Advertisement
Opinion

Op-Ed: How to hold Purdue Pharma accountable for its role in the opioid epidemic

Purdue Pharma protesters gather outside a Boston courthouse.
Protesters gather outside a Boston courthouse where a lawsuit against Purdue Pharma related to the opioid epidemic was heard Aug. 2.
(Charles Krupa / Associated Press)

The country’s other major public health crisis — the prescription opioid epidemic — has killed far more Americans than have died so far from COVID-19. Yet a major injustice to the opioid victims and their families is playing out mostly in the shadows in U.S. Bankruptcy Court in New York. That is where Purdue Pharma, the privately owned drug company responsible for the blockbuster OxyContin narcotic painkiller, filed for bankruptcy protection last September.

U.S. business history is littered with huge companies seeking the safety afforded only through bankruptcy courts: a halt to all pending civil litigation. That is no small matter for Purdue since over 2,600 lawsuits charge it was instrumental in creating America’s opioid crisis through deceptive promotion and marketing.

What sets Purdue’s bankruptcy apart is that Judge Robert D. Drain of the U.S. Bankruptcy Court in White Plains, N.Y., extended the no-litigation shield to eight members of the Sackler family, which owns the company. They have been individually named in many lawsuits for their roles in running Purdue and profiting from the opioid epidemic.

Many legal scholars were surprised that the judge — who acknowledged his order was “extraordinary” — protected the Sacklers since they were not parties in the bankruptcy case. None had declared insolvency. In fact, OxyContin’s $35 billion in sales had made the family one of the nation’s richest. In 2015, Forbes estimated the Sacklers’ net worth at $14 billion.

Advertisement

The unprecedented high-stakes legal maneuvering left many victims and relatives convinced that the judge must take the rare step of appointing an independent examiner to thoroughly probe the Sacklers. Otherwise, the family might reach a global settlement of all opioid litigation while walking away with most of its enormous OxyContin fortune.

The Sacklers have agreed to pay at least $3 billion toward any settlement, but many suspect the family is significantly understating its wealth and might have secretly transferred money abroad or stripped assets from the company before filing for bankruptcy. The widespread distrust is fueled by the family’s longstanding secrecy when it comes to how inextricably bound its finances are with Purdue. Three generations have run the company since the family acquired it in 1952.

Over five years of researching the history of the American pharmaceutical industry, I discovered declassified FBI files and never-before-published Senate papers that revealed the Sackler family had created a byzantine business empire reaching back to the 1950s. They secretly owned stakes in dozens of companies that were ostensibly rivals competing for the same drug promotion or government research grants. From 1991 to 2016 the Sacklers ran an OxyContin tax scheme involving sibling companies to Purdue in the United Kingdom and Bermuda that saved the company an estimated $1.4 billion in corporate taxes and the family tens of millions. (The U.K. changed its tax law as a result.)

Advertisement

Last year, John Coffee Jr., director of Columbia Law School’s Center on Corporate Governance, concluded in a report prepared for Utah’s Division of Consumer Protection that the “Purdue board was kept a Sackler-family dominated club.” Coffee called this “dysfunctional corporate governance” and said “there is little to distinguish the control that the Sacklers exercised over Purdue from the control that the Godfather held over his Mafia family.”

The Sacklers have benefited from the arcane and opaque nature of bankruptcy proceedings. They have ostensibly converted the court’s protective order into an “injunction to evade.” They redacted information in the small number of documents they have made available and have not produced any files from the more than 125 mostly foreign companies they controlled.

On May 12, Drain granted a request from 24 attorneys general that allows them to issue dozens of subpoenas directly to banks instead of having to pass them first by the Sacklers’ elite defense team. Still, it was only a partial victory. The Sacklers retained the right to review and redact information, and whatever is produced as a result of the subpoenas will be classified as “professionals’ eyes only information.” That means none of it will ever be made public.

Many victim activists worry that the Sacklers might succeed in hiding the full extent of their wealth and that any settlement the bankruptcy court ultimately sanctions will forever leave unanswered the many troubling questions about the full extent of the family’s role in igniting and fanning the opioid epidemic for its own profit. A bankruptcy-approved settlement means no further discovery, trial or any admission of responsibility by any Sackler.

Advertisement

To prevent this, the bankruptcy judge must immediately appoint an independent examiner with broad investigative powers. It has happened in only a handful of complex bankruptcies, including cases involving Lehman Brothers, Tribune Co. (a former owner of The Times) and Enron. Twenty prominent law school professors pleaded for an examiner to be appointed in the Purdue case but were ignored last November. The PAIN activist group recently launched an online petition demanding the appointment of an examiner in the case.

An independent examiner would have the authority to shine an overdue spotlight on the full breadth of the Sacklers’ finances, enabling victims to better decide whether the family is making a fair settlement offer. An examiner would also serve a broader public benefit.

The examiner in Enron’s bankruptcy took 18 months to produce a blistering four-volume, 4,500-page report. Such a report gives us perhaps the only chance of knowing what really transpired at Sackler-run Purdue during the lethal opioid crisis. There is no other mechanism in the bankruptcy system for such a public accounting besides the appointment of an independent examiner. Victims’ families and the thousands of individual plaintiffs who have suffered from the ravages of OxyContin deserve no less.

Gerald Posner’s latest book is “Pharma: Greed, Lies, and the Poisoning of America.”


Newsletter
A cure for the common opinion

Get thought-provoking perspectives with our weekly newsletter.

You may occasionally receive promotional content from the Los Angeles Times.
Advertisement