A pharmaceutical company that manufactured opioid drugs had to pay what seemed a big fine over violating the federal False Claims Act in 2017; the big series of opioid cases began around then, but its continuing fallout is still with us, and it is snowballing even now, says a prominent white collar criminal defense litigator at Manatt, Phelps & Phillips LLP in California.
“On September 8, 2017, a pharmaceutical company agreed to pay $7.55 million to resolve allegations that it violated the False Claims Act by paying doctors kickbacks to prescribe a ‘highly addictive’ opiate-based drug,” says Kenneth Julian, the Manatt litigator. “As one DOJ official said, ‘This settlement constitutes another example of the Department of Justice’s ongoing efforts to battle the opioid epidemic on every front,’” Julian added.
In the intervening four years, the pace of accusations and litigation has picked up, taking in every major manufacturer of opioid drugs. Most recently, according to The Washington Post on July 20, 2021, a $26 billion settlement with Johnson & Johnson and distributors McKesson, AmerisourceBergen, and Cardinal Health neared completion, with the funds to be directed to governments at various levels. The money will be used to try to tame and cure the high levels of opioid addiction all around the country. The money may begin to flow as soon as September 2021.
Ken Julian of Manatt noted that at the time of the 2017 case, the acting U.S. Attorney for the District of New Jersey said that “the conducted alleged by the government and resolved by [the] settlement was egregious because it incentivized doctors to over-prescribe highly addictive opioids. This settlement constitutes another example of the Department of Justice’s ongoing efforts to battle the opioid epidemic on every front.”
Kenneth Julian has successfully represented companies, business executives, physicians, and attorneys against civil and criminal allegations of all kinds: healthcare fraud, insider trading, price fixing, financial fraud, environmental contamination, and violations of antitrust laws. In other cases, Julian has also represented a former Major League Baseball player, an NCAA coach, and a family member of a former U.S. President.
According to National Public Radio, some 500,000 Americans have died directly from opioid overdoses, or because of conditions brought on by opioid abuse and addiction. One of the largest manufacturers, Purdue Pharmaceuticals, is nearing a massive bankruptcy settlement that will pay out more than $4 billion to governments and individuals, but still protect the Sackler family–Purdue’s owners—from further fines or prosecutions.
At the root of many of the cases, Ken Julian notes, is the repeating pattern of companies that took aim at the crisis to allegedly make fortunes off the patients’ addictions. For example, Galena Biopharma, the company that paid the $7.55 million civil penalty, was found to have “violated the False Claims Act (FCA) by paying kickbacks to doctors to induce them to prescribe Galena’s fentanyl-based drug Abstral.”
According to the DOJ’s allegations (which were neither admitted nor denied by Galena), Galena paid “multiple types of kickbacks” to induce doctors to prescribe its opioid Abstral, including “providing more than 85 free meals to doctors and staff from a single, high-prescribing practice; paying doctors $5,000, and speakers $6,000, plus expenses, to attend an ‘advisory board’ that was partly planned, and attended, by Galena sales team members, and paying approximately $92,000 to a physician-owned pharmacy under a performance-based rebate agreement to induce the owners to prescribe Abstral.”
Galena has since merged into another company, and is no longer doing business under its old name.
Galena is just one of the companies accused of profiting off the opioid crisis. Even better-known companies have been drawn into the unfortunately profitable side of addiction. McKinsey & Company, the nationally known, 27,000-employee business consultancy, is on the brink of a $573 million agreement with attorneys general in 47 states for its work with Purdue, in which it allegedly gave advice that helped the pharmaceutical company increase its Oxycontin sales, profits–and liability–even as doctors prescribed and over-prescribed the drug to patients.
One of McKinsey’s proposals, outlined in a planning document but apparently never implemented, involved making secret payments to insurance companies of up to $14,000 whenever a patient became addicted or overdosed in an “event” linked to Purdue’s opioids. The document was made public in November by attorneys representing states suing Purdue Pharma.
One of the largest settlements to date was a so-called bellwether trial in Ohio. The settlement resolved claims filed by the state’s Cuyahoga and Summit counties, and the deal will be worth some $260 million just for those counties alone, to be paid by manufacturers and distributors AmerisourceBergen, Cardinal Health, McKesson, and Teva.
By some estimates, more than 3,000 governmental jurisdictions have brought suits in federal and state courts, and have also included CVS and Walgreens, the largest pharmacy chains, as defendants. The cases may seem extraordinarily large and numerous, but they are based on hard, cold facts. The number of overdose deaths from opioids was six times higher in 2017 than in 1999, according to the CDC. The number of prescription opioids sold to pharmacies and doctors nearly quadrupled between 1999 and 2010, the CDC also found. And yet, despite the vast increase in drugs in circulation, the amount of pain recorded by Americans has reportedly remained consistent.
As litigation continues to unfold, much more money will change hands, most of it in the direction of state, county, and city governments struggling to provide enough services to get the addicted patients in their jurisdiction clean and sober. Even with all the litigation currently underway, it may be a decade or more before the cases are totally resolved, and the country as a whole is on its way to full recovery from the ongoing opioid epidemic.