Purdue Pharma receives $5.5 billion sentence, paving way for opioid settlement

OxyContin maker Purdue Pharma was sentenced on Tuesday to $5.5 billion in fines and penalties stemming from its 2020 guilty plea to charges of deceiving government regulators and paying kickbacks to doctors to boost opioid sales.

The sentencing in New Jersey federal court clears the way for the company to dissolve in bankruptcy and use its assets to fund a $7.4 billion settlement intended to compensate people harmed by the opioid epidemic.

Before accepting the plea deal, U.S. District Judge Madeline Cox Arleo in Newark heard nearly seven hours of testimony from people who wanted to speak up about the company's role in fueling the opioid epidemic in the United States. Over 200 victims sent letters to the court with personal stories of addiction and loss, and more than 40 spoke up in the courtroom.

Arleo directed Purdue Chairman Steve Miller to apologize directly to victims in the courthouse, which he did, saying the company "deeply regrets and accepts responsibility" for past misconduct.

"We are deeply apologetic for all of the things that happened that were described in colorful detail by all the victims here today," Miller said.

Arleo then offered an apology of her own. She said the government failed at several opportunities to stop Purdue from deceiving doctors and patients about the addictiveness of OxyContin.

"Your government failed you," Arleo said to the victims. "The inadequacy of what the law can offer today must be plainly stated."

Several of those who spoke said a fine was not sufficient punishment for Purdue's crimes. They called for Purdue's owners, members of the wealthy Sackler family, or executives to face jail time and for Arleo to reject the plea deal.

"Punishment by a fine means 'legal for a price'," said Ed Bisch, who lost his son Eddie to an overdose in 2001.

Arleo said she could not jail Purdue executives or company owners because the U.S. Department of Justice had not brought charges against them, only the company.

The judge said accepting the plea deal was the best outcome she could achieve, and that she hoped future cases would be handled differently, so that corporate wrongdoers do not get the message that they can "pay fines as the cost of doing business."

Under the plea deal, most of the $5.5 billion in fines will go unpaid, with the Justice Department collecting just $225 million as long as Purdue directs its remaining assets to repaying its creditors. Those are mostly state and local governments that were left to deal with the cost and consequences of the opioid crisis in their communities.

The sentencing comes as people harmed by opioids say the company's long-running bankruptcy has left them frustrated. The $7.4 billion settlement, which includes an $865 million fund for individuals affected by the crisis, had been hailed by Purdue and plaintiffs' lawyers as a victory for victims. A recent Reuters examination shows how the process has created daunting hurdles for many people seeking compensation.

Many victims who spoke on Tuesday expressed frustration with a bankruptcy settlement that could shut out many people who have been unable to find the old prescription records needed to qualify for payment.

Arleo told Purdue's lawyers that they should work with claimants who are having trouble locating old prescription records, rather than simply rejecting them.

"I want there to be some flexibility for victims," Arleo said. "We don't just say 'no' because the records aren't there."

Alexis Pleus, who lost her son Jeff to an overdose after he was first prescribed OxyContin for a football injury, said she had heard from countless families with stories like hers, and the majority likely won't qualify for payment.

"We still deserve justice, and this isn't it," Pleus said in court.

Purdue's bankruptcy case is coming to a close after more than six years in court, following a lengthy series of appeals that went all the way to the U.S. Supreme Court.

The sentencing was one of the final hurdles before the bankruptcy settlement can proceed.

Purdue said it remains on track to emerge from bankruptcy on May 1, ceasing its previous operations and emerging as a new nonprofit company that will make opioid addiction treatment and overdose-reversal medicines.

As part of the plea agreement, Purdue admitted to paying kickbacks to doctors to fuel OxyContin sales and to deceiving federal regulators about its efforts to prevent illegal drug use.

The company previously pleaded guilty to misbranding and fraud charges related to its marketing of OxyContin in 2007, admitting it falsely marketed OxyContin as less addictive, less subject to abuse, and less likely to cause withdrawal symptoms than rival pain medications.