Remarks as Prepared for Delivery
Good morning. I am pleased to be joined today by Vermont’s U.S. Attorney Christina Nolan, New Jersey’s First Assistant U.S. Attorney Rachael Honig, Acting Assistant Attorney General for the Civil Division Jeff Clark, and Eastern Texas U.S. Attorney Steve Cox.
This morning, subject to court approval, the Department of Justice is announcing a global resolution of our criminal and civil investigations into the opioid manufacturer Purdue Pharma, as well as a civil resolution with members of the Sackler family who comprise the shareholders of the company.
Before we address the specific terms, I want to provide some context of how today’s announcement fits into Department of Justice’s wider efforts to address the opioids crisis.
Department of Justice obviously has many longstanding and ongoing drug enforcement activities. But during this administration we have augmented those with a series of new initiatives targeted at both illicit opioids like heroin and fentanyl, and at the diversion and abuse of prescription opioids as well. These are shown on the chart we have today: JCODE and Operation SOS on the illicit side, and PIL Task Force, ARPO, OFADU, and Health Care Fraud Strike Forces on the prescription side. By these efforts, we have targeted unlawful activity involving opioids at every level of the supply chains. On the prescription side, that means any unlawful actions by manufacturers, distributors, pharmacy dispensers, or physician prescribers, for example.
So today’s announcement involves one of the most important participants in the supply chain of prescription opioids, at the manufacturer level. And a resolution which, if approved by the court, will redress past wrongs, and will also provide extraordinary new resources for treatment and care of those affected by opioids addiction.
The global settlement announced today involves the company pleading guilty to three felony counts for defrauding the United States and violating the Anti-Kickback Statute from 2009 to 2017. In addition to agreeing to plead guilty to these three felony counts, the company has agreed to a $3.544 billion criminal fine and a $2 billion criminal forfeiture amount. Further, to resolve its civil liability, Purdue Pharma has agreed to $2.8 billion in damages to the United States. The company is in bankruptcy, so the corporate resolution is subject to the bankruptcy court’s approval. If approved, this will be a corporate settlement totaling more than $8.3 billion. Additionally, members of the Sackler family have agreed to pay $225 million in a civil settlement that will provide civil releases only.
It is important to note that this resolution does not prohibit future criminal or civil penalties against Purdue Pharma’s executives or employees.
This resolution must be understood against two larger contexts: first, the company’s bankruptcy, and, second, as I’ve referenced, the department’s overarching work addressing the opioids crisis.
The company’s bankruptcy in the Southern District of New York involves many creditors, from private creditors to Federal, state, and local creditors. In general, the creditors are aiming to ensure that nearly all of the proceeds of the bankruptcy go to opioid abatement programs, and the Department of Justice supports that goal.
To that end, a key piece of today’s resolution is based on the future of Purdue Pharma. The agreed resolution, if approved, will require that the company must dissolve and no longer exist in its present form, the Sacklers must relinquish all ownership and control of the company (and its successors), and the assets must be transferred to a new public benefit company or PBC owned by a trust for the benefit the American public. The PBC would be charged with providing its medicines in a manner as safe as possible, without diversions, while providing millions of doses of medicines to treat opioids addiction and reverse overdoses and otherwise taking into account long-term public health interests. And, to be clear, the Sackler family will have no role in creating or controlling the PBC.
If the bankruptcy court approves this, the department will credit the company for the value conferred through the PBC against the criminal forfeiture amount, except for $225 million that will be paid to the United States on the bankruptcy effective date. (The criminal fines and civil damages would not be affected by this.)
This global resolution builds on the department’s other recent opioid successes. Just as the Department prosecutes illicit drug traffickers, the department is committed to doing the same with respect to abuse and diversion of prescription opioids. We have prosecuted medical professionals who have contributed to overdose deaths, run “pill mills,” or defrauded the federal government’s health care programs. We have also prosecuted opioid distributors like McKesson, Miami-Luken, and Rochester Drug Cooperative. We reached substantial settlement resolutions with other manufacturers, such as RB Group and Indivior, as well as Insys.
These are all examples of the department’s unwavering commitment to turn the tide of the opioid crisis ravaging this country. Today’s announcement focuses on the problems from wrongful activities in the prescription opioids realm, so let me note that our efforts there appear to be making a difference. The CDC reports that since 2017, prescription opioid overdose deaths have decreased–by over 18 percent in the first two years. And there has been a 47 percent decline in prescription opioids being dispensed.
But we will continue all of our efforts, including building on the record 8,136 opioids prosecutions in 2019. And not only through enforcement: for example, the department’s Office of Justice Programs awarded grants totaling more than $341 million to help fight the addiction crisis looming over the United States.
Today’s announcement is very much a success story in the close coordination between the U.S. Attorney’s Office in New Jersey, the U.S. Attorney’s Office in Vermont, the Civil Division’s Consumer Protection Branch and its Civil Frauds Section, and I also want to thank the important contributions of law enforcement, including the FBI, DEA and HHS-OIG, who would normally be with us but because of the pandemic we’ve limited the number of people on the stage today. I want to thank this entire team for their relentless work in bringing about this resolution.
Today’s announcement is particularly timely given that October is National Substance Abuse Prevention Month, and a few days from now, October 24, is DEA’s National Prescription Drug Take Back Day, which allows for a safe, convenient, and responsible means of disposing of unneeded prescription drugs that are sitting in medicine cabinets at homes. Keeping the American people safe is the Department of Justice’s highest priority. As today’s announcement re-affirms, the department will not relent in our efforts to combat the opioids crisis.
At this point, my colleagues will tell you more about these cases and the terms of the global resolution.