the negotiated sentence. While she didn’t go that far, she said she sympathized with people who bore the brunt of an epidemic linked to more than 900,000 deaths in the U.S. since 1999.
“It was a purposeful, intentional and sophisticated crime scheme,” she said.
The sentence calls for money, but no individual punishment
Purdue reached a deal with the Justice Department in 2020 to resolve criminal and civil probes the company was facing.
The Stamford, Connecticut-based company admitted it did not have an effective program to keep its powerful prescription painkillers from being diverted to the black market, even though it told the U.S. Drug Enforcement Administration that it did.
It also admitted it paid doctors through a speakers program to prescribe the drugs and paid an electronic medical records company to send doctors information on patients that encouraged more opioid prescriptions.
Steve Miller, who became chairman of Purdue’s board to guide the company through the bankruptcy process and will cease to have that position when the company is dissolved, addressed the hearing: “I deeply apologize on behalf of the company for everything they did,” he said.
Only the company was charged - not individual employees or owners.
The guilty plea and civil settlement with the federal government included $8.3 billion in forfeitures, fines and penalties. But the federal government agreed in a negotiated settlement to collect just $225 million in exchange for Purdue reaching a separate settlement of the thousands of lawsuits it faced from state, local and Native American tribal governments, along with other groups. Purdue’s guilty plea did not include restitution to victims.
After years of legal twists and turns - and $1 billion and counting in legal and professional fees for the parties - the broader sentence was approved by a bankruptcy judge in November.
‘We still deserve justice’
Arleo on Tuesday heard in person and by teleconference from people impacted by opioids in several ways: mothers who lost sons to overdose, a teenager born into withdrawal and whose mother later died, and people who were prescribed OxyContin after accidents and spent years dealing with addiction treatment and financial and emotional turmoil.
Many asked Arleo, who at times appeared to be on the verge of tears, to reject the negotiated sentence.
Alexis Pluis, an upstate New York mother who lost a son to opioids in 2014, said she doesn’t expect to receive anything from the settlement because she can’t locate 23-year-old medical records showing her son was prescribed OxyContin.
“We still deserve justice,” she said. “And this isn’t it.”
After listening to victims for about five hours Tuesday, the judge told them that she would keep photos of loved ones they lost to opioids in her chambers as long as she serves as a judge. She had harsh words for the federal government for approving OxyContin and not catching warning signs that it was being abused, and for prosecutors for not bringing charges.
She noted that she has sentenced convicted drug dealers to prison for selling OxyContin - and in those cases, federal prosecutors routinely bring up that it was part of an epidemic.
“It is not lost on me that those who started the epidemic will not serve a sentence,” she said.
Sackler family members to pay up to $7 billion
The settlement, which Purdue says could take effect as soon as Friday, calls for members of the Sackler family who own the company to contribute up to $7 billion over 15 years. Most of the money is to go to government entities to use to fight the opioid crisis.
Early in Tuesday’s hearing, Arleo asked lawyers why Sackler family members were being allowed to pay over 15 years. She was told it was because they had to sell other businesses to secure the cash.
The judge offered a different reason. “They’d rather pay it from future money than pay it now,” she said.
A Purdue lawyer said most of the lawsuits against the company over opioids did not include specific financial claims. But the ones in those that did totaled over $40 trillion in damages.
The settlement is among the largest in a series of settlements by drugmakers, wholesalers and pharmacies in recent years - and the only major one that includes payments for some individual victims or their survivors.
Payments to individual victims are expected to range from about $8,000 to about $16,000. Some people said Tuesday that they could be rejected for payments because they can’t locate decades-old prescriptions to the pills. Arleo told Purdue bankruptcy lawyers to ensure there are additional ways to prove they were harmed.
Overall, the settlements are worth more than $50 billion, and most of the money is to be used to address the overdose epidemic.
Under the Purdue deal, members of the Sackler family will be shielded from lawsuits over opioids from those who agree to the payments. Family members received payments from the company totaling about $10.7 billion from 2008 through 2018, but said nearly half that amount was used to pay taxes on behalf of the business.
As part of the settlement, Purdue itself will cease to exist and be replaced by a new company, Knoa Pharma, with a board appointed by the states and an aim of combating the opioid crisis. Millions of internal Purdue documents are to be made public.
Members of the Sackler family also have agreed not to object if their names are taken off museums and other institutions they’ve supported.
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Associated Press video journalist Emily Wang contributed to this article.
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