Creditors: Purdue spent $185K on post-bankruptcy donations
OxyContin maker Purdue Pharma faces another round of scrutiny after new court filings revealed that it gave a total of $185,000 to governors and attorneys general associations since it went bankrupt last September — disclosures that have already prompted the return of most of those funds.
Those contributions were disclosed in filings Friday night by the Official Committee of Unsecured Creditors, which asked the recipients to give back the money to Purdue because it is concerned about the ethics of the disbursements.
State leaders are playing key roles in the federal bankruptcy case, which is trying to settle approximately 3,000 lawsuits — including complaints from Connecticut and nearly every other state — that allege Stamford-based Purdue fueled the opioid crisis with deceptive marketing of OxyContin.
“The political contributions — $185,000 in donations to associations whose members include the very public servants with whom the debtors are attempting to negotiate a consensual resolution of these cases — are precisely the sort of transaction that demand close scrutiny,” the creditors committee said in its filings. “These donations may present troubling potential conflicts of interests — on both the donor and recipient sides — when viewed through the unique lens of these cases.”
In a statement Monday, Purdue defended the contributions.
“Like many companies, including numerous pharmaceutical companies, we have maintained longstanding membership in organizations that allow us to follow key industry-related issues that are relevant to our wide range of products and pipeline,” the statement said in part. “These memberships are completely proper and in line with payments Purdue and hundreds of other companies have made for years.”
Contentious contributions
On Monday, the Democratic Attorneys General Association, Republican Attorneys General Association
and Republican Governors Association said they were returning the Purdue contributions. The company gave $60,000 to RAGA last October, $25,000 to DAGA last December and $50,000 to RGA in January.
“Relief for victims of the opioid crisis has been the priority of every single Republican attorney general over the last decade,” said Kelly Laco, national press secretary for RAGA. “When we became aware of the circumstances in bankruptcy court, we returned the contribution.”
It was not immediately clear whether the Democratic Governors Association would take similar action with the $50,000 contribution that Purdue made in January.
A message left Monday for the DGA was not immediately returned.
Connecticut comprises one of 24 “nonconsenting” states that have not agreed to settlement terms with Purdue, which has offered a proposal it values at more than $10 billion. At the same time, Purdue denies the lawsuits’ allegations.
All of the nonconsenting states have Democratic attorneys general, with the exception of the Republican incumbents in Idaho and New Hampshire.
A spokeswoman for Connecticut Attorney General William Tong, a Democrat, referred an inquiry from Hearst to DAGA.
The committee did not mention a pledge from the Democratic and Republican governors’ groups to return their money. They both received $50,000 from Purdue in January.
In its filings, the committee advocated for the return of Purdue’s payments to “avoid any appearance of impropriety and ensure confidence in this bankruptcy process.” But it is not seeking a court order to force that action because it had “little appetite to commence an adversary proceeding to claw back $185,000 (or whatever amounts remain unreturned).”
Instead, it asked the court to require Purdue to seek permission before making any additional political contributions.
“The request by the creditors committee is a reasonable one,” said Robert Bird, a professor of business law at the University of Connecticut. “Because the issues underlying the bankruptcy are so highly politicized and so prominent in the public eye, the contributions — even if they are simply a continuation of previous contributions and past practices — can give the impression that Purdue Pharma is trying to influence the very state officials who would have control over the settlement agreement.’
Purdue’s contributions to DAGA and the governors’ associations were first reported by the online news outlet The Intercept.
Longstanding political activity
As the litigation against Purdue proliferated before its bankruptcy filing, it also sparked increasing scrutiny of the political dealings of the company and the Sackler family members who own the firm.
Between 2002 and 2017, the Sacklers gave $116,000 to the Connecticut Democratic Party. Then party-Chairwoman and former Lt. Gov. Nancy Wyman disavowed the contributions last year, saying that “if we knew then what we know now, of course, we never would have taken the money.”
In 2016, an investigation by The Associated Press and the Center for Public Integrity found that Purdue and other companies in the opioid industry, along with the advocacy groups largely funded by the industry, spent more than $880 million from 2006 through 2015 to influence state and local governments. Those efforts helped combat restrictions on drug prescribing, although many states later enacted limits.
During the past couple of years, however, Purdue appears to have shut down much of its political outreach.
The company said in its statement that before filing for bankruptcy that it had discontinued donations to political candidates, disbanded its political action committee and donated the PAC’s assets to charity.
After it filed for bankruptcy, it also agreed to institute major limits on its lobbying as part of a “voluntary selfinjunction” on its operations. In addition, it ended last year its membership in PhRMA, the pharmaceutical industry’s top lobbying group.