Sackler Family Memo Shows Purdue Pharma Owners Worried About Exposure

(Bloomberg) -- After criminal probes into Purdue Pharma LP's marketing of opioid painkillers led to guilty pleas in 2007 by some of the drugmaker's top executives, the head of the clan that owns the company took note of the risks they all faced.

Dr. Richard Sackler, a Purdue board member, warned his family members in a secret 2008 memo that Purdue's business posed a “dangerous concentration of risk'' and it was vital to have loyal subordinates in place to provide a legal shield, according to a newly released lawsuit.

“People who will shift their loyalties rapidly under stress and temptation can become a liability from the owners' viewpoint,'' Sackler said in the missive, quoted in a redacted complaint by the Massachusetts Attorney General's office.

The memo is one of the first glimpses into the Sackler family's thinking about the fallout from investigations, suits and media reports about allegations they allowed executives to mislead doctors and consumers about opioid painkillers' addiction risks to rake in billions.

“Purdue Pharma created the epidemic and profited from it through a web of illegal deceit,'' lawyers for Massachusetts Attorney General Maura Healey said in the lawsuit.

QuickTake: Heroin and Opioids

Healey originally sued Purdue, its executives and members of the Sackler family last year over the marketing of OxyContin. The amended complaint was attached as an exhibit to a motion Tuesday and provided new details. Purdue officials say the family communications were released solely to embarrass the Sacklers.

“The attorney general has cherry-picked from among tens of millions of emails and other business documents produced by Purdue,'' Robert Josephson, a company spokesman, said in an emailed statement.

“The complaint is littered with biased and inaccurate characterizations of these documents and individual defendants, often highlighting potential courses of action that were ultimately rejected by the company,'' he said.

Sackler's worries about his family's exposure came about a year after Purdue's president and its top lawyer pleaded guilty in 2007 to federal charges tied to the firm's aggressive marketing of OxyContin. Critics say the painkiller is stronger than morphine and easy to abuse.

To resolve criminal and civil investigations, Purdue agreed to pay $600 million in fines and other payments. The Purdue executives were sentenced to community service and never spent a day in jail.

Family Firm

The executives' guilty pleas may have focused Sackler's thinking a decade ago about the loyalty of subordinates and the viability of the family's continued ownership of Purdue, according to the suit. Sackler's father and uncle bought the company in 1952. Sackler began working at the family firm in 1971. He rose through the ranks to become the head of research and development.

In the 2008 memo, Sackler recommended the family either sell Purdue, or if it couldn't find a buyer, “milk the profits out of the business” and “distribute more free cash flow” to family members.

The concerns outlined in the memo were a far cry from Sackler's bullish attitude when Purdue brought OxyContin to the market 11 years earlier, according to the lawsuit. At a launch party, the executive compared the effect the opioid painkiller would have on the market as being the equivalent of a natural disaster like an earthquake.

Doctors would be so pleased with OxyContin's effectiveness that they'd write a “blizzard of prescriptions that will bury the competition,'' according to the suit.

The suit also paints Sackler and other family members who served as directors or executives as hands-on owners, involved in decision-making on how aggressively to market Oxycontin. For example, Sackler decided in 2011 to go out on doctor visits with sales reps “to make sure his orders were followed'' in terms of ramping up sales efforts.

Sackler kept up the pressure the following year, complaining U.S. sales were “among the worst” in the world. His demands on Purdue's staff grew to the point that managers asked then-CEO John Stewart to shield them from the owner's nagging.

“Anything you can do to reduce the direct contacts of Richard into the organization is appreciated,” Russell Gasdia, then the company's vice president of sales and marketing, wrote in an email to Stewart.

But when questions surfaced in 2001 about the company's allegedly hyper-aggressive marketing of the painkiller and its link to overdoses and addictions, Sackler had some advice for the company's lawyers.

“We have to hammer on the abusers in every way possible,” Sackler wrote in a February 2001 email quoted in the suit. “They are the culprits and the problem. They are reckless criminals.''

The case is the Commonwealth of Massachusetts v. Purdue Pharma LP, 1884-cv-01808, Suffolk County Superior Court (Boston)

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider, Peter Jeffrey

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