Wednesday, June 20, 2007
OxyContin agreement challenged by judge
Why shouldn't company executives who pleaded guilty be sent to jail as part of their punishment?
A federal judge is raising questions about a plea agreement that calls for $634.5 million in fines -- but no jail time -- for the illegal marketing of OxyContin, a powerful painkiller that doubles as a street drug.
Before sentencing three Purdue Pharma executives next month, U.S. District Judge James Jones will consider responses to 16 questions he recently submitted to federal prosecutors and company officials.
One of the questions: Why should the executives not be sent to jail?
"While it certainly is appropriate for the corporate officials to be held accountable for the actions of the company, a sentence of incarceration ... would be unusual," prosecutors responded in court filings.
Last month, Purdue's top three officers pleaded guilty to misdemeanor charges of overpromoting OxyContin, a painkiller that became Purdue's best-selling product as quickly as it became the drug of choice for those enticed by its heroinlike high.
Far Southwest Virginia was one the areas hardest hit by addiction, crime and death attributed to OxyContin.
Following a six-year federal investigation, company president Michael Friedman, chief legal officer Howard Udell and former head of medical affairs Paul Goldenheim agreed to pay a combined $34.5 million in fines. The company will pay another $600 million as part of an agreement that calls for Jones to place its top officials on probation.
It's unusual for a judge to have so many questions about a plea agreement.
Although Jones asked prosecutors to justify what the plea agreement calls "non-incarcerative sentences," it was unclear whether his question indicates any concerns about the lack of jail time.
Both the government and Purdue officials declined to comment. "It is not our place to speculate on what the judge is thinking with regard to the settlement agreement," company spokesman Jim Heins said.
In his court order seeking additional information, Jones noted that if he decides to reject the plea agreements, Friedman, Udell and Goldenheim would be allowed to withdraw their guilty pleas.
Sentencings for the three men are scheduled for July 20 in federal court in Abingdon.
Court filings by the trio's lawyers go on for pages about why probation is appropriate. The stigma of a criminal conviction is punishment enough, the papers state, considering "the strong message sent to the pharmaceutical industry" and the executives' sincere efforts to prevent future prescription drug abuse.
Also contained in the papers is a carefully worded response to another question from Jones: Why does the plea agreement not require Purdue to pay the costs of medical care and drug rehabilitation for the victims of OxyContin?
Technically, there are no "victims" in the case, according to attorneys for the company.
"Without minimizing the enormous harm suffered by many individuals as a result of the use, abuse or misuse of OxyContin, the defendants respectfully submit that none of these individuals qualify as a 'victim' of the misbranding crime at issue, as that term is defined by Congress," the company said in court filings.
Under the federal Crime Victims Rights Act, someone is considered a victim if they were directly harmed by a specific crime committed by the defendant.
The crime to which the company and its officers pleaded guilty is misbranding, or making false representations about OxyContin's propensity for abuse and addiction. Misbranding can occur in advertising, labeling or, as with the case against Purdue, presentations made to doctors by the company's sales representatives.
Both Purdue and prosecutors agree that to prove its case, the government was not required to show that the misbranding in question led to any abuse of OxyContin.
"The relevant question is not whether there are victims of OxyContin, but whether there are victims of the misbranding charged as the crime in this case," Purdue's lawyers stated.
Prosecutors agreed that it would be "legally difficult and burdensome" to identify possible victims of OxyContin abuse in the context of a criminal proceeding against the company.
Complicating the issue further is the fact that the guilty pleas by Friedman, Udell and Goldenheim included no admissions that they did anything wrong -- or even knew of wrongdoing by other company officials. Rather, the charges hold them responsible simply because of their positions as top company executives.
In the flurry of court filings generated by Jones' list of questions, prosecutors also defended their decision not to seek incarceration. The misdemeanor charges to which the executives pleaded guilty carry up to one year in jail; the company pleaded guilty to a felony charge.
Such charges are rarely used in the misbranding of pharmaceuticals, the government stated, and the negotiated plea agreements will "serve as a strong warning" to other drug companies.
In addition to raising questions about jail time, Jones also requested detailed information on Purdue's financial holdings. Some critics have said the monetary penalty to be paid by the company represents just a small fraction of its OxyContin profits.
But according to federal prosecutors, the $634.5 million in fines accounts for about 90 percent of the company's profits from the time the drug went on the market in 1996 until 2001.
The fine is the country's third largest to be assessed against a pharmaceutical company, according to the U.S. Justice Department's Office of Consumer Litigation.
Still, critics have said prosecutors should have pushed for more money, if not jail time.
But that might not be a realistic expectation, said Timothy Jost, a Washington and Lee University law professor who specializes in health care law.
"It is quite unusual for cases involving drug marketing to be criminally prosecuted," Jost said, "and it would be even more unusual for the defendants to actually do time."