OPIOID ENDGAME
Crisis fuels massive litigation against Purdue Pharma, with possible settlement in sight
“If you force them into bankruptcy, it might feel good, but it means you’re cutting off your nose to spite your face. ... (T)here’s just not the money in the industry that makes it like tobacco.” George Jepsen, Connecticut attorney general
This summer, protesters converged four times outside the blue-gray glass tower at 201 Tresser Blvd., in downtown Stamford. Their target each time was the building’s largest tenant, drugmaker Purdue Pharma.
On a mid-August morning, hundreds marched with placards commemorating family members and friends who had died of opioid overdoses, which they largely blamed on the maker of the OxyContin painkiller. Several weeks earlier, a local art gallery owner and a friend installed in the driveway a massive spoon stained to represent burnt heroin. A few weeks before, a pair of brothers slide-projected messages on the building condemning the company.
The protestors know the firm is not about to face a reckoning in the streets. If it happens, it will likely take place in the judicial system.
Over the past five years, local and state governments across the country have filed hundreds of complaints alleging that Purdue, with chronic and deliberate misrepresentations of its drugs, has helped cause thousands of deaths from prescription and illicit opioids. Resolving the torrent of litigation, which also involves many other opioid makers and distributors, entails protracted and complex negotiations that could lead to a colossal settlement. All the while, plaintiffs face an uncertain timeline for resolving their claims and no assurance they would receive enough funding to help tackle the epidemic.
“The opioid crisis crosses all the lines — party lines, religious lines, cultural lines,” Paul Hanly, co-lead counsel for the plaintiffs in a consolidated group of hundreds of lawsuits involving the company, said in an interview at his law firm’s offices in midtown Manhattan. “People of all political and cultural persuasions are united in that there is something terrible happening in our country and that drastic steps need to get taken to deal with it.”
Purdue officials have denied the lawsuits’ allegations.
“We share the state and local officials’ concern about the opioid crisis,” the company said, in part of a statement. “Purdue believes the accusations against the company are without merit, and we look forward to the opportunity to present our substantial defenses.”
The company did not make CEO and President Craig Landau or other executives available for an interview for this article.
Long history of litigation
Approved by the U.S. Food and Drug Administration in 1995, OxyContin consists of a controlled-release, semi-synthetic opioid painkiller to treat moderate to severe pain lasting more than a few days.
Its creator went to great expense to market the drug. Purdue’s annual spending for OxyContin advertising jumped from about $700,000 in 1996 to approximately $4.6 million in 2001, according to a 2003 federal Government Accountability Office report.
Spurred by its marketing, OxyContin’s annual sales surpassed $1 billion by 2001, making it the most-prescribed brandname narcotic of its kind in the U.S., according to the GAO.
Litigation soon followed. Starting in 2003, Hanly’s firm took on about 5,000 patients who had become addicted to OxyContin after being prescribed the drug. From that group, about 1,400 civil lawsuits would be filed against Purdue. That round of litigation was settled for $75 million in 2006, according to news reports at the time.
Based on those complaints, federal prosecutors built a criminal case against Purdue. In its largest punishment to date for marketing violations, Purdue pleaded guilty in 2007 in federal court to misbranding OxyContin to mislead and defraud physicians and patients. The company agreed to pay some $600 million in criminal and civil penalties.
At the same time, three former and then-executives pleaded guilty, as individuals, to misbranding charges and incurred close to $35 million in fines.
But the worsening of the opioid crisis meant the 2007 payouts were not the end of litigation.
In 2017, about 49,000 people in the U.S. died of opioid overdoses, according to preliminary data from the U.S. Centers for Disease Control and Prevention. The toll represented a fourfold increase over the number of opioid deaths in 2002.
As local and state governments struggled with the billions of dollars needed to pay for health care, law enforcement and social services to respond to the epidemic, they increasingly sought financial accountability from the pharmaceutical industry. Opioid prescriptions in the U.S. peaked in 2010 and then dropped each year through 2015, according to the CDC, though the 2015 rate ran at about three times the 1999 level.
In addition to Purdue,
the likes of Allergan, Endo, Insys, Janssen, Mallinckrodt and Teva are frequently targeted in lawsuits and investigations.
“The opioid crisis has gotten into the fabric of our society and grabbed our attention,” Angela Mattie, a professor in the schools of business and medicine at Quinnipiac University, said in an interview. “That is reflected in the backlash and repulsion widely felt toward Purdue at this point.”
Dangers in focus
Litigation filed in the past five years largely consists of civil, not criminal, complaints. The suits fit into a framework that has allowed local prosecutors and state attorneys general to invoke a range of consumer-protection and antifraud laws to prosecute Purdue.
The lawsuits generally share the same allegations, accusing Purdue of years of false or fraudulent marketing that misrepresents the benefits and risks of treating chronic, non-cancer pain with its opioids, namely OxyContin.
“That (marketing) campaign caused a sea change in medical and scientific thought that had previously deemed these drugs too dangerous to use for chronic pain in most circumstances,” Mississippi’s attorney general, Democrat Jim Hood, wrote in a July letter to attorneys of Purdue and several other opioid producers that he sued in December 2015. “It put billions of doses of high-powered drugs into the hands of patients who were unaware of the risks of addiction and death.”
Mississippi’s complaint led a wave of state lawsuits against the company. In 2017, 13 states sued, with 18 more following in 2018.
The lawsuits have come from Republicans in deepred states such as Alabama, Oklahoma and South Carolina and Democrats in blue strongholds like Massachusetts and New York and Washington state.
Over the same span, hundreds of cities and counties have sued. They range from rural communities to the country’s largest cities, including New York, Los Angeles and Chicago.
In total, the company faces more than 1,000 active complaints from cities, counties and states.
“These lawsuits are gaining traction and gathering momentum,” Robert Bird, a professor of business law at the University of Connecticut, said in an interview. “The litigation generates its own publicity, which, in turn, encourages other states to file suits.”
To help manage the proliferation of lawsuits, a Cleveland-based federal judge, Dan Polster, is overseeing hundreds of complaints filed by municipal and county governments in a process known as “Multidistrict Litigation.” Hanly — a partner in the Simmons Hanly Conroy firm, which also specializes in asbestos and mesothelioma cases — is co-lead counsel for the MDL plaintiffs.
Three MDL cases are scheduled to be heard in a trial starting next September
More than 20 cities and towns in southwestern Connecticut have sued. The list includes Bridgeport, Danbury, New Haven and Norwalk.
“Opioid addiction has had a profound impact on our community in terms of medical care costs, hospital costs and, of course, the tragedies that you see,” Danbury Mayor Mark Boughton said in an interview. “We want to be reimbursed, and we want dollars there for education and dollars for enforcement of people who are abusing the system.”
The company’s home city, however, has not taken legal action. Stamford Mayor David Martin was not available for an interview for this article, but Martin’s chief of staff, Michael Pollard, did not rule out the city pursuing litigation.
“We are continuing to assess all drug companies and other illegal opioid sources involved in the epidemic,” Pollard said in a statement. “We will be determining the extent and cost of the epidemic to Stamford and focus our legal actions on the companies and others who are most responsible.”
Connecticut’s role
At the state level, Connecticut does not have an active lawsuit against Purdue. But the state’s outgoing attorney general, Democrat George Jepsen, said his office has confronted the opioid crisis as part of a 42-state coalition investigating Purdue and six other pharmaceutical firms.
In 2017, 1,038 people in Connecticut died of drug overdoses, more than double the 2012 total, according to state data. Nearly half of last year’s deaths involved heroin.
In an interview, Jepsen said his team has held extensive talks with Purdue officials. In addition, the state can gather evidence to support potential claims against. Purdue and other companies and does not have a statute of limitations on opioid litigation, according to his office.
“We absolutely have their attention, which is what we need and want,” Jepsen said. “We could make a show of filing a lawsuit and devote very significant staff resources to bringing a lawsuit. We’re very comfortable with the position we’re in right now, (but) always keeping, if settlement talks fail, the option of filing a suit.”
Jepsen’s involvement in the multistate alliance will soon end, as he is not running for a third term. Still, the major-party nominees vying to succeed Jepsen, Democrat William Tong and Republican Sue Hatfield, pledged in interviews to maintain Connecticut’s involvement in the interstate initiative.
“Because of how it has affected people in our state — and it’s a crisis in every community here in Connecticut — and because we have Purdue Pharma in Connecticut, we have an obligation to have a very critical eye on this whole crisis,” said Tong, state representative from a district that includes parts of Stamford and Darien.
Hatfield and Tong said they would keep litigation against Purdue on the table, but they both said they would focus on continuing settlement talks.
“If we have settlement discussions that are currently active and ongoing, I, as the next attorney general, wouldn’t want to disrupt that,” said Hatfield, a state prosecutor with the Connecticut Division of Criminal Justice. “I would want to see that through, first and foremost, and continue on with Attorney General Jepsen’s work. I have a lot of respect for the work that he has done.”
Connecticut’s involvement in litigation involving Purdue predates Jepsen’s tenure. In 2007, when U.S. Sen. Richard Blumenthal was attorney general, the state received about $700,000 as part of a nearly $20 million settlement that 26 states reached with Purdue tied to allegations that the company encouraged physicians to overprescribe OxyContin.
The settlement restricted certain opioid marketing practices and helped support the launch of Connecticut’s prescription-drug monitoring program.
“It was a significant and positive first step,” Blumenthal said in an interview. “We continue to pur- sue our efforts to stop overuse of these powerful painkillers. ... If there has been law breaking, I support the effort in court to hold these companies accountable. There are other avenues of redress and remedies that can be pursued through negotiation, as well.”
Purdue also faces an investigation by the U.S. Attorney’s Office in Connecticut, which is part of the U.S. Department of Justice. A DOJ spokesman declined to comment on the inquiry’s status.
Company pushback
Across the country, the lawsuits have slogged through the courts. The litigation has collectively cost the plaintiffs and defendants many millions of dollars in legal services. Purdue did not answer a question from Hearst Connecticut Media inquiring about how many of the lawsuits it had tried to dismiss or how many cases it had settled.
A $24 million payout to the state of Kentucky in December 2015 marked its most prominent settlement in recent years.
In court, Purdue’s lawyers have argued the company’s accusers have not proved that it misled prescribers about its drugs.
“The state seeks to recover costs stemming from the misuse and abuse of prescription and illicit opioids by downstream actors who are far outside the manufacturers’ control and who in, many instances, engaged in criminal conduct,” attorneys for Purdue and the other defendants in Florida’s lawsuit wrote in a September filing supporting their motion to dismiss the case.
They have also cited FDA oversight of use and marketing of prescription opioids, challenging state liability for actions they said the FDA has “specifically authorized.”
Company officials have also contested claims that the firm flooded the market with OxyContin. In statements, they said that their opioids comprise less than 2 percent of such prescriptions.
Outside the courtrooms, Purdue said it is is working hard to help tackle the opioid crisis. The company has allocated $2 million to support prescription-drug education for several thousand high school students around the country between 2017 and 2020. The total includes $500,000 for the program’s expansion in Connecticut during the next two years.
In September, Purdue announced a $3.4 million grant to support a nonprofit pharmaceutical company’s development of an overthe-counter form of naloxone, a drug that can reverse the effects of opioid overdoses. Purdue has also partnered with the National Sheriffs’ Association on a program that gives naloxone kits and training to officers across the country.
In the past year, the company has run full-page ads outlining such efforts in a number of national publications including The New York Times, Washington Post, Wall Street Journal and USA Today.
The efforts have done little to assuage critics. “They can put as many ads as they want to out there, but that’s not dealing with the problem,” Ohio’s attorney general, Republican Mike DeWine, who is his party’s gubernatorial nominee in Tuesday’s election, said in an interview earlier this year. “Why don’t we take this opportunity to start talking and try to reach an agreement, so that Purdue Pharma can be part of the solution instead of just being the creator of the problem?”
Envisioning a settlement
Despite the widespread anger felt toward opioid producers, the litigants’ strategy is not to bankrupt the companies.
“We don’t want any of these companies to go out of business; this is not an act of vengeance,” Hanly said. “This is litigation to recover money that these government entities have spent and lost as a consequence of the defendants.”
Some critics have suggested Purdue and the other pharmaceutical companies that have been sued pay into a massive fund comparable to one financed by tobacco companies as part of a nationwide settlement in 1998 that was worth nearly $250 billion.
To cover the costs of the opioid crisis, such a pool could amount to several times that of the tobacco settlement. In 2015, the opioid crisis cost the country $504 billion, equivalent to 2.8 percent of gross domestic product that year, according to an estimate last year by the Council of Economic Advisers.
A comprehensive settlement — which would probably be reached through the MDL proceedings, according to Hanly — does not appear imminent. Such a pact could take several more months, even years, to hammer out. Before entering into any major agreements, Purdue and the other defendants are expected to demand they would not be liable again for any actions predating a settlement.
“These defendants need ‘eternal peace,’” Hanly said. “That’s why this settlement is incredibly complex … because it has to be completely buttoned up. Otherwise, if there’s an escape hatch, the companies are presumably paying all this money to get sued, maybe not tomorrow, but perhaps a year from now, or three years from now.”
The extent to which Purdue and its owners, members of the Sackler family, could contribute to a settlement is debatable as the company does not publicly disclose its finances.
Third-party estimates suggest OxyContin is still lucrative, but less so than at its peak. The drug’s sales last year totaled $1.8 billion, down from $2.8 billion five years earlier, according to data from health care analytics company Symphony Health Solutions. Competition from generic drugs has contributed to the decline.
“One of the issues that we face is not all these companies are financially that cash-flushed,” Jepsen said. “If you force them into bankruptcy, it might feel good, but it means you’re cutting off your nose to spite your face about getting some kind of future income stream, on a pay-asyou-go basis. But there’s just not the money in the industry that makes it like tobacco.”
After collecting their settlement shares, hundreds of the plaintiffs would allot a to-be-determined portion of their proceeds to cover expenses and fees for private-sector law firms. They would then grapple with complicated decisions about the funds’ distribution.
“The reality is these lawsuits take years, and years is not something we have. We need to deal with the problem in the here and now, which we’re doing,” Dr. Jeff Gordon, a former president of the Connecticut State Medical Society, said in an interview. “But if there are settlements in the future, we should be very clear that the money is protected to support prevention and treatment programs.”
In the meantime, Purdue’s dwindling headcount suggests it may be feeling fiscal strain. In June, it announced approximately 350 layoffs, about half of which were linked to the elimination of its alreadydownsized sales force. That followed earlier job cuts stemming from the company’s announcement in February that it would stop marketing OxyContin and other opioids to prescribers.
About 550 remain with the company, including some 250 at its Stamford headquarters. Earlier this year, the firm reported employing about 1,100.
Purdue has also shaken up its leadership. In July, the company announced a new board chairman and a new general counsel. At the same time, the company is increasingly moving away from opioids. Last month, it announced an “exclusive option” to acquire a Minnesota company developing an injectable steroid treatment for back pain.
Those changes may eventually help repair the company’s battered reputation, but they will not end the litigation. Only money flowing out of 201 Tresser that makes its way to the plaintiffs would likely bring the company relief from its opponents.
“If some company has stolen from the state of Mississippi or injured its citizens or violated its laws, I’ve got a duty to collect what’s owed to the state,” Hood said in an interview. “That’s my job.”