Purdue Pharma Scrambles To Discourage A Justice Department Appeal of Bankruptcy Deal

Purdue Pharma launched a behind-the-scenes effort in recent days aimed at discouraging the Justice Department from appealing a pending multibillion-dollar bankruptcy settlement for the OxyContin-maker.

NPR acquired an early draft of a letter distributed by the drug company to groups supportive of the bankruptcy deal.

Updated August 31, 2021 at 4:14 PM ET

The letter is framed as a direct appeal to DOJ officials and purports to be written by those injured by the company and members of the Sackler family.

"We collectively speak for the overwhelming majority of the state and local governments, organizations, and individuals harmed by Purdue and the Sacklers," the letter states.

There is no mention in the document of the company's role launching the effort or crafting the message.

Ryan Hampton, an opioid activist who served on a key committee negotiating the bankruptcy deal, expressed outrage at Purdue Pharma's effort.

"This letter was highly inappropriate. It was wrong," Hampton told NPR. "It was written, proposed and pushed at the eleventh hour at the beckoning of Purdue Pharma."

Hampton, who is in recovery from opioid addiction, said he resigned his position as co-chair of the so-called unsecured creditor's committee Tuesday to protest the lobbying effort.

"Why is this letter coming from Purdue's counsel recommending that all creditors sign onto it? This just didn't look right," Hampton said.

The preemptive pressure campaign comes as federal Judge Robert Drain has signaled he will approve the plan Wednesday at a hearing in White Plains, N.Y.

Three sources with close knowledge of the effort described it in detail to NPR.

Two of the individuals suggested Purdue Pharma was engaged in a good-faith bid to protect a fragile settlement, which has gained backing from most of the state and local governments that sued the Sacklers and their drug company.

A third source expressed discomfort with the company's efforts to dissuade the DOJ from filing an appeal.

All three indicated a Justice Department challenge of a confirmed plan appears likely, though not certain.

They agreed to speak only on background because of the sensitive nature of last-minute negotiations aimed at building additional support for the deal.

The letter warns that any Justice Department appeal would "jeopardize the delivery of billions of dollars" to communities struggling with high rates of addiction, overdose and death.

The document's language suggests Purdue Pharma hoped it would eventually be signed by state attorneys general, local government officials, hospitals and a group representing individual victims of the company's opioid products.

Purdue Pharma declined to answer questions about the letter or the bankrupt company's bid to influence DOJ decision-making.

The Justice Department hasn't said conclusively whether it will challenge the settlement in court and declined NPR's request for comment.

The Justice Department has condemned the deal

The deal has sparked intense controversy in part because it would grant broad immunity from opioid lawsuits to members of the Sackler family as well as hundreds of their associates.

The Sackler's remaining empire — including drug companies headquartered overseas — will be sheltered from opioid liability as will other independent firms that partnered with Purdue Pharma.

The Sacklers would admit no wrongdoing and will remain one of the wealthiest families in the world.

In return, they would pay more than $4.3 billion over the next decade, most of which would go to fund drug treatment and other health care programs designed to ease the opioid crisis.

During a two-week bankruptcy trial that concluded Friday, attorneys for two different branches of the DOJ indicated an appeal is possible.

They argued the liability releases demanded by the Sacklers are unlawful and would violate the constitutional rights of those with potential claims against the family.

In a legal brief, DOJ attorney William Harrington accused the Sacklers of gaming the bankruptcy system to avoid accountability for "alleged wrongdoing in concocting and perpetuating for profit one of the most severe public health crises ever experienced in the United States."

The letter drafted by Purdue Pharma on behalf of the company's victims urges the DOJ to accept the settlement with the Sacklers.

The letter describes a deal granting family members protection from opioid lawsuits as "imperfect [but] better for those harmed by the opioid epidemic than any other alternative."

Purdue Pharma has long worked to influence DOJ decisions

Sources knowledgeable about Purdue Pharma's lobbying effort suggested such efforts were commonplace in complex bankruptcy cases.

They also suggested that the letter drafted by the company would be rewritten before being sent to the Justice Department.

Members of the Sackler family played no role in drafting the document. It was unclear how many organizations involved in the bankruptcy deal might ultimately sign it.

Purdue Pharma has a long and successful history pressuring DOJ decision-makers.

In 2007, the firm's attorneys pressured Justice Department officials to abandon plans to file felony criminal charges against company executives over what were considered illegal opioid marketing schemes.

Instead, Purdue officials pleaded guilty to misdemeanor charges and paid more than $600 million in fines.

"At the eleventh hour, top political appointees at the Department of Justice blocked those indictments and, as a result, a much weaker set of plea agreements was entered into with these Purdue executives that really amounted to a slap of the wrist," said Sen. Maggie Hassan, D-N.H., in a 2019 interview with NPR.

Last year, facing the threat of new federal charges, the company negotiated again with the DOJ.

Purdue Pharma ultimately pleaded guilty to felony crimes for deceptive marketing of OxyContin, but there were no individual charges filed against company executives.

Under that deal, the Sacklers agreed to pay the DOJ $225 million as part of a civil settlement. They weren't charged with any crimes and admitted no wrongdoing.

Some lawmakers are pushing the DOJ to appeal the Purdue Pharma plan

Purdue Pharma isn't alone in trying to sway the DOJ's decision on whether to challenge the bankruptcy settlement after it's approved.

Earlier this month, four Democratic lawmakers — two U.S. senators and two House members — wrote a letter to Attorney General Merrick Garland urging him to block implementation of the plan.

"There is still time for the DOJ to play a key role in this case by seeking an immediate direct appeal ... on the constitutionality of the plan's nonconsensual third-party releases," the lawmakers wrote.

Sens. Elizabeth Warren, D-Mass., and Richard Blumenthal, D-Conn., signed the letter, as did Reps. Carolyn Maloney, D-N.Y., and Mark DeSaulnier, D-Calif.

During the bankruptcy trial, meanwhile, critics of the plan suggested an appeal is all but certain, if it is approved by Judge Drain.

"We urge you not to make the historic mistake of confirming this plan," argued Matthew Gold, an attorney representing Washington, Oregon and the District of Columbia, which still oppose the settlement.

"The plan contains fatal flaws [and] will be reversed on appeal," Gold said during a hearing on Aug. 23.

Some say it will help ease the opioid crisis

But supporters of the plan argue it would distribute money quickly to fund drug treatment and other health care programs designed to ease the opioid crisis.

"A long messy appeal does not help the still struggling people, nor does it help rebuild communities devastated by the crisis," argued Arik Preis, an attorney representing groups harmed by Purdue Pharma that have embraced the settlement. He also spoke during the Aug. 23 bankruptcy hearing.

Purdue Pharma introduced OxyContin in the late 1990s. Critics say the company's aggressive and at times misleading marketing campaigns persuaded doctors to prescribe opioids more liberally, helping usher in the deadly opioid crisis.

More than 500,000 Americans have died from fatal overdoses, according to the Centers for Disease Control and Prevention.

By their own reckoning, the Sacklers earned more than $10 billion from opioid sales, though they say nearly half of that money went to pay taxes.

Family members who served on Purdue Pharma's board have said repeatedly that they did nothing wrong and acted ethically.

However, documents made public during court proceedings show some family members pushed sales of highly addictive opioid pills long after abuse and overdose rates surged.

During the trial, Drain has pushed those involved in crafting the bankruptcy deal to narrow liability releases for the Sacklers and their associates.

At a final hearing on Friday, Drain spoke at length about his fear the deal might still be challenged on appeal. He warned that such an appeal would delay distribution of desperately needed funds.

"One thing that is crystal clear from the record of the trial is that time is no one's friend," Drain said. [Copyright 2021 NPR]