May 10, 2019
By Mike Spector and Jessica DiNapoli
NEW YORK (Reuters) – A united front among members of the billionaire Sackler family behind painkiller OxyContin is showing signs of strain from litigation over who bears responsibility for the deadly U.S. opioid epidemic.
At least twice in recent months, eight members of the Sackler family who own OxyContin maker Purdue Pharma LP have been at odds over how to respond to allegations implicating them in deceptive marketing of prescription painkillers that led to widespread fatal overdoses, said people familiar with the matter.
The family members have split into two groups that their advisers dub the “A side” and “B side,” the people said.
One point of contention centers on how aggressively former Purdue President Richard Sackler should disavow emails he had written years earlier that maligned opioid addicts, a debate that came to a head in anticipation of a critical segment on HBO’s news satire “Last Week Tonight with John Oliver.”
Another disagreement surfaced over legal defense tactics, with a lawyer for one faction initially counseling against Purdue settling an Oklahoma case in favor of a bankruptcy filing that would halt lawsuits.
The family dynamics will likely influence how the Sacklers resolve roughly 2,000 lawsuits by cities, counties and states alleging Purdue pushed prescription painkillers on unsuspecting doctors and patients while concealing their addiction and overdose risks.
The Sacklers, longtime philanthropists worth an estimated $13 billion, are attempting to reach a settlement covering all the litigation and will need to agree among themselves how much to pay. U.S. communities are seeking billions of dollars in damages to address harm from opioids, and settlement discussions will help determine how much money they get.
The lawsuits, which in recent months have targeted the Sacklers in addition to Purdue, claim the family and company contributed to a public health crisis that claimed the lives of nearly 400,000 people between 1999 and 2017, according to the latest data from the U.S. Centers for Disease Control and Prevention.
Family members declined to be interviewed by Reuters about their internal debates.
“In any family or business grappling with important choices, it is normal for a range of opinions to be discussed and options presented,” the two Sackler contingents said in a joint statement. “This internal discussion is necessary for reaching the right decisions in a collaborative way, and in no way signifies a split within our family,” the statement said.
“The reality is that we are united in both our deep desire to help address today’s crisis of drug addiction and in our knowledge that we did not cause this complex public health crisis. We all hope to resolve the many lawsuits through a fair global resolution” that steers settlement funds to affected communities, the family’s statement added.
This account of some of their deliberations is based on court records and interviews with several people close to the family’s discussions. They spoke on the condition of anonymity because of the sensitive nature of the conversations.
Purdue declined to address the Sacklers’ private talks. It has noted the U.S. Food and Drug Administration approved labels for the company’s opioids that carried warnings about risk and abuse associated with treating pain. Purdue and the Sacklers have denied allegations in lawsuits that they contributed to the opioid crisis, and have pointed to heroin and fentanyl as more significant culprits than prescription painkillers.
“A SIDE” vs “B SIDE”
According to court records and people familiar with the matter, the two Sackler factions each comprise relatives of the late Mortimer and Raymond Sackler, two of three brothers, all doctors, who purchased a Purdue predecessor in 1952.
For a graphic, click https://tmsnrt.rs/2W1QbXD
In a June 2018 lawsuit, Massachusetts Attorney General Maura Healey named the eight Sacklers making up the two factions, targeting their role serving on Purdue’s board.
In January, she disclosed details of emails and other internal records that alleged the Sacklers masterminded aggressive opioid sales despite knowledge of their harmful effects.
The Sacklers together countered in court papers that they were typical, passive board members who approved routine management requests rather than micromanaging the marketing of OxyContin. Still, the allegations eventually prompted various renowned museums in New York and London to shun donations from the family.
In March, a critical family debate ensued about how to resolve a separate, longstanding lawsuit against Purdue brought by Oklahoma Attorney General Mike Hunter.
There were two options for averting a trial slated for late May. One was settling the lawsuit. The other was putting Purdue into bankruptcy court, which would halt the Oklahoma case and other litigation.
David Bernick, a lawyer from Paul, Weiss, Rifkind, Wharton & Garrison LLP representing the “B” side, initially counseled against settling the Oklahoma lawsuit, people familiar with the matter said. He was concerned thousands of other plaintiffs would seize upon a financial figure in any agreement and demand costly settlements themselves, they said.
The better option, he felt, would be for Purdue to seek bankruptcy protection and negotiate with Hunter and other litigants under the supervision of a judge in Chapter 11 proceedings.
Advisers on Mortimer’s “A” side of the family argued for settling, confident that the agreement’s structure would combat expectations from other plaintiffs for similar financial sums.
Ultimately, both sides of the family united to contribute $75 million toward settling the Oklahoma case, which helped finance a national addiction treatment center.
The family released a statement cautioning that the agreement, which totaled $270 million with contributions from Purdue, was “not a financial model for future settlement discussions.” Bernick declined to comment on the settlement discussions.
A subsequent family dispute was harder to resolve. It involved whether Richard Sackler should apologize more forcefully for disparaging opioid addicts in his emails.
On March 28, two days after the Oklahoma settlement, allegations that the Sacklers and Purdue were responsible for fatal overdoses resurfaced in an updated lawsuit brought by New York Attorney General Letitia James.
In one email message with an undisclosed party nearly 20 years ago cited in the lawsuit, Richard said, “We have to hammer on the abusers in every way possible. They are the culprits and the problem. They are reckless criminals.” In another email exchange, he said opioid addicts “are criminals, and they engage in it with full, criminal intent. Why should they be entitled to our sympathies?”
The messages stoked tensions among other family members who felt they were less involved in details of Purdue’s operations than Richard, and that the publicity around the emails was unfairly tarnishing them, according to people familiar with the matter.
A spokeswoman for New York’s attorney general told Reuters that family members should “take responsibility for their destructive actions.”
On April 11, the two Sackler contingents and their lawyers gathered in a Debevoise & Plimpton LLP conference room on the 35th floor of a Manhattan office tower to hash out their next moves. Richard dialed into the crisis-management session by phone.
By the end of the meeting, the two sides agreed on taking proactive measures in response to allegations against them, which included seeking media interviews.
But on April 12, just one day later, conflict erupted again as the family wrangled over how to respond to a request from HBO’s “Last Week Tonight with John Oliver.” A producer for the show had sought comment from the family and the company ahead of a segment critical of Richard’s conduct.
Mortimer’s “A” side of the family wanted Richard to provide a statement that would strongly repudiate his previous comments assailing addicts and call the messages “stupid.”
Up to that point, he had most recently apologized in a statement for “insensitive language” in “moments of frustration” regarding the email questioning whether addicts deserved sympathy.
Richard’s son, David, rejected the proposal, in part over concerns that Oliver’s satirical show was an improper forum for the stronger expression of regret, a person familiar with the matter said.
In the end, the show featured actor Michael Keaton reading from Richard’s “reckless criminals” email and other famous actors mocking the former Purdue executive.
However, Oliver also used material supplied by the family and Purdue. He said during the April 14 broadcast that Purdue and the Sacklers insisted the family did not cause the opioid crisis and that they vigorously denied claims in recent lawsuits. He also stated their view that Richard’s statements criticizing addicts had been taken out of context.
(Reporting by Mike Spector and Jessica DiNapoli. Additional reporting by Nate Raymond in Boston; editing by Vanessa O’Connell and Edward Tobin)