Purdue Pharma LP pleaded guilty to the felony crime of misleading consumers about its OxyContin pain medication and in the final federal reckoning will pay $635 million in criminal and civil penalties.
Michael Friedman, the chief executive officer of the Stamford-based company publicly revealed plans to resign after pleading guilty to a misdemeanor charge. The company did not immediately designate a permanent replacement.
Howard Udell, the company”™s chief legal officer, also pleaded guilty to a misdemeanor, as did Paul Goldenheim, Purdue Pharma”™s former chief scientific officer.
Friedman agreed to pay $19 million to the state of Virginia”™s Medicaid fraud-control unit; Udell is to pay $8 million and Goldenheim $7.5 million.
Purdue Pharma began selling OxyContin in 1996, and in 2000 corporate sales topped $1 billion.
The drug”™s addictive qualities spawned a black market, fueled in part by a wave of pharmacy robberies. Between 1996 and 2001, OxyContin was verified as the cause of 146 deaths and the drug likely contributed to another 318 deaths, according to the U.S. Drug Enforcement Administration.
“OxyContin was not the result of good science or laboratory experiment,” said John Brownlee, the Virginia prosecutor who led the investigation, in a prepared statement. “OxyContin was the child of (marketers) and bottom-line financial decision making.”
The company maintains the three men did not engage in or tolerate the misbranding activities, but were prosecuted under the doctrine of strict liability in which corporate officers can be held accountable by reason of their position.
In a statement of facts filed with the court, however, Brownlee said Purdue Pharma allowed sales staff to market the drug as less addictive than other painkillers after receiving reports of abuse and black market activities.
Purdue”™s financial penalties include:
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? $276 million as a forfeiture to the federal government, an unspecified portion of which will be distributed to states;
? $130 million to settle private civil liabilities related to OxyContin;
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? $101 million as reimbursement for payments by government agencies to settle claims related to the misbranding of OxyContin;
? $59 million to state Medicaid programs to settle misbranding claims;
? $20 million to endow Virginia”™s prescription-drug monitoring program;
? $4.6 million for an internal compliance program; and
? $3.4 million to federal and state Medicaid programs for improperly calculated rebates.
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The total does not include $19.5 million Purdue Pharma agreed to pay 26 states for improperly marketing OxyContin. Â Connecticut is to receive $700,000, with $100,000 earmarked for a prescription drug-monitoring program similar to Virginia”™s.
“Purdue Pharma knowingly spread dangerous disinformation about OxyContin, falsely assuring doctors and patients that this powerful pain reliever was less addictive than similar medications,” said Connecticut Attorney General Richard Blumenthal, in a prepared statement. “The company”™s misrepresentations led to addiction and abuse in Connecticut and nationwide.”
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