Tag: Sacklers

12/26/23

The Sackler Cartel Goes Before the Supreme Court

Photo by Sigmund on Unsplash

The Sackler family’s legal maneuverings to avoid financial consequences from their privately-owned company, Purdue Pharma, just had another development. In August of 2023 the U.S. Supreme Court temporarily blocked the bankruptcy deal for Purdue Pharma that would have shielded members of the Sackler family from additional lawsuits and cap the Sacklers’ personal liability at $6 billion. This was in response to a Justice Department objection that said the settlement would allow the Sackler family to take advantage of legal protections meant for debtors in financial distress, while the Sackler family is reportedly worth $11 billion. The New York Times and SCOTUSblog reported on the Supreme Court arguments on Monday, December 4th over the bankruptcy deal.

The case could have far-reaching implications for similar lawsuits. If the court approves the deal, it would affirm a litigation tactic that has become popular in resolving lawsuits where people claim similar injuries from the same entity, whether that is a drug or a consumer product. “By turning to the bankruptcy courts as a tool to resolve those claims, businesses aim to free themselves from civil liability and prevent future lawsuits.” If the Supreme Court were to block the use of such a mechanism in this case, the Sackler family would no longer be shielded from civil lawsuits. Additionally, the Purdue Pharma bankruptcy settlement deal would be in jeopardy as the Sackler family previously threatened to walk away from the settlement if the bankruptcy protections were not included in the agreement. See “Carrot-and Stick Tactics of Purdue and the Sacklers” and “Supreme Court considers $6bn deal that shields Sacklers.”

The NYT said it was rare for the Supreme Court to hear a bankruptcy dispute, but this one was precipitated when a watchdog office of the Justice Department, the U.S. Trustee Program, petitioned the court to review the deal. Additionally, the opioid crisis is a nationally important issue. Allowing third parties to be shielded without declaring bankruptcy themselves has become an increasingly popular tactic for avoiding liability. And these rulings have divided lower courts.  The objection by the U.S. Trustee Program was, if approved, the Sacklers would get the benefits of bankruptcy without its costs.

Individuals who may want to sue individual Sackler family members—the ones actively involved in decisions made by Purdue Pharma—in civil court would be prevented from doing so. “The U.S. trustee argued that their constitutional due process rights would be summarily extinguished.” While the Justice Department and a few other plaintiffs are challenging the settlement, most others are concerned about the potential loss of funds to initiatives intended to address the opioid crisis.

Under the deal, Purdue would pay $1.2 billion toward the settlement immediately upon emerging from bankruptcy, with millions more expected in the years to come. The Sacklers would pay up to $6 billion over 18 years, with almost $4.5 billion due in the first nine years.

According to an agreement with tribal plaintiffs, all 574 federally recognized Native American tribes are eligible for payouts from a trust worth about $161 million.

Each state has devised a formula with its local governments for distributing the Purdue money. But all must follow the guidance for using it: that it be largely applied to initiatives intended to ease the opioid crisis, including addiction treatment and prevention.

If the agreement is upheld, about 138,000 plaintiffs, individuals and family members of victims who died from overdoses, would be able to file claims to a trust that would hold $700 to $750 million. Payments are expected to range from $3,500 to $48,000. “Though the payouts are small, the Purdue plan is one of only very few opioid settlements across the nation that set aside money for individuals.”

Purdue Pharma would cease to exist. A new company, Knoa Pharma, would receive the assets from Purdue. Knoa would be owned by creditors, and would manufacture addiction treatment and opioid reversal medicines at no profit. See “The Bondage of Buprenorphine” for a potential new product already developed by a Sackler. Knoa would continue to make opioids like OxyContin as well as nonopioid drugs, with the profits going towards the settlement funds. The Sacklers have been off the Purdue board since 2018, so why it there such resistance to members of the Sackler family avoiding further financial liability?

CNN reported members of the Sackler family withdrew more than $10 billion from Purdue Pharma and placed the money in family trusts and holding companies as pressure built over the nation’s opioid epidemic. An audit of Purdue related to its filing for bankruptcy in September 2020 showed that from 2008 to 2018 the family withdrew more than eight times as much money from the company as the previous 13 years. “From 1995 through 2007, the Sacklers received $1.3 billion from Purdue; but from 2008 through 2018, those payments amounted to $10.7 billion.” The larger withdrawals came after Purdue’s 2007 plea deal with the Justice Department to pay a $600 million penalty on a felony charge of misleading and defrauding physicians and consumers over OxyContin.

The withdrawals came during a time when Purdue Pharma was accused of fueling the nation’s opioid epidemic and amid growing concerns from many states that a significant amount of the family’s wealth may be held overseas; therefore unavailable to plaintiffs seeking relief through the courts.

According to StatNews, political appointees at the Justice Department refused to approve felony charges for Purdue executives, letting the company off with a $600 million fine. Richard Sackler admitted he never bothered to read the entire 2007 plea deal document where prosecutors gave guidelines for Purdue’s future behavior. Instead, they doubled down on marketing OxyContin. The important result of the ruling was there was no trial. “A trial would have exposed the company’s OxyContin profits to forfeiture or prompted one of the executives to expose the magnitude of OxyContin scion Richard Sackler’s participation in the admitted crimes.”

An attorney for the Raymond Sackler family said the amount the family withdrew was publicly known. ““These distribution numbers were known at the time the proposed settlement was agreed to by two dozen attorneys general and thousands of local governments.” But Letitia James, the New York Attorney General said the audit showed the need for even more information:

The fact that the Sackler family removed more than $10 billion when Purdue’s OxyContin was directly causing countless addictions, hundreds of thousands of deaths, and tearing apart millions of families is further reason that we must see detailed financial records showing how much the Sacklers profited from the nation’s deadly opioid epidemic.

CNN said a spokesperson for the Sackler family defended the withdrawals, saying: “Members of the Sackler family who served on Purdue’s board of directors acted ethically and lawfully, and the upcoming release of company documents will prove that fact in detail.” The statement of the Purdue audit said the family’s ownership interest of Purdue Pharma had been valued at between $10 billion to $12 billion.

In his testimony for federal bankruptcy court, Dr. Richard Sackler, a former president and co-chairman of the bord of directors of Purdue Pharma said he, the Sackler family and Purdue Pharma did not have any responsibility for the opioid crisis in the United States. Yet during his tenure, Purdue pleaded guilty twice to federal criminal charges related to marketing and sales of OxyContin. In an email he wrote in 2001, he said “We have to hammer on abusers in every way possible… They are the culprits and the problem. They are reckless criminals.”

A congressional committee investigating the Sacklers, released a statement saying the Sackler family, who owned a controlling interest in Purdue Pharma since 1952, were collectively worth $11 billion. See the statement for a listing of the Sackler family’s assets. The chairperson of the committee said the family built its enormous fortune in large part through sales of OxyContin:

Members of the Sackler family pushed Purdue to use deceptive marketing practices to flood communities with this dangerous painkiller, and now the Sackler family is attempting to use Purdue’s bankruptcy proceedings to evade individual responsibility for their role in fueling the opioid epidemic.

Untangling the contributions of the Sackler family from executives for Purdue Pharma in order to get a clear picture of exactly what individual family members were responsible for may be an impossible task. But looking at how family members contributed to the opioid epidemic and Purdue Pharma’s facilitation of the opioid epidemic is easily done.

Arthur Sackler’s marketing strategies were applied to OxyContin after his death, and Mortimer Sackler transferred millions of dollars from trust companies to himself as early as 2009. Records show approximately $1 billion in wire transfers between the Sacklers, entities they control, and different financial institutions—including funds placed in Swiss bank accounts.

According to StatNews, the evidence of callous greed by Purdue was chilling. The privately-held company fired employees who tried to blow the whistle on its activities and maneuvered to have reporters working on the story of fraud at Purdue fired or removed from their beats. Sales reps were encouraged to allow doctors to believe morphine was stronger than OxyContin; it wasn’t. Executives at Purdue knew the opposite was true.

The 2007 plea deal document discussed above didn’t slow them down. It allowed Purdue Pharma to continue marketing and selling OxyContin. Now with the assistance of consultants at McKinsey & Co., they “turbocharged” their sales, concentrating on known pill mill operators, pushing the highest-dosage pills, “and banning together with other opioid makers to pull end-runs around FDA regulators.”

For more information on the Sacklers and OxyContin, read Pain Killer, by Barry Meier, which “exposes the roots of the opioid epidemic at the hands of Purdue Pharma and Raymond and Mortimer Sackler.”  Also see: “What Purdue and the Sackler Family Treasure,” “It’s Strictly Business,” and “Giving an Opioid Devil Its Due.” Read “The Tale of the OxyContin Lie” and watch PainKiller on Netflix if you think the Sackler family should get a pass by the Supreme Court.

04/26/22

It’s Strictly Business

© arturkurjan | 123rf.com

While news on the fighting in Ukraine was dominating the headlines at the beginning of March in 2022, a struggle of a different kind came closer to an end. The legal battle between the Sackler family and Purdue Pharma on the one side, and a group of states who refused to sign off on the settlement last summer seems to have ended when both sides agreed to a mediated settlement. The New York Times reported it was the first time in three years of negotiations that all states accepted a settlement agreement with Purdue Pharma and the Sacklers. “While the deal is a breakthrough, it is likely to leave many people disappointed that members of the Sackler family did not acknowledge wrongdoing or any personal responsibility for the public health crisis.”

If the judge presiding over Purdue’s bankruptcy proceedings approves the agreement, the Sackler family would pay up to $6 billion to help communities provide assistance for the damage from the ongoing opioid crisis. This was an increase of more than $1 billion from an earlier offer. The Sacklers would have 18 years to make payments of the additional $1 billion. In return, Sackler family members would be protected from all current and future civil claims against them over their company’s prescription opioid business. However, the deal does not protect them from potential criminal cases, which are difficult to prove.

The Sacklers’ position on prohibiting future civil lawsuits was a major obstacle for states that opposed the plan. The latest deal included an agreement by the Sacklers to create a public repository of confidential documents that detail lobbying, public relations and marketing activities with OxyContin. The attorney general of Connecticut, one of the states that rejected the earlier offer, said the settlement was both significant and insufficient, “constrained by the inadequacies of our bankruptcy code.” This settlement resolves their claims against Purdue and the Sacklers, but the fight continues against the wider addiction industry.

The new mediated agreement has several additional terms. Family members from the Sackler family were to attend a hearing that would allow people who suffered from OxyContin addiction to describe what they endured. Any medical centers, art or educational institutions that bear the Sackler name can remove it without their action being contested by the family. Also, there was a statement attached to the settlement that was characterized as an “apology.” Widely described as an apology, this statement doesn’t seem to qualify as one. The Sackler family said:

The Sackler families are pleased to have reached a settlement with additional states that will allow very substantial additional resources to reach people and communities in need. The families have consistently affirmed that settlement is by far the best way to help solve a serious and complex public health crisis. While the families have acted lawfully in all respects, they sincerely regret that OxyContin, a prescription medicine that continues to help people suffering from chronic pain, unexpectedly became part of an opioid crisis that has brought grief and loss to far too many families and communities.

The new settlement still faces a difficulty. The U.S. Trustee program, which oversees the bankruptcy system within the Department of Justice, has argued vigorously against the proposed immunity shield for the Sacklers. Before the tentative agreement, there was a conflict building in the U.S. Court of Appeals for the Second Circuit. So far, the Justice Department has not commented on whether it would continue to challenge that condition of the tentative settlement.

The above-noted hearing was conducted on March 10th by the judge overseeing Purdue’s bankruptcy and featured 26 people from 19 states. The NYT said it was the first time individuals were able to directly address members of the Sackler family. The three members of the Sackler family who attended the hearing were: Dr. Richard Sackler, a former president and chairman of the board; David Sackler, a former board member; and Dame Theresa Sackler, a former board member and widow of Dr. Mortimer Sackler, one of the company’s founders.

Dame Theresa sat quietly; her expression unchanging. David Sackler sometimes shifted his position. Dr. Richard Sackler, who was the family member seen as most involved in the company’s aggressive marketing of OxyContin, remained off camera the whole session. This infuriated some of the participants. One of the individuals referred to the Sacklers as “killers,” saying that to this day, they deny any wrongdoing; that the family acted lawfully in all respects. “Richard, can you honestly say that with a straight face? If so, why don’t you turn on your camera and let’s see?”

Dr. Sackler was permitted to remain off camera by prior agreement. Also by prior arrangement, the Sacklers did not speak during the session and did not issue a statement afterwards. An individual testifying at the hearing, who was himself in recovery from an opioid addiction, quoted a statement made by Dr. Sackler in 2001, which said: “We have to hammer on the abusers in every way possible. They are the culprits and the problem. They are reckless criminals.” He then accused Richard Sackler, “You are the abuser. You are the criminal and you are the culprit . . . I hope that every single victim’s face haunts your every waking moment.”

A man from Indiana, who was a criminal court judge, lost his son to an overdose. The man and his wife began their testimony time by playing a recording of the 911 call made when they found their son dead from an overdose. He was “a straight-A student in college, studying law.” The judge said to Dr. Sackler, “I have put away drug dealers with a single rap of a gavel without blinking an eye. Oh, how I wish I could do the same to you, Richard Sackler.”

Foundations, art galleries and museums around the world have requested they become distanced from the Sackler name, including: The Metropolitan Museum of Art and the Dia Art Foundation in New York, the Serpentine Gallery and the four Tate galleries in the U.K., and the Louvre in Paris. Others, including the Guggenheim and the American Museum of Natural History in New York, and the British Museum in London have not announced plans to remove the Sackler name from their institutions.

Members of the Sackler family have persistently denied that the billions of dollars removed from Purdue Pharma over the course of a decade was done to shield assets from potential litigation over their role in the opioid crisis. But a review of emails, memos and other documents showed that Sackler family members discussed exposure to potential litigation as early as 2007, “a full decade before they faced a new wide-ranging legal attack and significant financial transfers stopped.”

Blomberg Businessweek published an article noting “How the Sacklers Shifted $10.8 Billion of Their Opioid Fortune.” Initially, Purdue and its subsidiaries moved billions to companies registered in Luxembourg, the British Virgin Islands and Delaware. “From 2008 through 2017, $10.8 billion flowed out of Purdue in hundreds of transactions through numerous subsidiaries.” The money eventually landed in two Delaware companies, Rosebay Medical Co. and Beason Co., which are trusts for the benefit of the Sackler family. See the Bloomberg article for particulars of the monetary shell game with Purdue funds.

Blomberg said a spokesperson for the family said in a statement: “All of the Sackler family members, including those who served on Purdue’s board, have always conducted themselves properly.” From 2007 to 2019, 10 Sacklers were Purdue directors. The following graphic appeared in the Blomberg article.

NPR reported last year that “Purdue Pharma conducted Massive Probe of the Sacklers, But The Findings Are Secret.” The company acknowledged hiring attorneys, forensic accountants and other financial experts to probe members of the Sackler family. The team searched for evidence of wrongdoing by the family and reported their findings to a special committee of Purdue’s board between April 2019 and March of 2021. But Purdue chose to reveal essentially nothing of what investigators uncovered. “Purdue’s disclosure filing says it paid its lawyers for a 22,000-hour investigation of the Sacklers, but it doesn’t disclose any of their findings.”

Writing for NPR, Brain Mann said the Purdue Pharma document suggests the primary goal of the investigation “was to inform and shape bankruptcy talks” that were underway at the time. Speaking on behalf of the Sacklers, spokespersons downplayed the significance of the investigation and maintained members of the family did nothing wrong. An attorney for the Raymond Sackler family said: “As we have said before, we support the release of documents and they will continue to show Sackler family members who served on Purdue’s board acted ethically and legally.”

A few clues about what investigators found were evident in the filing. The filing stated that “certain dealings between Purdue Pharma and the Sackler families and various Sackler entities were not conducted on arm’s-length terms.” There is a link to the “Alix Report on Distributions to Sacklers,” noting compensation, pension benefits, travel and expense reimbursements, legal expenses incurred on behalf of Sackler family members, and fringe benefits provided to members of the Sackler family such as cell phones, fleet vehicles and personal service employees up until April 30, 2019.

It seems the Sacklers were playing the long game from the time of Purdue’s first admission of illegal actions in “misbranding” OxyContin in 2007. See “Giving an Opioid Devil Its Due.” From 2008 until 2017 there was a transfer of over $10 billion out of the company. From 2007 to 2019, 10 different members of the Sackler family served on Purdue board. An extensive investigation by Purdue was done of members of the Sackler family looking for evidence of wrongdoing.

The investigative team reported to a special committee of the board between April of 2019 and March of 2021, but failed to publicly disclose any of its findings. The Sacklers consistently denied any wrong doing and repeatedly warned that a failure to protect family members from all current and future civil claims against them over their company’s prescription opioid business would scuttle the bankruptcy negotiations and perhaps end “The ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis,” according to Steve Miller, Purdue’s chairman.

The Sacklers will not face any civil charges; criminal filings are very difficult to prove and will likely not be filed. Despite the transfer of billions of dollars from Purdue, ultimately to family trusts, members of the family deny having done anything ethically or legally wrong. Their so-called apology was formed in non-apologetic rhetoric that took no responsibility for Purdue Pharma’s or the family’s role in birthing the opioid crisis. There is no apparent remorse by members of the Sackler family involved in the day-to-day operations and decisions of Purdue Pharma that led to the eventual addiction and deaths of hundreds, if not thousands of people. There seems to have been one unverbalized, but clearly communicated statement by the Sacklers in their so-called apology quoted above: “It’s not personal; it’s strictly business.”

For further information on the Sacklers and Purdue Pharma, see: “It Doesn’t Seem Right,” “Carrot-and-Stick Tactics of Purdue and the Sacklers” and “What Purdue and the Sackler Family Treasure.”