09/24/19

What Purdue and the Sackler Family Treasure

© dmitry_rukhlenko | stockfresh.com

The New York Times and FiercePharma reported on September 11, 2019 that Purdue Pharma and the Sackler family have reached a tentative settlement with 23 states and nearly 2,300 other plaintiffs (cities, counties, tribes) in the first major opioid settlement. Although specifics of the deal have yet to be finalized, it would involve Purdue filing for Chapter 11 bankruptcy. “The company would be dissolved, and a new one would be formed to continue selling OxyContin and other medicines, with the profits used to pay the plaintiffs.” The settlement does not include an admission by Purdue or the Sackler family of wrongdoing. The agreement was approved by Purdue’s board on Sunday, September 15, 2019 approximately 48 hours after the New York State Attorney General charged members of the Sackler family with transferring $1 billion into Swiss bank accounts.

The tentative deal was reached just six weeks before the start of the first trial before a federal judge in which Purdue is a defendant. But it isn’t clear whether the settlement will absolve the company or family members from all existing and future claims. The NYT reported that because the deal falls short of what some state attorneys general were seeking, several states vowed to continue to pursue legal action. Maura Healey, the Massachusetts attorney general, said, “It’s critical that all the facts come out about what this company and its executives and directors did, that they apologize for the harm they caused, and that no one profits from breaking the law.” Under the deal the Sackler family will pay plaintiffs $3 billion over seven years. Some attorneys general wanted $4.5 billion up front, but the family refused.

A critical sticking point has been the timing of the family’s sale of its global pharmaceutical business, Mundipharma, and the contribution the family would make from the proceeds. Some attorneys general, including those from Massachusetts, New York, New Jersey, Pennsylvania and Connecticut, who have not signed on to the settlement, had been pressing the family to sell Mundipharma immediately and to discontinue manufacturing drugs for international markets.

Often in Chapter 11 bankruptcy, all litigation against a company is stayed. At this time, it is unclear if the Sackler payouts in the settlement would bind them into Purdue’s bankruptcy proceeding “and therefore halt the lawsuits against them as well as the company.” The NYT reported that many of the states have named individual members of the Sackler family as defendants.  The Times said the family members have been intentionally siphoning billions of dollars out of the company since 2007, when Purdue and three of its executives paid a $635 million fine to resolve federal charges related to their “misbranding” of OxyContin. See “Giving an Opioid Devil Its Due” for more on this ruling.

In court filings on Friday, September 13, 2019, New York state Attorney General Letitia James said members of the Sackler family used Swiss bank accounts to transfer $1 billion from the company to itself. She said, “Records from one financial institution alone have shown approximately $1 billion in wire transfers between the Sacklers, entities they control, and different financial institutions, including those that have funneled funds into Swiss bank accounts.” She referred to the proposed deal as “an insult.”

The court filing highlights the activities of Mortimer D.A. Sackler, a former Purdue board member. It alleges that Sackler transferred millions of dollars from trust companies, at least one of which was previously unknown, through Swiss bank accounts to himself as early as 2009. Some of the funds were directed to real estate companies that owned Sackler family homes in Manhattan and the Hamptons, the filings said.

A spokes person for Mortimer Sackler said the decade-old transfers were entirely legal. “This is a cynical attempt by a hostile AG’s office to generate defamatory headlines to try to torpedo a mutually beneficial settlement that is supported by so many other states and would result in billions of dollars going to communities and individuals across the country that need help.” A Purdue Pharma media representative said the company had no comment. The New York Attorney General’s office believes there is more to be learned about the family’s holdings, “and that information is central to arriving at a just settlement.”

FiercePharma noted how Massachusetts Attorney General Maura Healey filed a complaint that alleged members of the Sackler family played a major role in the marketing for OxyContin “and pocketed billions of dollars in profits over the years.” The company used “coffee, ice cream, catered lunches and cash” to tempt doctors to prescribe the drug. It also used face-to-face interactions to conceal a paper trail for its sales tactics and hide the identities of potential witnesses. According to Healey’s filing, when a sales rep emailed a sales pitch to a doctor, a Purdue VP said the company should “fire her now” since the company did not want a record of their communications.

At Purdue’s launch party for OxyContin, Richard Sackler, then the Senior Vice President of Sales, said the launch “will be followed by a blizzard of prescriptions that will bury the competition.” He was also said to support a blame shifting tactic for the deaths and opioid epidemic onto those who became addicted. According to the lawsuit, in a confidential email he was reported to have written that they are “the culprits and the problem.” And that “we have to hammer on the abusers in every way possible.” Healey’s lawsuit said: “By their misconduct, the Sacklers have hammered Massachusetts families in every way possible. And the stigma they used as a weapon made the crisis worse.”

The lawsuit alleges the company deceived doctors and patients to get more people on its opioid painkillers, including OxyContin, by downplaying the risks and overstating benefits. Members of the Sackler family directed the company’s marketing strategy for opioids and worked to cover their tracks, the lawsuit claims.Purdue argued that its marketing was consistent with the FDA’s official labeling on its drugs. And Massachusetts still covers Purdue’s drugs as “brand preferred” in state programs, the company’s new filing contended.

STAT News reported that Richard Sackler was especially involved in efforts to market OxyContin, saying that he pushed staff to pursue deregulation in Germany. He was also alleged to instruct Purdue staff not tell doctors the truth about OxyContin for fear of reducing sales. In 1997, the year after OxyContin was put on the market, Michael Freidman, at the time the head of sales and marketing at Purdue, told Richard Sackler he did not want to correct a false impression among doctors that OxyContin was weaker than morphine. Friedman’s reason was because the myth was driving prescriptions and sales. He said it would be extremely dangerous at this early stage “to make physicians think the drug is stronger or equal to morphine.” Sackler said he agreed.

Friedman was later one of three Purdue executives who pleaded guilty to a misdemeanor charge of “misbranding” OxyContin (See “Giving an Opioid Devil Its Due” linked above for more on this). “No members of the Sackler family were charged or named as part of the plea agreement.” The Massachusetts lawsuit also alleges the Sackler-controlled Purdue board voted that three executives, but no family members, should plead guilty as individuals. Amid concern by the family to maintain the allegiance of two executives, when the case concluded Purdue paid them millions for their silence.

“‘The Sacklers spent millions to keep the loyalty of people who knew the truth,’ the complaint filed by the Massachusetts attorney general alleges.” ProPublica reported the Massachusetts lawsuit claims Purdue paid $5 million to Howard Udell in November 2008, and up to $1 million in November 2009. “In February 2008, the company paid $3 million to Friedman.”

On July 31, 2019, Arizona Attorney General Mark Brnovich filed a complaint in the US Supreme Court charging that members of the Sackler family who owned and controlled Purdue companies, made “billions of dollars off the promotion and sale of opioids.” The lawsuit also claimed members of the Sackler family intentionally transferred billions of dollars from the company into family held bank accounts, “looting” Purdue in the process. “Sackler family members have long constituted the majority of Purdue’s board, and company profits flow to trusts that benefit the extended family.” From 2007 to 2018, the Sackler family received more than $4 billion in payouts from Purdue, according to the Massachusetts lawsuit.

The State brings this action because it has evidence that the Sacklers, Purdue, and the other Defendants were parties in recent years to massive cash transfers—totaling billions of dollars—at a time when Purdue faced enormous exposure for its role in fueling the opioids crisis. These transfers threaten the ability of Purdue to satisfy any relief the State may obtain in its pending proceeding against Purdue. The State therefore brings this action to hold the Defendants accountable for their attempts to loot Purdue, and to ensure that the people of Arizona can obtain adequate relief for the devastation that the Sacklers and Purdue have wrought in this state.

FiercePharma reported the suit named eight members of the Sackler family, including the former president and CEO Richard Sackler of Purdue, of ‘strip mining’ the company’s finances. The transfers are thought to have been done in order to set Purdue up for a bankruptcy filing and to avoid paying the potential multibillion-dollar settlements in state and federal courts. A Purdue spokesperson said the US Supreme Court was an improper forum to conduct a trial of the claims being made by Arizona. “This petition was filed solely for the purpose of leapfrogging other similar lawsuits, and we expect the Court will see it as such.”

This dismissal of the Sackler family’s influence over Purdue seems disingenuous. In late 2010, Purdue told the family that sales of the highest dose of OxyContin and the most profitable opioids were lower than expected. That meant an anticipated quarter-end payment to the family of $320 million was at risk of being reduced to $260 million. This prompted an email from Mortimer D.A. Sackler: “Why are you BOTH reducing the amount of the distribution and delaying it and splitting it in two? … Just a few weeks ago you agreed to distribute the full 320 [million dollars] in November.”

ProPublica reported that after the company pled guilty in 2008 to the federal charges of understating the risk of addiction to OxyContin, Richard Sackler advised other family members that it was important to select a new chief executive who was loyal to the family. He allegedly wrote that, “People who will shift their loyalties rapidly under stress and temptation can become a liability from the owners’ viewpoint.” The company installed five new, non-family board members. Yet in hundreds of board votes, the new directors didn’t once oppose the family.

In September of 2014 Purdue began a secret project, code-named Project Tango, to cash in on an industry growing as a result of the opioid epidemic—addiction treatment medication. Dr. Kathe Sackler, sister to Mortimer Sackler and a daughter of the company co-founder Mortimer Sackler, participated in phone calls and urged staff to give the project their “immediate attention.” So, while OxyContin sales were declining, there was an internal team at Purdue calculating how they could enter into the addiction treatment market, which was expanding. See “The Bondage of Buprenorphine” for more on this.

Company documents suggested Purdue wanted to become an “end-to-end pain provider.” They intended to sell buprenorphine (Suboxone). Then in 2015, Purdue became interested in Narcan, calling it a “strategic fit.” Executives even discussed how Purdue’s sales force could promote Narcan to the same doctors who prescribed the most opioids! Ultimately Purdue decided against acquiring the rights to Suboxone and Narcan.

The story of Purdue, the Sackler family and OxyContin, brings two sayings to mind, one biblical: the love of money is the root of all kinds of evil (1 Timothy 6:10a), and one from recovery: denial is not a river in Egypt. The biblical passage in First Timothy passes judgment on Purdue and the Sackler family from the beginning of their attempts to bring OxyContin to market: “But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all kinds of evils” (1 Timothy 6:9-10a). The saying on denial highlights how Purdue and the Sacklers have used denial in its various forms from their original marketing of OxyContin, through their attempts to negotiate a way out of the multiplication of lawsuits that are now coming to light. And that leads to another biblical saying, “For where your treasure is, there your heart will be also” (Matthew 6:24).

In an interesting post script, the Wall Street Journal reported on October 4th that according to court records and testimony, Purdue Pharma transferred $12 billion or $13 billion in profits to members of the Sackler family. Neither the Sackler family nor Purdue disputed the reported amounts. They were revealed in bankruptcy court filings on 10/3 and 10/4. They could complicate efforts to settle the lawsuits against the company, by giving credibility to opponents of the tentative deal who think the Sackler family should contribute more than they have agreed. It is not clear when the distributions occurred.

01/16/15

Whatever You Treasure Has Your Heart

“Greed is a fat demon with a small mouth and whatever you feed it is never enough.” (Janwillem van de Wetering)

The following passage contrasts the pursuit of material wealth to that of heavenly riches. Modern wealth or treasure often means possessing “money” or valuables containing precious metals. So many English translations since William Tyndale use “rust” to translate a Greek word which can also mean: “eating” or “consuming.”  Following this sense, the word translated “money” in verse 25 is better understood as more broadly as material wealth.

Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also.The eye is the lamp of the body. So, if your eye is healthy, your whole body will be full of light, but if your eye is bad, your whole body will be full of darkness. If then the light in you is darkness, how great is the darkness!“No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.  (Matthew 6:19-25)

Wealth to the audience who heard the Sermon on the Mount would have more likely been excess provisions of food and resources like cloth. So vermin or insects that would get into your stored grain and materials could destroy or ruin your treasure. Thieves could also steal it from you. But earthly treasures can also be things that bring an individual power, prestige or wealth. So there is a broad range of things that we can covet or “store” up that would qualify as earthly treasure.

And here lies the first bombshell of the passage: whatever you treasure has your heart.

The next two verses, 6:22-23, can be difficult to understand. The metaphor of the eye being the lamp to our body doesn’t speak clearly to a modern audience. Craig Blomberg, suggests that it is a restatement of the previous paragraph. So the meaning is that the way people handle their finances affects every part of their lives:

Just as the “heart” (v. 21) forms the center of one’s affections and commitments, the “eyes” enable the whole person to see. Good and bad eyes probably parallel a good and bad heart and thus refer, respectively, to storing up treasures in heaven versus storing them up on earth.

I think that Jesus is extending his statement about treasure, rather than just restating it. In his time, as today, it would likely have been understood that extreme examples of greed were ungodly. But there is nothing morally wrong with trying to improve your financial status, is there? So saying: “where your treasure is, there your heart will be also”, could have been readily affirmed—but not fully understood. His hearers, then and now, could have missed a crucial point.

So Jesus extends and clarifies his statement about treasure by using another metaphor, how the eye is the lamp of the body; the eye lets in light. Here, as Leon Morris observed, there is a spiritual parallel with Jesus speaking of the eye as the source of light to the body. So, if you have “good,” healthy eyes, your body has light. If your eye is not healthy, you will be in darkness. So far Jesus has described the one half of the metaphor that everyone knows—blind people are in darkness. The second half of the metaphor now equates “light” entering a person as spiritual or moral “darkness,” and then declared “how great is the darkness” if the “light” that enters you is “darkness!”

It asks the question, “What do you have your eye on?” If your eye is on some kind of treasure, that is where your heart is. If your eye is on the things of God, then your body is full of the light of God. If your eye is on other things, you have let “darkness” in—and how great is that darkness! So, no one can serve two masters; you cannot serve God and earthly treasure in any form.

Twelve Step recovery is steeped in the knowledge that pursuing earthly treasures leads to destruction. In the “Step Seven” essay in Twelve Steps and Twelve Traditions, Bill W. noted how alcoholics for thousands of years have been demanding more than their share of security, prestige—the things of material achievement or earthly treasure. Success meant dreaming of more; frustration or failure meant drinking for oblivion. “Never was there enough of what we thought we wanted.” Never was there “thought of making honesty, tolerance, and true love of man and God the daily basis of living.”

As long as individuals attempted to live by their own strength and intelligence, a working faith was impossible. “This was true even when we believed that God existed.” Here, the Twelve Stepper and the follower of Christ stand in agreement: “We could actually have earnest religious beliefs which remained barren because we were still trying to play God ourselves.” As long as we place self-reliance first, a genuine reliance on God was impossible. “That basic idea of all humility, a desire to seek and do God’s will, was missing.” Whatever you treasure has your heart.

This series is dedicated to the memory of Audrey Conn, whose questions reminded me of my intention in seminary to look at the various ways the Sermon on the Mount applies to Alcoholics Anonymous and recovery. If you’re interested in more, look under the category link “Sermon on the Mount.”