The Sackler Family, the Opioid Crisis & Liability for Corporate Wrongdoing

Topics: Criminal Enforcement, Fraud, Government Fraud, Government Regulation, Litigation, Risk Management, Thomson Reuters Regulatory Intelligence

opioid crisis

As lawsuits against the major opioid manufacturers and distributors continue to march through the legal system, some states are attempting to pursue the family many perceive as responsible for creating the opioid crisis in the U.S.

The Sackler family is now front and center in at least two major state lawsuits. The Sackler family owns Purdue Pharma and holds the majority of seats on its board of directors.

The Attorneys General of Massachusetts and New York have filed civil actions alleging in great detail that the eight members of the Sackler family who were officers and/or directors of the Purdue entities had actual knowledge that Purdue’s opioid product, OxyContin, was addictive and subject to abuse soon after it went to market.

The lawsuits allege that in spite of this knowledge, the Sackler family pursued profits over public health by downplaying the risks and pressing for increased sales. The New York action alleges the Sackler family was “directly involved in developing and sanctioning Purdue’s deceptive and illegal activities… to normalize opioid prescribing and generate a financial windfall for themselves.”

According to various court filings, the Sackler family made as much as $4 billion from OxyContin sales from 2000-2015. The family is conservatively believed to be worth as much as $14 billion.

What Did the Sackler Family Know? 

According to the lawsuits, members of the Sackler family who were officers and directors of Purdue knew the company’s opioid products were addictive as early as 1999. However, instead of warning about the risks, they implemented a strategy of blaming the victims and misleading physicians.

Soon after OxyContin was introduced in 1995, the Sacker family knew that doctors “had the crucial misconception that OxyContin was weaker than morphine” and were prescribing it “much more often and even as a substitute for Tylenol.” According the lawsuits, the Sackler family knew as early as 1999 that there was “widespread abuse of OxyContin.”

In response to a 2001 report about 59 deaths from OxyContin in a single state, Richard Sackler, then-president of Purdue Pharma, wrote to company executives: “This is not too bad. It could have been far worse.”

In 2006, the Sackler family voted that the Purdue Frederick Company would plead guilty to a felony for misbranding OxyContin as less addictive and less subject to abuse and diversion than other pain medications. The Sacklers also voted that three Purdue executives, who were not members of the Sackler family, would plead guilty as individuals.

As the opioid crisis expanded, the family began to look for opportunities to profit from the crisis they had helped create by developing addiction treatments and overdose antidotes.

opioid crisis

Members of the Sackler family, including (left) Raymond and his wife Beverly, and Mortimer (right) and his wife Theresa

While continuing to deny the addictiveness and potential for abuse of Purdue’s opioid products, Richard Sackler applied for a patent to treat opioid addiction in 2007. The patent was granted in 2018. The patent application states that opioids are addictive and refers to addicts as “junkies.” This is consistent with Richard Sackler’s reported strategy to respond to increasing evidence about addiction to Purdue’s opioids by targeting the victims: “We have to hammer on the abusers in every way possible. They are the culprits and the problem. They are reckless criminals.”

In 2007, the Sackler family again voted that the company would plead guilty and agreed that Purdue would never deceive doctors and patients about opioids again. The Purdue Frederick Company then went out of business and opioid operations continued under Purdue Pharma Inc. and Purdue Pharma L.P.

In 2013, Purdue staff reported to the Sackler family that drug overdose deaths had more than tripled since 1990. Staff also told the Sacklers that the deaths were only the “tip of the iceberg” and that for every death there were more than one hundred people suffering from prescription opioid dependence or abuse.

By 2014, Purdue was planning to expand its business to sell treatments for opioid addiction. According to the complaint, internal documents about Project Tango stated: “Pain treatment and addiction are naturally linked.” The team’s analysis of this business opportunity found the “market” of people addicted to opioids had doubled from 2009 to 2014.

In 2015, the Project Tango team outlined to Purdue’s board how patients become addicted to opioids and could then become consumers of suboxone, an addiction treatment Purdue offered through a joint venture the Sacklers also controlled. By 2016, the Sacklers were discussing how sales of NARCAN, an overdose antidote, could provide $24 million in nets to Purdue by 2025.

Liability for Corporate Wrongdoing

In recent years, the Department of Justice (DOJ) has stated its intent to “fully leverage its resources to identify culpable individual at all levels in corporate cases.”

The “Yates Memo” states that holding individuals accountable for the wrongdoing of the corporation is important because it:

  •  deters future illegal activity;
  •  incentivizes changes in corporate behavior;
  •  ensures that the proper parties are held responsible for their actions; and
  •  promotes the public’s confidence in the justice system.

More recently, the DOJ announced that “pursuing individuals responsible for wrongdoing will be a top priority in every corporate investigation.” Further, the revised policy “makes clear that absent extraordinary circumstances, a corporate resolution should not protect individuals from criminal liability.”

Although the 2007 federal prosecution of Purdue Frederick Co. did result in criminal charges against three Purdue officers under the “responsible corporate officer doctrine,” it did not attempt to attach criminal liability to the board of directors. Given the roadmap of misconduct set out in recent state lawsuits, it seems only a matter of time before members of the Sackler family might be facing federal criminal allegations relating to their role in directing the business of Purdue Pharma.

Although the Sackler family has denied all allegations of wrongdoing against Purdue and the family, representatives of some members of the family have said the family may be interested in  achieving a “global resolution” of all claims.