Tuesday, November 24, 2020

Purdue Pharma L.P. Pleads Guilty To Federal Felonies Relating To The Sale And Marketing Of Prescription Opioids

 Plea includes admission to a violation of the Federal Anti-Kickback Statute investigated by the Vermont U.S. Attorney’s Office

BURLINGTON – Opioid company Purdue Pharma LP (Purdue) pleaded guilty today in federal court in Newark, New Jersey, to conspiracies to defraud the United States and to violate the Anti-Kickback Statute.

United States Attorney for the District of Vermont, Christina Nolan, stated: “I am proud of my office’s contribution to this investigation, leading to Purdue’s guilty plea in New Jersey to Count Three of the Information, charging Purdue with conspiring with an electronic medical records company to violate the federal Anti-Kickback Statute.  As today’s felony guilty pleas demonstrate, Purdue put opioid profits ahead of people and corrupted the sacred doctor-patient relationship.  We hope the company’s guilty plea sends a message that the Justice Department will not allow big pharma and big tech to engage in illegal profit-generating schemes that interfere with sound medicine. We hope, also, that this guilty plea will bring some sense of justice to those who have suffered from opioid addictions involving oxycodone and some vindication for families and loved ones of those who did not survive such addiction.”   

Purdue pleaded guilty to an Information charging it with three felony offenses: one count of dual-object conspiracy to defraud the United States and to violate the Food, Drug, and Cosmetic Act, and two counts of conspiracy to violate the Federal Anti-Kickback Statute. U.S. District Judge Madeline Cox Arleo will schedule sentencing at a later date.  

The U.S. Attorney’s Office in Vermont led the investigation of Purdue’s unlawful conduct underlying Count Three of the Information, a charge of conspiracy to violate the Anti-Kickback Statute.  The Vermont investigation revealed that, from April 2016 through December 2016, Purdue made nearly $1 million in payments to Practice Fusion, Inc., an electronic health records company, in exchange for Practice Fusion installing a prompt in its software intending to cause doctors to refer, recommend, and arrange for the ordering of Purdue’s extended release opioid products – OxyContin, Butrans, and Hysingla.  The Chairman of Purdue’s Board of Directors, Robert S. Miller, admitted today in federal court that one purpose of the software prompt was to increase Purdue’s extended release opioid sales and that it knew it was unlawful to provide remuneration in exchange for arranging for, or recommending, such prescriptions.  Purdue Chairman Miller further admitted Purdue was in fact guilty of conspiring with Practice Fusion to violate the Anti-Kickback Statute.  At the conclusion of today’s change of plea hearing, Judge Arleo adjudged Purdue guilty of all three felonies charged by the Department of Justice in an Information filed this week.  U.S. Attorney Nolan commended Assistant U.S. Attorneys Michael Drescher and Owen Foster and healthcare fraud investigator George Thabault for their hard and groundbreaking work to secure this historic conviction and to hold accountable a big pharma company that contributed to the opioid addiction crisis in the United States through its unlawful marketing.  Purdue’s guilty plea marks the first time in history that a pharmaceutical company has been found guilty in connection with a relationship with an electronic health records company.

As part of today’s guilty plea, Purdue also admitted to conduct underlying Counts One and Two, which were investigated by the U.S. Attorney’s Office for the District of New Jersey and the Department of Justice’s Consumer Protection Branch.  That investigation revealed that, from May 2007 through at least March 2017, Purdue conspired to defraud the United States by impeding the lawful function of the Drug Enforcement Administration (DEA). Purdue represented to the DEA that it maintained an effective anti-diversion program when, in fact, Purdue continued to market its opioid products to more than 100 health care providers whom the company had good reason to believe were diverting opioids and by reporting misleading information to the DEA to boost Purdue’s manufacturing quotas. The misleading information comprised prescription data that included prescriptions written by doctors that Purdue had good reason to believe were engaged in diversion. The conspiracy also involved aiding and abetting violations of the Food, Drug, and Cosmetic Act by facilitating the dispensing of its opioid products, including OxyContin, without a legitimate medical purpose, and thus without lawful prescriptions.  Purdue also admitted it conspired to violate the Anti-Kickback Statute, between June 2009 and March 2017, by making payments to two doctors through Purdue’s physician speaker program to induce those doctors to write more prescriptions for Purdue’s opioid products.

Under terms of the plea agreement, Purdue agreed to the imposition of the largest penalties ever levied against a pharmaceutical manufacturer, including a criminal fine of $3.544 billion and an additional $2 billion in criminal forfeiture. For the $2 billion forfeiture, the company will pay $225 million following the entry of a judgment of conviction in accordance with the Plea Agreement. Purdue has also agreed to a civil settlement that provides the United States with an allowed, unsubordinated, general unsecured bankruptcy claim for recovery of $2.8 billion to resolve its civil liability under the False Claims Act. 

The criminal and civil resolutions, which were announced on October 21, 2020, do not include the criminal release of any individuals, including members of the Sackler family, nor are any of the company’s executives or employees receiving civil releases.

On November 17, 2020, the bankruptcy court in the Southern District of New York approved the financial terms of the global resolution with the company. The resolution includes the condition that the company cease to operate in its current form and instead emerge from bankruptcy as a public benefit company (PBC) or entity with a similar mission designed for the benefit of the American public. The proceeds of the PBC will be directed toward state and local opioid abatement programs. 

The global resolution does not resolve claims that states may have against Purdue or members of the Sackler family, nor does it impede the debtors’ or other third parties’ ability to recover any fraudulent transfers.

The criminal investigations leading to Purdue’s guilty plea were conducted by the U.S. Attorney’s Offices for the Districts of Vermont and New Jersey, the Consumer Protection Branch of the Department of Justice’s Civil Division, and the FBI’s Washington, D.C., and Newark Field Offices, with assistance by DEA. 

Appearing on behalf of the United States at today’s hearing in federal District Court in New Jersey were Assistant United States Attorneys J. Stephen Ferketic and Sean Sherman of the U.S. Attorney’s Office for the District of New Jersey, Assistant United States Attorney Owen C.J. Foster of the U.S. Attorney’s Office for the District of Vermont, and Trial Attorney Gabriel Scannapieco, of the Department of Justice’s Consumer Protection Branch.  Assistant United States Attorney Michael P. Drescher investigated and prosecuted Count Three of the Information together with AUSA Foster. 

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