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New York state files fraud charges against Purdue Pharma and Sackler family

Who are the Sacklers?
  • New York prosecutors charge that Purdue Pharma and the family that owns the opioid maker fraudulently transferred funds out of the company while it was under investigation.
  • The state's lawsuit also claims that Purdue and other opioid distributors engaged in deceptive marketing regarding the risk of opioids.
  • Purdue transferred "hundreds of millions of dollars" in opioid profits to the controlling Sackler family each year despite knowing that the company faced potentially huge liabilities.

New York state prosecutors on Thursday filed a lawsuit against Purdue Pharma and the family that owns the OxyContin-maker, alleging they fraudulently transferred funds out of the company. The complaint also adds charges previously filed against other companies that made and distributed opioids.

"We found that pharmaceutical manufacturers and distributors engaged in years of deceptive marketing about the risks of opioids and failed to exercise their basic duty to report suspicious behavior, leading to the crisis we are living with today," New York Attorney General Letitia James said in statement. "As the Sackler Family and the other defendants grew richer, New Yorkers' health grew poorer and our state was left to foot the bill."

Accused of fueling opioid crisis, Purdue Pharma and Sacklers agree to $270 million settlement

Profiting from opioid epidemic?

The suit claims that eight members of the Sackler family used a number of corporate entities "as vehicles to transfer funds from Purdue directly or indirectly to themselves."

Purdue fraudulently conveyed "hundreds of millions of dollars" in opioid profits to the Sacklers each year despite knowing that the company faced potentially huge liabilities because of litigation by a number of state attorneys general, according to the suit.

Specifically, the complaint alleges that the Sacklers formed a new company, Rhodes, to make drugs for treating opioid addiction after Purdue was already under federal investigation for its opioid marketing practices. Citing a former senior manager at the company, New York prosecutors claim that Rhodes was set up as a "landing pad" for the Sacklers in case of legal fallout out around the use of OxyContin.

"The Sacklers' full understanding of opioids' abuse and addiction risk is underscored by their willingness to research, quantify and ultimately monetize opioid abuse and addiction by pursuing the development of medications to treat the addiction their own opioids caused," the suit states.

The complaint also targets distributors who buy bulk pharmaceuticals and supply them to individual pharmacies. These middlemen, the suit alleges, ignored "red flags" that singled out specific pharmacies as likely hot spots of illegal prescribing.

Oxycontin maker Purdue Pharma may declare bankruptcy

Opioid manufacturers also allegedly used such distributors to market the products to doctors while underplaying their risks and offered consumers discount cars and other incentives to request opioids.

New York is seeking financial damages that could add up to tens of millions of dollars and a special fund to fight the opioid epidemic. It also would bar the companies accused in the suit from marketing and distributing painkillers in the state unless they abide by strict safeguards.

Purdue and Sackler family respond

Purdue Pharma, based in Stamford, Connecticut, denies the allegations in New York's suit, calling them "misleading."

"Such serious allegations demand clear evidence linking the conduct alleged to the harm described, but we believe the state fails to show such causation and offers little evidence to support its sweeping legal claims," the company said in a statement. "Instead, the state is seeking to publicly vilify Purdue and its former directors while unfairly undermining the important work we have taken to address the opioid crisis."

The company and the Sackler family on Tuesday agreed to pay a total of $270 million to settle litigation with Oklahoma over the drugmaker's role in opioid deaths in the state. It was the first settlement out of nearly 2,000 suits against the drugmaker in connection with its opioid sales.

"Expanding this baseless lawsuit to include former directors of Purdue Pharma is a misguided attempt to place blame where it does not belong for a complex public health crisis. We strongly deny these allegations, which are inconsistent with the factual record, and will vigorously defend against them."

The Sackler family is worth an estimated $13 billion. The family spokesperson pointed to the Oklahoma settlement, noting the Sacklers "are committed to supporting solutions that save lives by preventing addiction and abuse of prescription medicines and treating those who are suffering from addiction. That is why we are voluntarily contributing $75 million to the ground-breaking National Center for Addiction Studies and Treatment, announced earlier this week in Oklahoma."

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