Purdue Pharma Agrees to Pay $270 Million to Oklahoma to Settle Case Involving Deceptive Marketing Practices of Opioid Painkillers Representing 1.2% of the Total Potential State Liability

On March 26, 2019, Purdue Pharma LP, the manufacturer of OxyContin, together with the Sackler family who own the company, agreed to a $270 million settlement with the state of Oklahoma to resolve a lawsuit in which the state alleged that Purdue fueled the opioid crisis in Oklahoma through deceptive marketing practices. Purdue did not admit wrongdoing in the settlement agreement.

This suit is just one of over 2,000 filed in federal and state courts against Purdue and other opioid drug manufacturers. According to the US Centers for Disease Control and Prevention, in 2017, there were 47,600 deaths from drug overdoses involving opioids. Of those, 17,029 deaths were attributed to prescription opioids. The “economic burden” of prescription opioid abuse is estimated to be $78.5 billion per year, including the costs of addiction treatment and other healthcare, lost productivity and criminal justice costs. Federal and state governments have brought these suits in an effort to recoup some of the costs associated with the opioid crisis. Indeed, in the Original Petition, the Attorney General of Oklahoma noted that the “State of Oklahoma paid, and continues to pay, millions of dollars for health care costs that stem from prescription opioid dependency,” and that Oklahoma “seeks to recover for the damages caused by Defendants’ wrongdoing.”

The Consent Judgment addressed allegations contained in the Original Petition that Purdue “violated Oklahoma law by deceptively marketing its opioid pain medications – as well as opioid products generally – so as to overstate their efficacy and falsely downplay the associated risk of addiction, which resulted in an opioid crisis and public nuisance in the State of Oklahoma.” Oklahoma also alleged violations of the Oklahoma Medicaid False Claims Act, the Oklahoma Medicaid Program Integrity Act and the Oklahoma Consumer Protection Act, as well as statutes pertaining to Public Nuisance, Fraud, and Unjust Enrichment. To resolve these claims, Purdue agreed to not engage in the promotion of opioids to Oklahoma healthcare providers or patients. They also agreed to provide reasonable assistance to law enforcement investigations of potential diversion or suspicious circumstances involving Purdue opioids in Oklahoma.

Purdue also agreed to pay $270 million in penalties to reimburse Oklahoma for a variety of costs, including attorneys’ fees, as well as the costs of “medically assisted treatment drugs, such as buprenorphine/ naloxone,” for a five-year period. In addition, part of the penalty payment will be used to fund a National Center for Addiction Studies and Treatment, which will be part of Oklahoma State University’s Center for Health Sciences. This Center “will be dedicated to addiction studies, treatment and education, including education to eliminate the stigma associated with addiction and treatment.”

In response to the settlement agreement, Oklahoma Attorney General Mike Hunter noted that “nearly 50 percent of Oklahomans who died from a drug overdose in 2018 were attributed to a pharmaceutical drug,” and that the addiction crisis “is a clear and present danger.” Attorney General Hunter also lauded the “constructive” nature of the settlement agreement, noting that the agreement will “bring to life a new and unique national center with the goal of creating breakthrough innovations in the prevention and treatment of addiction.”

Analysis

Oklahoma may be remembered as the smartest of the states.  We did an analysis of the potential settlements with states.  Oklahoma Represents 1.2% of the US population.  This could mean that the potential liability to all states if settled at a similar rate to population could be at least $27 billion.  This does not include federal, City, County and patient liability.  A federal judge this past week stated that Oklahoma counties and cities are not subject to the terms of the settlement of which $12.5% was set aside for them. Purdue is a privately held company by the Sackler family.  According to Forbes, they estimate that the Sackler family is worth $13 Billion.  If the family were to liquidate all their assets for legal settlement purposes, the states would still be in a shortfall of $14 billion in settlement funds.  Today total Purdue sales are around $3 billion if they were to put aside 66% of their estimated net profit it could take as long as 24 years just to pay the state liability.  The settlement makes a case for Purdue that they may never withstand all the liability that they may owe now and in the future.

Other opioid cases are pending in Oklahoma include Johnson and Johnson and Teva.