Purdue Says Kentucky Suit Over OxyContin Could Be PainfulDavid Armstrong
No one rises as Circuit Judge Steven Combs enters his courtroom in Pikeville, Kentucky.
Combs wears a white shirt and yellow tie, no robe. Lawyers approach the bench as their cases are called, shake the judge’s hand and exchange small talk before getting to business. Today’s docket includes a woman convicted of public intoxication, an accused trafficker of painkillers, and a procedural matter involving Purdue Pharma LP, a multibillion-dollar pharmaceutical company based in Stamford, Connecticut, that’s effectively accused of laying waste to this Appalachian coal town.
Purdue, which makes the best-selling painkiller OxyContin, has never gone to trial on a case of OxyContin abuse. It has won dismissals in more than 400 personal-injury lawsuits related to the drug. And while it has settled some product-liability cases related to OxyContin under secret terms, Purdue has defeated more than 10 efforts to wage class-actions against it.
In this remote county courthouse in southeast Kentucky, the company faces a potential legal reckoning that its own chief financial officer called “crippling.” Purdue has already lost initial procedural decisions that may force it to go to trial with its “arms tied behind its back,” the company said in pretrial arguments.
Purdue is accused in a civil suit filed by the state of Kentucky of actions that helped create addiction on a sweeping scale. Many of the abusers went on crime sprees to feed their OxyContin habits and ended up in jail, in public treatment facilities, or dead from overdoses, the state alleges. The company denies all claims.
The lawsuit, once dismissed as a quixotic mission, has become Purdue’s legal nightmare -- one that the company says could result in a catastrophic $1 billion judgment against it, based on the state’s allegations as well as the potential for punitive damages and pre- and post-judgment interest. With other lawsuits filed this year in Illinois and California against Purdue and other opioid makers, the Kentucky case could trigger more litigation along the lines of the suits that cost Big Tobacco billions in the 1990s.
OxyContin is a powerful opioid that works to alleviate pain, and the 12 hours of relief it offers on a time-released basis means patients can take far fewer pills each day. After the drug hit the market in 1995, addicts soon discovered that crushing the pills defeated the time-release system. They could then snort or inject the drug for an intense, immediate high.
Reports of the opioid’s widespread abuse in rural America - - and its nickname, Hillbilly Heroin -- began more than a decade ago. Purdue has fought hundreds of largely successful legal battles since then to defend its marketing approach.
The Kentucky suit alleges that the company trained its sales force to falsely portray OxyContin as difficult to abuse, even though its own study found a drug abuser could extract most of the active ingredient from a tablet by crushing it. Addicts quickly learned how to get high from a single pill, which contained far more pain-relief medicine than older drugs because of its long-acting feature.
The Kentucky action claims that sales representatives misled doctors and others into believing that OxyContin didn’t produce a “buzz” and was less addictive than shorter-acting drugs. It alleges the company concealed information about the dangers of OxyContin. The 12 claims against the company include Medicaid fraud, false advertising, creating a public nuisance, and unjust enrichment. Abbott Laboratories, which at one time co-promoted OxyContin with Purdue, is also named as a defendant. Abbott has denied any wrongdoing and Purdue is required by contract to indemnify the company in the lawsuit.
Purdue has said it and its executives took “extraordinary measures” to combat the abuse of OxyContin. In 2010 it won approval for a tamper-resistant form of the drug that’s been credited with reducing OxyContin abuse, although a 2012 study found that some pill addicts switched to such drugs as heroin as a result.
The company settled litigation with federal prosecutors in 2007, when a Purdue unit and three of the company’s top executives pleaded guilty to “misbranding” OxyContin as less addictive than other narcotics and paid $634 million in fines. The company’s fine was the 11th largest paid by a pharmaceutical firm in a U.S. Department of Justice case.
“Purdue Pharma accepted full responsibility for the actions some of its colleagues took during a period that ended in 2001,” the company said in a statement. “Since then we’ve dedicated ourselves to combating prescription drug abuse, most significantly by formulating OxyContin and other pain medications with abuse-deterrent properties.”
About $160 million of the fines paid in 2007 was set aside to reimburse the federal government and states for damages suffered by Medicaid programs as a result of the improper promotion of OxyContin. States share the cost of Medicaid, the government health insurer for the poor, with the federal government. Kentucky, which was offered $500,000, was the only state to refuse the money. Instead, it filed its own lawsuit.
“I want to hold them accountable in eastern Kentucky for what they did,” says Kentucky Attorney General Jack Conway, who said the wave of addiction led to misery and crime. “We have lost an entire generation. Half the pharmacies in Pike County have bulletproof glass. We had FedEx trucks being knocked off. It was the Wild West.”
Purdue can avoid a trial in Kentucky only by making a “very, very significant” settlement offer, Conway said.
A trial, which could take place as early as next year, might provide the first detailed public airing of how the company marketed OxyContin to doctors and patients, along with disclosures about whether company officials understood how easily their pills could be abused.
Purdue has spent six years trying to get the case moved out of Pike County, arguing that it can’t get a fair trial there. Kentucky, along with neighboring Tennessee and West Virginia, is among the top five states for painkiller prescriptions per 100 people. The rate of painkiller use in Kentucky is twice that of New York and New Jersey.
“Anyone you talk to in this county has someone in their family who has been hooked on this,” says Wayne Rutherford, the executive for the Pike County government. He’s sitting in a conference room at the Pike County Courthouse below a framed portrait of Jesus. An eighth-generation resident of the area, Rutherford wears a “Friend of Coal” button on his suit coat lapel. He has seen family members become hooked on painkillers.
“There was a time when I was going to three funerals a week,” he says. “I couldn’t get to them all.”
In one of many unsuccessful efforts to have the case moved, lawyers for Purdue hired a consultant to survey Pike County residents last year -- to try to gauge whether it would be possible to seat an impartial jury there.
The results were filed in court: Almost 40 percent said they knew someone who ran into criminal trouble because of an OxyContin addiction. One-third said they knew someone who overdosed or was seriously hurt taking the drug, and 29 percent said they knew someone who died. Nine out of 10 agreed that OxyContin had a “devastating effect” on the community.
Illegal drug deals went down in hospital parking lots and school zones. Coal miners snorted painkillers on the job. Those who got caught up in the wave of crime and addiction included a star football player, a beauty queen, a deputy sheriff, and a trucking business owner, according to local newspaper accounts and court filings. The judge denied the motion to change venue.
Shortly after Kentucky’s suit was filed in 2007, Purdue did succeed in having the case transferred to federal court in New York, which kicked off a six-year delay. By January 2013, a federal appeals court upheld an order to return the case to Kentucky, and the company last year exhausted its legal options for keeping the case out of Pike County. And then, court records show, Purdue took another blow.
On April 1, 2013, Judge Combs ruled that Purdue missed a deadline for responding to the state lawyers’ “request for admissions.” Such requests are laundry lists of statements presented by the plaintiff; the defendant can either admit or deny each one. In this case, the requests included several statements claiming that Purdue caused OxyContin to be overprescribed and caused the state to spend excessive amounts of money combating the drug’s abuse.
The effect of the judge’s ruling is to treat the entire list of statements as admissions, giving the state an advantage in proving Purdue was liable for the addiction and resulting effects alleged in the lawsuit.
Purdue -- which has steadfastly denied that it helped cause addictions and argues that it therefore should not have to pay for government costs in treating addicts -- has said that Combs’s ruling will force the company to go to trial with its “arms tied behind its back” or pay an exorbitant amount to settle, Purdue attorney John Famularo argued in a February hearing.
“This is a billion-dollar case -- a billion-dollar case,” Famularo told the Kentucky Court of Appeals during the hearing on the company’s request to overturn Combs’s decision. Purdue says that after the state’s requests for admissions were served in 2007, they were never mentioned again. The company argues the state was obligated to re-serve the requests once the case was sent back to Kentucky from federal court or to give Purdue another chance to submit responses.
In an affidavit, Purdue’s chief financial officer, Edward Mahony, said a judgment of $1 billion or more “would have a crippling effect on Purdue’s operations and jeopardize Purdue’s long-term viability.”
The appeals court ruled against the company, which has made a final pre-trial appeal to the state Supreme Court. Finding relief there may be tough. The appeals court said that in deciding the issue, it was going by case law that was “firmly entrenched by our Supreme Court.” Purdue can still appeal any verdict based on the admissions issue.
As the case moves toward trial, Kentucky lawyers plan another first for Purdue: They want to elicit testimony from the company’s board, which is dominated by members of the Sackler family, the wealthy philanthropists who own the company and have until now remained largely untouched by the controversy tied to the blockbuster drug that netted their business billions of dollars.
One has to look hard to find the Sackler name on Purdue’s corporate website. But look around a major museum in New York, London, Paris and beyond, and you can’t miss it, from the Sackler Wing at the Louvre to the Sackler Gallery at the Smithsonian. Libraries, research institutes at major universities -- even a footbridge at London’s Kew Gardens and an escalator at the Tate Modern gallery bear the family name. Sackler family members, through a Purdue spokesman, declined to comment for this story.
In 1952, brothers Raymond, Mortimer and Arthur Sackler -- all of them psychiatrists -- purchased a small pharmaceutical company in New York called Purdue Frederick Co., which had annual sales of $22,000. Raymond and Mortimer ran the company together. Arthur, the oldest, appears to have been primarily an investor and adviser.
Considered the father of modern pharmaceutical marketing, Arthur Sackler created the first medical-journal advertising insert to promote a drug and pushed for hiring sales reps long before they became as common in physicians’ waiting rooms as out-of-date magazines. Purdue used many of Arthur Sackler’s tactics when it introduced OxyContin, a time-released dose of the opioid oxycodone, in 1995.
In its first year on the market, the drug made up just 1.3 percent of Purdue’s gross sales; the company earned $8.8 million on net sales of $229.5 million. Three years later, the company’s sales doubled and OxyContin accounted for half the revenue. In 2003, net sales of OxyContin hit $1.6 billion, and the drug made up 94 percent of Purdue’s total sales.
In the almost two decades since its introduction, OxyContin sales have probably helped the Sackler family earn as much as $3 billion, based on Purdue’s financial records and public sales figures.
Purdue today is owned through holding companies and family trusts for the benefit of Mortimer and Raymond Sackler’s families, according to Raul Damas, a company spokesman. In all, nine members of the Sackler family are Purdue directors. In January, Raymond Sackler announced the appointment of Chief Executive Officer Mark Timney. None of the Sacklers has been named in the Kentucky suit.
Raymond, who remains on the board, and his children have been the most involved in the family business. His son, Richard, a physician, worked at Purdue for three decades before being named president in 1999. Now retired, he remains a director. A grandson, David Sackler, sits on the board and runs a family investment fund, Summer Road LLC, in New York. Raymond’s other son, Jonathan, is a director, too.
Mortimer Sackler, who moved to London in the 1970s, died in 2010. His third wife and widow, Dame Theresa Sackler, who studied horticulture, has been known to give Mortimer Sackler roses -- a breed for which she bought the naming rights at auction -- to friends as gifts. She’s also a director at Purdue.
In New York, Mortimer’s son, Mortimer D.A. Sackler, is on the board of the Guggenheim Foundation and oversees a family investment holding company. He’s also on the Purdue board.
As it fights the Kentucky case, Purdue must also prepare to defend itself on a new front against a pair of lawsuits, one filed jointly by Orange and Santa Clara Counties in California, the other by the city of Chicago. Four other makers of painkillers -- Johnson & Johnson, Endo Health Solutions Inc., Teva Pharmaceutical Industries Inc., and Actavis plc -- are also named as defendants in these cases. The allegations and demands for relief are far more sweeping than those in the Kentucky lawsuit or the 2007 federal settlement.
The lawsuits, filed earlier this year with the help of Washington D.C. law firm Cohen Milstein Sellers & Toll, allege a two-decade-long campaign by the industry to persuade doctors to make painkillers commonplace by obscuring the drugs’ risks and misrepresenting their efficacy.
To accomplish this, the pain pill makers “polluted virtually every resource for information on the use of opioids,” the lawsuits claim. They paid doctors -- known in pharmaceutical marketing as “key opinion leaders” -- to endorse the use of the drugs, they funded front organizations with independent-sounding names to promote painkiller use while minimizing risks, and they manipulated scientific consensus in favor of pain pill use, the lawsuits allege. The suits seek to prohibit future misleading statements as well as to compel the companies to pay restitution and penalties related to the cost of combating the abuse of painkillers.
In Chicago, Purdue and the other companies have filed a joint motion to dismiss the case, arguing that the U.S. Food and Drug Administration approved the uses that they promoted for the drugs -- uses the city is now complaining about. In essence, the companies contend that the city is asking a court to substitute its judgment for the FDA’s. The FDA also continues to study and monitor safety issues concerning the long-term use of the painkillers, according to the motion.
A Johnson & Johnson spokeswoman said its subsidiary Janssen Pharmaceuticals, which sells the opioid pain medications named in the complaints, has “acted appropriately, responsibly and in the best interests of patients” and is “vigorously defending against the allegations in these lawsuits.” The other companies did not respond to requests for comment.
The companies also argue there are “glaring deficiencies” in the Chicago filing that warrant a dismissal. A similar motion to dismiss is expected in California, but action in that case is on hold while the matter of whether the lawsuit should be heard in state or federal court is settled.
As for the Kentucky case, Pike County prosecutor Rick Bartley, who has been involved in law enforcement for four decades, says the ripple effects of OxyContin’s abuse will be felt far into the future in his region.
Babies were born addicted to painkillers, their mothers in jail, their fathers dead. Grandparents were left to try to clean up the mess. Says Bartley: “This being ground zero, I think there could be no better place for Purdue Pharma to have to stand its ground and answer to the people in our community as to the horrors OxyContin has brought over the years.”
The case is Commonwealth of Kentucky v. Purdue Pharma LP, 07-CI-01393, Pike Circuit Court (Kentucky).
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