Source: New York Times
Date: 10 May 2007

In Guilty Plea, OxyContin Maker to Pay $600 Million


ABINGDON, Va., May 10 —The company that makes the narcotic painkiller OxyContin and three current and former executives pleaded guilty today in federal court here to criminal charges that they misled regulators, doctors and patients about the drug’s risk of addiction and its potential to be abused.

To resolve criminal and civil charges related to the drug’s “misbranding”, the parent of Purdue Pharma, the company that markets OxyContin, agreed to pay more than $600 million in fines. That is the third-highest amount ever paid by a drug company in such a case.

Also, in a rare move, three executives of , including its president and it top lawyer, pleaded guilty today as individuals to misbranding charges, a criminal violation. They agreed to pay a total of $34.5 million in fines.

OxyContin is a powerful, long-acting narcotic that provides relief of serious pain for up to 12 hours. Initially, Purdue Pharma contended that OxyContin, because of its time-release formulation, posed a lower threat of abuse and addiction to patients than traditional, shorter-acting painkillers like Percocet or Vicodin.

That claim became the lynchpin of the most aggressive marketing campaign ever undertaken by a pharmaceutical company for such a drug. Just a few years after the drug’s introduction in 1996, annual sales reached $1 billion. Purdue Pharma heavily promoted OxyContin to doctors like general practitioners who had little training in the treatment of serious pain or in recognizing signs of drug abuse in patients.

But both experienced drug abusers and novices, including teenagers, soon discovered that chewing an OxyContin tablet or crushing one and then snorting the powder or injecting it with a needle produced a high as powerful as heroin. By 2000, several parts of the United States, particularly rural areas, began to seeing skyrocketing rates of addiction and crime related to the drug’s use.

Details about the plea agreements are expected to be announced at a press conference at noon today in Roanoke, Va., by John L. Brownlee, the United States attorney for the Western District of Virginia. “Misbranding” is a broad statute that makes it a crime to mislabel a drug, fraudulently promote it or market it for an unapproved use.

In a proceeding this morning in United States District Court in Abingdon, Va., both Purdue Pharma and those executives acknowledged that the company fraudulently marketed OxyContin for six years as a drug that was less prone to abuse as well as one that also had fewer narcotic side effects.

The time period covered by those expected guilty pleas runs from late 1995, when the Food and Drug Administration approved OxyContin for sale, to mid-2001, when Purdue Pharma, faced with both public criticism and regulatory scrutiny, dropped its initial marketing claims for the drug.

Federal officials said that internal Purdue Pharma documents show that company officials recognized even before the drug was marketed that they would face stiff resistance from doctors concerned about the potential of a high-powered narcotic like OxyContin to be abused by patients or cause addiction.

As a result, company officials developed a fraudulent marketing campaign designed to promote OxyContin as a time-released drug that was less prone to such problems. OxyContin is made of a long-used narcotic, oxycodone. But unlike other medications like Percocet that also contain the narcotic, OxyContin is pure oxycodone and, because it is a time-released drug, contains its in very high doses. The drug is valuable in treating serious, long-lasting pain.

But to increase the drug’s use, Purdue Pharma and those executives are expected to acknowledge that “with the intent to defraud or mislead” they marketed and promoted OxyContin as a drug that was both less addictive, less subject to abuse and less likely to cause other narcotic side effects than other pain medications.

For instance, when the painkiller was first approved, F.D.A. officials allowed Purdue Pharma to state the time-released of a narcotic like OxyContin “is believed to reduce” its potential to be abused.

But according to federal officials, Purdue sales representatives falsely told doctors that the statement, rather than simply being a theory, meant that OxyContin had a lower potential for addiction or abuse than drugs like Percocet. Among other things, company sales officials were allowed to draw their own fake scientific charts that they then distributed to doctors to support that misleading abuse-related claim, federal officials said.

Between 1995 and 2001, OxyContin produced $2.8 billion in revenue for Purdue Pharma, a closely held company that is based in Stamford, Conn. At one point, it accounted for 90 percent of the company’s sales.

As part of the plea agreement, Purdue Frederick, a holding company, pleaded guilty to a felony charge of misbranding OxyContin. The company agreed to pay $600 million in criminal and civil penalties, which will be split among federal government and state agencies.

Purdue Pharma will also be required to use some of that money to settle civil lawsuits. The company has also agreed, among other things, to subject itself to independent monitoring.

The three top former and current Purdue Pharma executives pleaded guilty to criminal misdemeanor charges of misbranding, a charge that not require prosecutors to show knowledge of intent. However, the three individuals ran Purdue Pharma during the period in question.

Those executives are Michael Friedman, the company’s president, who agreed to pay $19 million in fines; Howard Udell, its top lawyer, who agreed to pay $8 million; and Dr. Paul Goldenheim, its former medical director, who agreed to pay $7.5 million.

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