THE BLOG
05/18/2016 08:10 am ET | Updated May 18, 2016

Purdue Pharma: Corporate Fraud With a Body Count

The LA Times investigation of Purdue Pharma's manufacture and marketing of the narcotic painkiller OxyContin published last week should be regarded as a standard case study in corporate fraud.

Except this particular tale also features a body count.

This fact does nothing to call into question the validity of corporate fraud framework for understanding the story of OxyContin; it only makes its principal victims more visible, and the misbehavior in question more abhorrent, than is typical for the genre.

All the major features of Purdue's handling of OxyContin conform to similar acts of corporate fraud perpetrated in recent years: it encompasses not only what the company did (lie to generate profit), but what government regulatory agencies failed to do (detect and expose those lies), as well as the absence of any serious legal or other penalties imposed on Purdue Pharma as a result (a $634.5 million fine on a drug that has earned it $31 billion in revenue, or 2 percent of earnings).

Still the story is peculiar in some key respects. Many times corporate fraud originates in some fairly innocent business model. Not so with OxyContin, a dubious affair from the start. As the LA Times investigation shows, Purdue formulated the drug because a patent on another its painkillers was set to expire. Anticipating competition from generic brands--and a subsequent loss of revenue--the company pursued an innovation that would render a narcotic painkiller eligible for a new patent, and consequently insulate it from competition. Purdue scientists pioneered a slow-release methodology designed to release a drug into a person's system incrementally instead of all at once.

The problem was, although the innovation was real, the claims made on its behalf did not materialize for many of the drug's users. In early drug trials, OxyContin failed to ensure twelve hours of pain relief in a substantial number of patients. But without twelve hour scheduling, the drug represented no genuine innovation, and no comparative advantage, when compared to other less expensive, long-lasting drugs.

So Purdue Pharma chose to simply ignore inconvenient data, and the Food and Drug Administration (FDA) chose to let them. They could not alter the facts, but they could try to avoid them. Nevertheless, as the saying goes, facts are stubborn things. One study conducted in 2002, seven years after Purdue secured application approval for OxyContin from the FDA, found that almost 87% of people taking the drug were taking it more frequently than every 12 hours. In drug trials and in subsequent clinical use, patients told their physicians that OxyContin wore off after five to eight hours, subjecting them not just to bouts of pain but narcotic withdrawal. Unwilling to forfeit the feature deemed necessary to persuading insurance companies to continue to reimburse for the high cost of the drug, Purdue formulated a disturbing response. According documents revealed by the LA Times, the company instructed doctors "to prescribe stronger doses, not more frequent ones, when patients complain that OxyContin doesn't last 12 hours." As the reporters note in a measured tone, this approach "creates risks of its own."

More accurate would be the assessment of Professor Egilman, a family health doctor who has served as expert witness in lawsuits filed against Purdue: the 12 hour dosing schedule, he told the Times, is "an addiction producing machine." Higher doses only compounded the withdrawal problems patients encountered. Periodically plunged into a ravine of agony, patients were subsequently guided to jump off a higher cliff. To this day, the FDA has not asked Purdue to change its recommendations regarding higher dosing, despite the fact that a recent examination of medical records in Ontario, Canada concluded that one in 32 patients on high doses of the drug fatally overdosed.

Added to this disgrace is the way in which Purdue presented OxyContin as less addictive than its peer narcotics, and therefore a candidate for use in settings previously not treated with opioids. Just like a mortgage securitization machine that eventually resulted in mortgages for homeowners who did not qualify for them, Purdue Pharma recommended OxyContin be prescribed to patients and for durations unprecedented in modern medical practice. The LA Times makes the key point: other drug companies quickly followed suit. Since the approval of OxyContin in 1995, the United States has been overdosed with prescription narcotic painkillers--with only 5% of the world's population, the US consumes 80% of its painkillers--and spiraling rates of addiction, suicide and deaths from overdose are the inevitable result. Only recently, in the face of complete and ongoing regulatory failure by the FDA, the Center for Disease Control stepped in to provide new recommendations for the protocols on prescribing narcotic painkillers. The dire circumstances of the opioid epidemic would seem to dictate more rigorous action, but a political establishment under the sway of large corporate donors has yet to summon the will.

Another recurring feature of corporate fraud makes an appearance in the OxyContin saga as well: the revolving door between government and industry. In an age of at least ostensible government regulation, no truly massive corporate fraud scheme can be perpetrated without government complicity, discernable as either a bewildering set of decisions or inexplicable complacency. At critical moments, sometimes nothing more than venal self-interest is in play. In the case of OxyContin, Dr. Curtis Wright, charged with medical review of the drug for the FDA, left the agency shortly after he approved the drug. According to the Times, Wright was working at Purdue on new product development within two years of his departure. In the absence of confession or other material evidence of motive, these sorts of career moves are more than merely suggestive; they are, in and of themselves, suspicious.

For all its similarities to other kinds of corporate malfeasance, the shadow of death cast by OxyContin, which, according to federal government surveys, has been abused by more than 7 million Americans over the past 20 years, places Purdue Pharma in exceptional standing among other serial offenders of corporate America.

That's not just because of the incalculable harm that resulted from its actions. After all, other comparable incidents of fraud inflicted grievous personal damage as well--though the news media makes no serious or consistent attempt to measure or take account of this trauma. In the case of opioid overdoses, they sometimes have to. While newspapers decide what to print in their articles, they cannot tell people what to write in their death announcements.

Not surprisingly, thousands of obituaries submitted to commemorate the victims of opioid overdose omit any mention of a cause of death or addiction. Still, it's undeniable that a growing number of families and loved ones opt to reveal both, often in unvarnished terms. As families refuse speak euphemistically or elliptically about the opioid use in their death announcements, an organic movement of "obit activism" is underway across America. Deprived of a voice on the front page, victims' advocates find one in the few remaining media platforms available to them and under their control.

And it is agonizing to read what they have to say. The mother of Kelsey Endicott reminds us that it is "not true that everything happens for a reason;" her daughter's death from overdose only weeks ago had "no possible reason to justify for the loss." Another family chronicles a life of homelessness and injuries as the result of the untreated mental illness and substance dependence of Jaime Noelle Velarde, who died, in their words, "in a dry tent curled up in a warm sleeping bag." The obituary for Alex Michael Hesse strikes a familiar note in the world of obit activism: "Growing up [Alex] was just like any other young man," his family says, but "he made some mistakes that ended up costing him his life." In his obituary, Sean Stem's family urged communities to "tear down whatever obstacles" exist in the way of treatment. "We have learned the hard way that no amount of love can cure this illness" of opiate addiction, his family acknowledged, in a confession that implicates us all.

In explaining their decision to declaim heroin overdose as cause of death in their daughter's obituary, Alison Shuemake's parents told USA Today that "Shame doesn't matter now." A Massachusetts father agreed, asking his local news station, "If parents are too afraid to put it in an obituary, how is the rest of the world going to see it?" Only days ago Molly Parks' parents reached the same conclusion. "I see a lot of obituaries from families losing 20-somethings, 30-somethings, and 40-somethings and they are all saying they died suddenly," her father said. "But that's not the truth."

In the United States, fatal overdose from opioids exceeded deaths from car accidents in 2014; it is the leading cause of acute preventable death in America. A non-trivial number of these deaths come at the hands of illicit heroin, not OxyContin or other prescription opioid. However, many of these victims found their way to an underground painkiller because of their initial use of a prescribed one. As government officials point out, almost half of all young people using heroin today "reported abusing prescription opioids" before they turned to the cheaper illegal street version of the drug.

And in fact, most overdoses do come at the hands of legal substances: "unintentional poisoning deaths" from prescription opioids quadrupled between 1999 and 2010, outnumbering deaths from heroin and cocaine combined.

Too often the call to deliver meaningful justice for corporate fraud is cast as a jeremiad, a retroactive bid to underscore our resentment. The case of Purdue Pharma, which admitted no wrongdoing in its financial settlement with the Department of Justice and was not forced to change the way it instructed physicians and dentists to prescribe OxyContin, shows us that justice has prospective, even preventive, components. Unless forced to change cost to benefit analysis, corporations will continue to defraud and endanger the American people. A metaphorical back page, community-driven "obituary section" exists for every meek corporate fraud settlement; in the case of Purdue Pharma, it happens to be real.

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