Justice Department Seeks Billions In Penalties From OxyContin Maker Purdue Pharma

The U.S. Justice Department is seeking up to $18.1 billion in criminal and civil penalties from Purdue Pharma, the bankrupt opioid drug manufacturer that is already embroiled in multibillion-dollar settlement negotiations with various states over its alleged culpability in the opioid crisis.

The Wall Street Journal reported that federal prosecutors are probing if Purdue’s marketing and distribution of opioids violated criminal statutes including conspiracy, anti-kickback laws and misbranding under the Food, Drug and Cosmetic Act.

The federal government specifically alleged that between 2010 to 2018, Purdue aggressively marketed its OxyContin painkillers to prescribers who often wrote unnecessary prescriptions. These practices led to reimbursements being paid from federal health care insurance programs – a violation of the False Claims Act.

The Journal noted that the Justice Department valued its civil claims against Purdue at $2.8 billion (which might be tripled under the law). If criminal charges and a conviction arise, the government said it will seek a $6.2 billion fine and the forfeiture of another $3.5 billion.

On Tuesday, Purdue said only that it is in talks to resolve criminal and civil investigations with the Justice Department.

Last September, Purdue filed for chapter 11 bankruptcy protection in September in an effort to settle lawsuits filed by states and local governments that accused the company of creating opioid addictions through its aggressive marketing tactics.

Now, the Justice Department’s intervention further complicates Purdue’s bankruptcy proceedings.

Purdue initially valued its settlement proposal with states at up to $10 billion. At least $3 billion of any settlement would come from the company’s owners, members of the Sackler family.

Bloomberg reported that the Sackler family has been hit with more than 2,000 lawsuits over the opioid crisis. The owners’ $10 billion settlement plan would lead the family to give up Purdue to a trust controlled by the states, cities and counties that have sued the company.

Although many states support the bankruptcy plan, Massachusetts and Connecticut, among others, oppose it – thereby slowing progress on a final deal.

Daniel Connolly, one of the lawyers for the Sackler family, told Bloomberg: “The Sackler family continues to support the proposed settlement framework valued at more than $10 billion, which is also supported to date by more than 28 states and territories and thousands of municipalities. We look forward to the conclusion of this process when all of Purdue’s documents will be public, making clear that the Sackler family acted ethically and responsibly at all times.”

Chuck Tatelbaum, a Connecticut-based bankruptcy lawyer, told Bloomberg he was not sure the Justice Department will get what it wants from Purdue.

“Just because you file a claim, doesn’t mean the bankruptcy court is going to allow it,” he said. “These filings are placeholders. They can be amended at any time during the case.”