July 31, 2007

Congresional Testimony on Oxycontin and the Prosecution of Purdue

Testimony of Sidney M. Wolfe, M.D.
Health Research Group of Public Citizen
Senate Judiciary Committee Hearing on Oxycontin and the Prosecution of Purdue

I will discuss three issues that have arisen from the highly-touted prosecution by the Justice Department of the Purdue Frederick Corporation for “misbranding Oxycontin with the intent to defraud and mislead the public.” The issues highlight the double standard in this country for prosecuting corporations and individual corporate officials whose intentional activities result in hundreds of deaths vs. the much more stringent penalties imposed on non-corporate individuals who serve long jail sentences for activities resulting in a tiny fraction of the damage done by such corporate criminal activity.

The three issues are as follows:

1. The prosecution of Purdue and subsequent financial penalties were inexplicably and unacceptably limited to a time period (1996-2001) ending well before the company ceased engaging in illegally misbranding Oxycontin.
On January 17 2003, the FDA sent Purdue a warning letter concerning clearly illegal promotion of Oxycontin during late 2002, almost a year after the end of the period for which the Justice Department prosecuted Purdue’s illegal activities.[1]

The nature of the violations is almost exactly the same as those earlier ones for which the Justice Department prosecuted the company and extracted financial retribution.

The beginning of the letter to one of the three company officials who were convicted of misdemeanors (Michael Friedman, COO and Executive Vice President of the company) is reproduced here:

WARNING LETTER

Dear Mr. Friedman:

This Warning Letter (revised) concerns the dissemination of promotional materials for the marketing of OxyContin (oxycodone HCl controlled-release) Tablets by Purdue Pharma L.P. (“Purdue”). Specifically, we refer to two journal advertisements for OxyContin that recently appeared in the Journal of the American Medical Association (JAMA), one in the October 2, 2002 issue (A7038) (the “October Ad”) and one in the November 13, 2002 issue (A7087) (the “November Ad”). The Division of Drug Marketing, Advertising, and Communications (DDMAC) has reviewed these advertisements and has concluded that they are in violation of the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.§§ 331(a) and (b), 352 (n), and its implementing regulations.

Your journal advertisements omit and minimize the serious safety risks associated with OxyContin, and promote it for uses beyond which have been proven safe and effective. Specifically, your journal advertisements fail to present in the body of the advertisements any information from the boxed warning in the approved product labeling (PI) for OxyContin regarding the potentially fatal risks associated with the use of OxyContin and the abuse liability of OxyContin, which is a Schedule II controlled substance, and make unsubstantiated efficacy claims promoting the use of OxyContin for pain relief. Your journal advertisements also understate the minimal safety information that is presented.

Your advertisements thus grossly overstate the safety profile of OxyContin by not referring in the body of the advertisements to serious, potentially fatal risks associated with OxyContin, thereby potentially leading to prescribing of the product based on inadequate consideration of risk. In addition, your journal advertisements fail to present in the body of the advertisements critical information regarding limitations on the indicated use of OxyContin, thereby promoting OxyContin for a much broader range of patients with pain than are appropriate for the drug. The combination in these advertisements of suggesting such a broad use of this drug to treat pain without disclosing the potential for abuse with the drug and the serious, potentially fatal risks associated with its use, is especially egregious and alarming in its potential impact on the public health.

In addition, there was a non-prosecution agreement signed by the three individual corporate criminals and the company itself and agreed to by the Justice Department that prevents any further prosecution of the company or the three guilty company officials for any activities before May 10, 2007 (and, implicitly, after December 31, 2001). This includes the promise not to seek additional criminal penalties (forfeiture actions) for actions between December 31, 2001 and May 10, 2007.

Three company criminals signed following agreement:

The company itself also signed a non-prosecution agreement with the US attorney.

2.   The criminal penalties paid by the company, said to be 90 percent of their profits on Oxycontin, were apparently limited to the 1996-2001 interval, even though much of the subsequent (2002-2006) sales and profits were unequivocally derivative of the earlier (and subsequent) illegal promotional activities.
The Justice Department has stated that the financial penalty of $634 million the company was assessed was 90 percent of the profits on Oxycontin during that interval (1996-2001) which would have amounted to about $700 million. Aside from the obvious, continuing impact of the illegal pre-December 2001 promotional activities-as evidenced by massive continued prescribing of Oxycontin for several years after then-the illegal 2002 activities discussed above directly document why several years of the post-December 2001 period should also have been the subject of prosecution and a much larger disgorgement of profits.

In an affidavit in this case from the IRS, it was disclosed that the company had made $2.85 billion in profits from 1995 through September 30, 2004, 90 percent of which ($2.57 billion) were said to be from Oxycontin. Thus, in those 2 ¾ years following the end of the period of the prosecution, the company appears to have made an additional $1.8+ billion in profits. ($2.57 billion minus $700 million). U.S. retail sales of Oxycontin in 2002, 2003 and ¾ of 2004 were approximately $4.7 billion alone. As can be seen in the chart below, the three biggest sales years for Oxycontin were 2002-2004, after the period during which the prosecution of illegal activities and “retribution” were done. There is little question that the company should have been forced to disgorge much more of its ill-gained profits than the $634 million that was settled upon, possibly as much as $2 billion or more.

The standard for the government forcing a company to disgorge profits is that the money was obtained through illegal means. The illegal promotional activities of Purdue in 2002 were clearly successful in continuing the earlier illegal activities as evidenced by the peak year of sales being 2003. The subsequent sharp decrease in sales, with 2006 sales being only 37 percent of the peak sales year in 2003, confirms that once-belatedly-illegal promotion was finally stopped, the ill-gotten sales and profits dropped significantly.

3. No company official is going to jail because there was no felony conviction of any company person. There was only a conviction of the corporation itself, which cannot go to jail.
US Attorney Brownlee has said that the many prosecutors “spent years culling through millions of documents, looking for the evidence. And what they did is they were able to piece together a corporate culture that allowed this product to be misbranded with the intent to defraud and mislead.”

Why was it that there were no individual humans who carried out the deadly missions of the “corporate culture” such as the admitted activities of:

(The above is from page 4 of the press the statement issued by the Justice Department on May 10, 2007 announcing the prosecution.)

Why is it that no individual who had engaged in “misbranding Oxycontin with the intent to defraud and mislead the public” could be found and sent to jail?

_________________________

In 2002, a physician who recklessly dispensed prescriptions for Oxycontin was convicted and subsequently sentenced for his crime. James Graves, M.D., former Navy flight surgeon, was sentenced to 63 years for manslaughter (four patients overdosed on OxyContin). He was imprisoned in the Santa Rosa County Jail in Milton, Florida, pending appeal. Others, non-physicians, who illegally sold Oxycontin, have also received jail sentences.

Employees of Purdue orchestrated an illegal scheme to promote the same drug, Oxycontin, as being safer, more effective and less subject to abuse than it actually was and pushed hundreds of millions of prescriptions for the drug based on the false pretenses of their promotional campaigns. Many of the hundreds of deaths attributed to Oxycontin could have been avoided if these illegal activities had not occurred.

Why are there no manslaughter charges, no jail sentences and such relatively low amounts of financial penalties?  Is it perhaps because Purdue has the money to hire Rudy Giuliani and the best white collar criminal defense lawyers to minimize the damage to itself and its executives? If this does not represent a double standard of justice, what does?