Arizona Seeks to Add Sackler Family in Lawsuit Against Purdue Pharma

PIMA COUNTY – In addition to the U.S. Supreme Court filing against Purdue Pharma and the Sackler family this morning, Attorney General Mark Brnovich also filed an action in Pima County Superior Court seeking to add the Sacklers to his office’s existing lawsuit against Purdue.

The ongoing lawsuit filed in September 2018 alleges Purdue, controlled by the Sacklers, engaged in deceptive and misleading marketing to push opioids, in violation of a 2007 judgment against Purdue obtained by the Arizona Attorney General’s Office for violating the state’s Consumer Fraud Act.

The 2007 Judgment and related agreements should have ended the Sacklers’
misconduct. Instead, the Sacklers expanded their deceptive sales campaign to make more
money from more patients on more dangerous doses of opioids.

Arizona’s 2007 judgment prohibits Purdue from making deceptive claims when marketing OxyContin. The judgment also requires Purdue to provide balanced information about OxyContin, including disclosing the risk of abuse, addiction, and physical dependence associated with using the drug.

Allegations:

Due to their control over Purdue during the period at issue, and their direction of the deceptive sales and marketing practices that violated the Court’s order, Plaintiff now moves this Court to issue an order requiring Defendants Richard Sackler, Beverly Sackler, David Sackler, Ilene Sackler Lefcourt, Jonathan Sackler, Kathe Sackler, Mortimer Sackler, and Theresa Sackler to appear and show cause as well.

The Sackler family owns Purdue and has perpetually held a majority of the seats on its Board. Effectively controlling the privately held drug company, the Sacklers had the power to sell Purdue’s addictive narcotics. They hired hundreds of sales representatives to carry out their wishes and fired those who failed to sell enough drugs.

The Sacklers facilitated more patients taking opioids, at higher doses and for longer, than ever before and were able to pay themselves billions of dollars as a result. They should be held accountable. The Sackler Defendants were the chief architects and beneficiaries of Purdue’s deception, directing the misconduct described in the State’s Show Cause Application.

Each Sackler Defendant knew what Purdue publicly denied for decades: that prescription opioids and opioid addiction are naturally linked. Each Sackler Defendant sent sales representatives to promote opioids to prescribers in Arizona thousands of times.

Each Sackler Defendant realized that sales reps in Arizona would unfairly and deceptively promote opioid sales that are risky for patients, including by:

• falsely blaming the dangers of opioids on patients instead of the addictive drugs;

• pushing opioids for elderly patients, without disclosing the higher risks;

• pushing opioids for patients who had never taken them before, without disclosing the higher risks;

• pushing opioids as substitutes for safer medications, with improper comparative claims;
• falsely assuring doctors and patients that reformulated OxyContin was safe;

• pushing doctors and patients to use higher doses of opioids, without disclosing the higher risks;

• pushing doctors and patients to use opioids for longer periods of time, without disclosing the higher risks; and

• pushing opioid prescriptions by doctors that Purdue knew were writing dangerous prescriptions.

Each Sackler Defendant recognized that Purdue’s sales representatives would not tell Arizona doctors and patients the truth about Purdue’s opioids. They appreciated that these unfair and deceptive tactics achieved their purpose by concealing the truth.

Each Sackler Defendant understood that Purdue’s deceptive sales campaign would impact prescribers, pharmacists, and patients in Arizona in making decisions whether to prescribe, dispense, and take Purdue opioids.

Each Sackler Defendant realized that staff reporting to them would pay top prescribers thousands of dollars in speaker fees to encourage other doctors to write dangerous prescriptions in Arizona. They understood that staff reporting to them would reinforce these misleading acts in Arizona including by sending deceptive publications to Arizona doctors and deceptively promoting Purdue’s opioids throughout Arizona. Each Sackler Defendant took money from Purdue’s deceptive business in Arizona. Each Sackler Defendant sought to conceal his or her misconduct.

The Sacklers’ Conduct Leading to the 2007 Consent Judgment.

From the 1990s until 2007, the Sacklers directed a decade of misconduct, which led to criminal convictions, a judgment of this Court, and commitments that Purdue would not deceive doctors and patients again.

The Sackler family’s first drug company was The Purdue Frederick Company, which they bought in 1952. In 1990, they created Purdue Pharma Inc. and Purdue Pharma L.P. Richard, Beverly, Ilene, Jonathan, Kathe, Mortimer, and Theresa Sackler took seats on the Board. For events before July 2012, this Application uses the “Sackler Defendants” or the “Sacklers” to refer to them. David Sackler joined the Board in July 2012. From that time forward, the “Sackler Defendants” or the “Sacklers” includes him as well.

The Sacklers maintained family control of Purdue and held the majority of Board seats. Beginning in 1994, the Sacklers received all Board documents during their tenures, requiring that staff provide them with all Quarterly Reports and any other reports directed to the Board.

In 1995, Purdue released OxyContin, a long-lasting narcotic intended to help patients suffering from moderate to severe pain. The drug has generated some $35 billion dollars in revenue for Purdue. OxyContin, however, also generated controversy. Its sole active ingredient is oxycodone, a chemical cousin of heroin which is up to twice as powerful as morphine. In the past, doctors had been reluctant to prescribe strong opioids except for acute pain, surgery recovery, cancer treatment, or end-of-life palliative care, because of a long-standing—and well-founded—fear about the addictive properties of these drugs.

Purdue launched OxyContin with a marketing campaign that attempted to counter this attitude and change prescribing habits. The company funded research and paid doctors to make the case that concerns about opioid addiction were overblown, and that OxyContin could safely treat an ever-wider range of maladies. Millions of patients found the drug to be a vital salve for excruciating acute pain. But millions more—many of whom were now taking the drug for chronic pain—grew so hooked on it that, between doses, they experienced debilitating withdrawal.

As Purdue kept aggressively promoting opioids, the company was engulfed in a wave of investigations by state attorneys general, the Drug Enforcement Administration, and the Department of Justice. These investigations discovered that Purdue knew about significant abuse of OxyContin as far back as 1996, yet actively concealed that information from the public. Company officials had received reports that the pills were being crushed and snorted, stolen from pharmacies, and that some doctors were being charged with selling prescriptions. Yet Purdue continued to market OxyContin as less prone to abuse and addiction than other opioids. The Department of Justice also discovered that the Sacklers had received reports detailing the ways in which Purdue’s opioids were being abused.

In 2003, Richard Sackler left his position as President of Purdue. After a few more years of investigation, Jonathan, Kathe, and Mortimer Sackler resigned from their positions as Vice Presidents. Nonetheless, the Sacklers kept control of the company. And, as alleged below, they directed Purdue’s deceptive marketing campaign.

By 2006, prosecutors obtained evidence that Purdue intentionally deceived doctors and patients about its opioids. At base, federal prosecutors had uncovered a “corporate culture that allowed this product to be misbranded with the intent to defraud and mislead.” Purdue paid more than $600 million in fines, among the largest settlements in U.S. history for a pharmaceutical company. The Sacklers voted that The Purdue Frederick Company should plead guilty to a felony for misbranding OxyContin. In May 2007, the Sacklers again voted for their company to plead guilty and enter agreements that Purdue would never deceive doctors and patients about opioids again. The Purdue Frederick Company confessed to a felony and effectively went out of business. The Sacklers continued their opioid business in two other companies: Purdue Pharma Inc. and Purdue Pharma L.P.

The Sacklers voted to admit in an Agreed Statement of Facts in conjunction with Purdue’s guilty plea to federal misbranding charges that, for more than six years, supervisors and employees intentionally deceived doctors about OxyContin: “Beginning on or about December 12, 1995, and continuing until on or about June 30, 2000, certain Purdue supervisors and employees, with the intent to defraud or mislead, marketed and promoted OxyContin as less addictive, less subject to abuse and diversion, and less likely to cause tolerance and withdrawal than other pain medications.” Those intentional violations of the law happened while Richard Sackler was CEO; Jonathan, Kathe, and Mortimer were Vice Presidents; and Richard, Jonathan, Kathe, Mortimer, Ilene, Beverly, and Theresa Sackler were all on the Board.
The Sacklers also voted for Purdue to enter a Corporate Integrity Agreement with the U.S. government at the conclusion of a Department of Justice investigation. The agreement required the Sacklers to ensure that Purdue did not deceive doctors and patients again. The Sacklers promised to comply with rules that prohibit deception about Purdue opioids, to complete hours of training, to ensure that they understood the rules, and to report any deception. Counsel for Purdue certified in writing that Richard, Beverly, Ilene, Jonathan, Kathe, Mortimer, and Theresa Sackler had each approved the rules and would obey them.

Finally, the Sacklers voted to enter into the 2007 Judgment in this Court. The judgment ordered that Purdue “shall not make any written or oral claim that is false, misleading, or deceptive” in the promotion or marketing of “OxyContin.” It required that Purdue provide fair balance regarding risks and benefits in all promotion of OxyContin, and required fair balance about the risks of taking higher doses for longer periods and the risks of addiction, overdose, and death. The Sacklers voted to enter into similar consent judgments with a number of other states’ attorneys general.

The 2007 Judgment and related agreements should have ended the Sacklers’ misconduct. Instead, the Sacklers expanded their deceptive sales campaign to make more money from more patients on more dangerous doses of opioids.

The Sackler Defendants’ Misconduct from the 2007 Judgment Until Today.

From the 2007 Judgment to 2018, the Sacklers controlled Purdue’s deceptive sales campaign. They directed the company to hire more sales representatives to visit doctors thousands more times, insisting that they repeatedly visit the highest prescribers. The Sacklers directed sales representatives to encourage doctors to prescribe more and higher doses of opioids. The Sacklers sometimes demanded more sales detail than anyone else in the entire company, so staff had to create special reports just for them. Richard Sackler even went into the field to personally promote opioids to doctors and supervise representatives.

Above all, the Sacklers were laser-focused on the bottom line. From 2007 to 2018, they voted to direct Purdue to pay their family billions of dollars, including millions of dollars from opioids sold in Arizona. These payments show the total control that the Sackler Defendants exercised over Purdue and were deliberate decisions to benefit from deception in Arizona, at great cost to patients and families.

From the 2007 convictions and settlements until today, the Sacklers ordered Purdue to hire hundreds of sales representatives to carry out their deceptive sales campaign. They made the fundamental decision to hire a sales force, and then to expand it, controlling the size and activity of Purdue’s sales team.

The Sacklers also knew and intended that the sales reps would push higher doses of Purdue’s opioids. Richard Sackler directed Purdue management to “measure our performance by Rx’s by strength, giving higher measures to higher strengths[.]”

On April 18, 2008 Richard Sackler sent Kathe, Ilene, David, Jonathan, and Mortimer Sackler a secret memo about how to keep money flowing to their family. Richard wrote that Purdue’s business posed a “dangerous concentration of risk.” After the criminal investigations that almost reached the Sacklers, Richard wrote that it was crucial to install a CEO who would be loyal to the family: “People who will shift their loyalties rapidly under stress and temptation can become a liability from the owners’ viewpoint.” Richard recommended John Stewart for CEO because of his loyalty. Richard also proposed that the family should either sell Purdue in 2008 or, if they could not find a buyer, milk the profits out of the business and “distribute more free cash flow” to themselves.

That month, the Sacklers voted to have Purdue pay their family $50,000,000. From the 2007 convictions and settlements until 2018, the Sacklers voted dozens of times to pay out Purdue’s opioid profits to their family—in total more than $3.5 billion.

In May 2009, staff told the Sacklers that Purdue had violated its Corporate Integrity Agreement with the U.S. government by failing to supervise its sales reps. Because sales reps lobbying doctors pose a high risk of misconduct (because there are no witnesses and the rep is paid to increase opioid sales), the United States required that Purdue managers supervise sales reps in person at least five days each year. Purdue management disregarded that obligation and did not even devise a system to track it.

The Sacklers required each representative to visit an average of 7.5 prescribers per day. In April 2010, staff reported that they were falling short. During Q1 2010, reps had averaged only 7.0 visits per day. Staff promised to try harder. The Sacklers continued to set a target for daily sales visits for every sales rep, and they tracked the results, quarter by quarter, for at least the next four years. The results were always close to seven visits per day. The Sacklers also set targets for the total number of sales visits by the entire sales force per quarter—huge numbers that were always more than a hundred thousand visits. Meeting those targets was a top priority for the entire company. As with the daily visits per rep, the Sacklers tracked the total number of sales visits per quarter, every quarter, for at least the next four years.

In June 2010, staff gave the Sacklers an updated 10-year plan for growing Purdue’s opioid sales. According to the plan, the Sacklers expected Purdue to pay their family at least $700,000,000 each year from 2010 through 2020. Staff emphasized that selling as many opioids as the Sacklers wanted “will require significant salesforce support” so the plan detailed the “optimization” of sales visits and the number of reps required.

In 2011, to make sure his directions regarding sales tactics were followed, Richard Sackler insisted on being sent into the field with the sales reps. Richard indeed went into the field to promote opioids to doctors alongside a sales representative. When he returned, Richard argued to the Vice President of Sales that a legally required warning about Purdue’s opioids was not needed. Richard insisted there should be “less threatening” ways to describe Purdue opioids.

In March 2012, Purdue staff sent Richard Sackler an assessment of recently improved opioid sales. Staff told Richard that the increase in prescriptions was caused by tactics that Purdue taught sales reps: pushing opioids for elderly patients with arthritis (“proper patient selection”) and encouraging doctors to use higher doses of opioids (“quick titration”). In the coming months, Purdue would study, document, and expand the use of higher doses to increase sales—a tactic that helped to addict and kill Arizonans.

In February 2013, the Sacklers met with staff about tactics for promoting Purdue’s opioids. They discussed research on what influences prescriptions, how doctors had responded to Purdue’s increased promotion, and sales force promotion themes. On the same day, the Sacklers voted to award bonuses and salary increases to executives, including those involved in marketing Purdue’s opioids.

In January 2014, staff reported to the Sacklers on Purdue’s programs for complying with state and federal law. Staff noted that Purdue still paid reps for generating sales and that it did not disclose to the public the money it spent to influence continuing medical education. Nor had the Sacklers adopted “claw-back” policies so that executives would forfeit bonuses they earned from misconduct, or passed any resolutions certifying the Board of Directors’ oversight of Purdue’s compliance with the law.

In September 2014, Kathe Sackler dialed in to a confidential call about “Project Tango.” Project Tango was a secret plan for Purdue to expand into the business of selling drugs to treat opioid addiction. In their internal documents, Kathe and staff wrote down what Purdue publicly denied for decades: that “[a]ddictive opioids and opioid addiction are ‘naturally linked.’” They determined that Purdue should expand across “the pain and addiction spectrum,” to become “an end-to-end pain provider.” Purdue illustrated the end to-end business model with a picture of a dark hole labeled “Pain treatment” that a patient could fall into—and “Opioid addiction treatment” waiting at the bottom.

In January 2015, the Sacklers voted to evaluate employees’ 2014 performance on a scorecard that assigned the greatest value to the volume of Purdue opioid sales. Employees were expected to generate more than one-and-a-half billion dollars. The Sacklers also voted to establish the company’s scorecard for 2015: once again, the biggest factor determining employees’ payout would be the total amount of Purdue opioid sales. In 2016, the Sacklers met with the rest of the Purdue Board in January, March, April, June, August, October, November, and December.

In June 2016, the Sacklers met to discuss a revised version of Project Tango— another try at profiting from the opioid crisis. This time, they considered a scheme to sell the overdose antidote NARCAN. The need for NARCAN to reverse overdoses was rising so fast that the Sacklers calculated it could provide a growing source of revenue, tripling from 2016 to 2018. Like Tango, Purdue’s analysis of the market for NARCAN confirmed that they saw the opioid epidemic as a money-making opportunity and that the Sacklers understood how Purdue’s opioids put patients at risk. The Sacklers identified a “strategic fit” because NARCAN is a “complementary” product to Purdue opioids.

They specifically identified patients taking Purdue’s prescription opioids as the target market for NARCAN. Their plan called for studying “long-term script users” to “better understand target end patients” for NARCAN. Likewise, they identified the same doctors who prescribed the most Purdue opioids as the best market for selling the overdose antidote; they planned to “leverage the current Purdue sales force” to “drive direct promotion to targeted opioid prescribers.”
Finally, they noted that Purdue could profit from government efforts to use NARCAN to save lives.

In November 2016, staff prepared statements to the press denying the Sacklers’ involvement in Purdue. Their draft claimed: “Sackler family members hold no leadership roles in the companies owned by the family trust.” That was untrue; Sackler family members held the controlling majority of seats on the Board and controlled the company.

In 2017, the Sacklers met with the rest of the Purdue Board in February, March, April, June, July, August, October, November, and December.

By 2017, Purdue staff began feeling the pressure of the opioid epidemic and elevated to the Sacklers their concern and belief that Purdue should do something to address the crisis. In one presentation, staff told the Sacklers: “Purdue Needs a New Approach,” suggesting a “New Narrative: Appropriate Use.” Staff also suggested that the Sacklers create a family foundation to help solve the opioid crisis.

The Sacklers did not redirect the company toward appropriate use or create the foundation. Instead, they decided to sell harder. For 2018, the Sacklers approved a target for sales reps to visit prescribers 1,050,000 times—almost double the number of sales visits they had ordered during the heyday of OxyContin in 2010.

In October 2017, Beverly Sackler served her last day on the Board. A week later, the New Yorker published an article entitled “The Family That Built an Empire of Pain.”

In January 2018, Richard Sackler received a patent for a drug to treat opioid addiction—his own version of Project Tango.

Richard had applied for the patent in 2007. He assigned it to a different company also controlled by the Sacklers, instead of Purdue. Richard’s patent application says opioids are addictive, calls the people who become addicted to opioids “junkies,” and effectively asks for a monopoly on a method of treating addiction.

In Spring of 2018, states’ attorneys general began filing lawsuits to hold Purdue and the Sacklers accountable. The Sacklers began departing the company. Kathe Sackler resigned from the Board in May, Richard Sackler in July, David Sackler in August, and Theresa Sackler in September. As of the date of this filing, all the Sacklers have stepped down from the Board.

As demonstrated above, the Sacklers’ conduct both before, during, and after entry of the 2007 Judgment reflects their continuous control of Purdue and direction of its numerous violations. Thus, the Sacklers should be required to appear and show cause in their personal capacity as to why they should not be found to have violated the 2007 Judgment.

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Because the Attorney General’s action against Purdue and the Sacklers alleges violations of a previous court order under the Consumer Fraud Act, the Attorney General’s Office can seek up to $25,000 per violation. The filing states that the Attorney General’s Office intends to seek the maximum penalty for every violation, given the seriousness of the issue and Purdue’s disregard for the 2007 judgment.

Section Chief Rebecca Eggleston and Senior Litigation Counsel Rebecca Salisbury are handling the State’s superior court litigation against Purdue and the Sacklers. The State is also represented by Consovoy McCarthy PLLC and Keller Lenkner LLC.