Three executives of Purdue Pharma have agreed to pay fines totalling $635 million to resolve charges relating to the marketing of Oxycontin. The company admits to understating the risks involved with this potent drug and to deliberately misleading doctors and the public about its addictive qualities. From 1996 to 2001 the company claimed that Oxycontin was a "miracle" drug, safer than rival medications. Alas, it turns out that the drug was subject to abuse and led rapidly to addiction. And the company apparently knew this all along.
The pleas involved Michael Friedman, CEO, Howard Udel, the chief legal officer, and Dr. Paul Goldenheim, the former head of research. While claiming to have taken steps to prevent misstatements in the promotion of the drug, Mike, Howie and Paul pled guilty under the legal principle that holds high-level executives accountable for the improper acts of others. I'm sure that they privately berated their marketing department for the lies and deceptions, even as the dollars began to roll in.
Company revenues associated with OxyContin between 2000 and 2006 approached $10 billion. So the $635 million fine, while appearing hefty, is about six per cent of revenues. As a tax on criminal negligence, that isn't bad. Even Al Capone would have approved.
You don't achieve overwhelming market share by sitting around and waiting for doctors to discover you. It takes very aggressive marketing and, in this case, pretty dramatic misreprentation to dominate the market for pain killers. The company told two fundamental lies in their drive to sell their product:
1. That OxyContin was less addictive than other opiates. It's not.
2. That the drug was less readily subject to abuse. Not true.
It turns out that OxyContin is highly addictive and the company knew it. In addition, they put a warning right on the label not to crush the pill and ingest/inject it. You might get stoned. You might, indeed. By crushing the pill, users circumvent the "time release" characteristic and access the full power in one overwhelming (and highly addicting) moment.
Purdue Pharma did a great job of pushing (that is the operative word) OxyContin deep into the medical system. Originally intended for treatment of extreme pain in cancer patients, the company's marketers successfully presented it as the drug of choice for common ailments such as routine back pain. That's why it rose to prominence in the workers comp system. (See our post here.)
The Great American Success Story?
In the ideal world, when a drug is created, it will be prescribed prudently and carefully, and only for the purposes for which it was intended. When you develop an effective product to manage extreme pain, you would limit its use to cases of extreme pain. That's in the ideal system - not exactly how you would describe the current status of health care in America.
The real American way is achieving market saturation, market dominance, even if your product is best used by a limited population. And to dominate the market, you tell people what they want to hear: the product is extremely safe and effective. It works better than anything else. And heck, if you have a workers comp claim, the prescription won't cost the employee a dime! We'll even give them 50 tabs, 40 more than they really need for their little back strain, so they can generate some income on the side.
This country has locked up more people for using and abusing drugs than any country in history. We have a real problem with people getting stoned. Nonetheless, when a legitimate company becomes a pusher, when their misrepresentations and outright lies lead to addiction and death, nothing much happens. If Mike, Howie and Paul sold a few ounces of marijuana or crack cocaine, or even a few tabs of OxyContin, to an undercover agent, they'd be going to jail for a long, long time.
But after their enterprise made billions, Purdue Pharma hired Rudy Giuliani Partners LLC to work out a deal with the prosecutors. In case you're wondering, Giuliani Partners is "dedicated to helping leaders solve critical strategic issues, accelerate growth, and enhance the reputation and brand of their organizations in the context of strongly held values."
Hmm. This drug scandal certainly became an embarassing "strategic issue" for Purdue Pharma. As for "enhancing the reputation and brand...in the context of strongly held values" - I'm still trying to figure out what the company's core values are. Your guess is as good as mine. In any event, Guiliani Partners undoubtedly earned a hefty fee. Once you get beyond a few days of bad press, Mike, Howie and Paul are still very free and very rich. Overall, you'd have to say that Rudy's boys cut them a pretty good deal, one that even the bootlegger Capone would appreciate.