
Purdue Pharma files for bankruptcy with $10B plan to settle claims - dingdongding
https://www.bloomberg.com/news/articles/2019-09-16/purdue-pharma-seeks-bankruptcy-to-short-circuit-opioid-suits-k0luhox6
======
formatkaka
If anyone doesn't know what's going on here exactly.

The Sackler Family – A Secretive Billion Dollar Opioid Empire \-
[https://www.youtube.com/watch?v=zGcKURD_osM](https://www.youtube.com/watch?v=zGcKURD_osM)

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DickingAround
I have a high level question; a lot of want to legalize drugs. Ending the war
on drugs and all that. This is a drug that was legal and a lot of people got
on it and now we're angry. Why? I don't like that people got hurt. I also
recognize that bad drugs are bad. But I can't find a way out of "tell people
drugs are bad and they have to make their own choices." Is the problem here
the doctors told them the bad drugs were good drugs?

~~~
brogrammernot
OxyContin isn’t a bad drug, it’s a highly addictive drug and the company knew
it was highly addictive & not only didn’t do enough due diligence to make sure
prescribers didn’t over prescribe it but also intentionally encourage that
behavior which has led to an epidemic.

However, food for thought on that same subject is the over prescribing of
amoxicillin and other similar class of drugs for viruses. The doctor is
operating a business and his/her clients want a solution to their problem, so
they write a script as they want to keep their customer happy and it “can’t be
too bad”.

There’s a case to be made that a certain amount of immediate gratification
expected on the part of the consumer is a large contributing factor to
overprescribing in general.

However, in this case, Purdue was very much in the wrong and should not have
been encouraging over prescription of a highly addictive drug.

~~~
projektfu
Yeah. I think the underlying story is that doctors used to be more
apprehensive about prescribing opioid painkillers, and when they did they
prescribed lortabs or something like that for acute cases and they wouldn't
put refills on or rewrite the scripts when asked. Then, along comes Purdue
with a claim that OxyContin, because of its unique formulation, is a big
addiction concern and is safe to prescribe for chronic pain. Then they (and a
couple other manufacturers) basically conducted a successful campaign to
convince doctors that undertreatment of chronic pain was widespread and they
were basically letting their patients suffer, strongly suggesting that this
may be considered malpractice in the future if they do not start prescribing
more opioids. This campaign was very smart and even reached the doctors who
refuse to take incentives from drug manufacturers. Essentially, in the way
that Pfizer created a new category of concern in the mind of patients with
Viagra, Purdue did the same in the mind of doctors with OxyContin.

Lo and behold, people are addicted to OxyContin, some start looking for more
immediate-relase formulations of opioids because they don't feel right even on
80mg Oxy tablets, and hundreds of thousands who otherwise would have been
alive with chronic pain are now dead of overdose. Meanwhile, research is
showing that opioids are not very good for chronic pain and other approaches,
usually multimodal approaches, are better, including NSAIDs, gaba-ergic drugs
like gabapentin and pregabalin, ketamine, physical therapy, psychological
retraining, meditation, acupuncture, etc.

~~~
Alex3917
> Then they (and a couple other manufacturers) basically conducted a
> successful campaign to convince doctors that undertreatment of chronic pain
> was widespread and they were basically letting their patients suffer,
> strongly suggesting that this may be considered malpractice in the future if
> they do not start prescribing more opioids.

That was/is the position of the IOM though. Was Purdue involved with
convincing the IOM to adopt that position?

~~~
projektfu
Yes, when ideas become fashionable, they become the conventional wisdom.

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gibolt
Looks like they got a golden escape hatch.

Sounds like this arm of the company will end up controlled by a government
trust. The best outcome would probably be the government running the operation
at break even, lowering costs, and heavily regulating how much product it
could give to hospitals.

~~~
throwawayjava
Pierce the veil and go after the family.

~~~
grumpydba
After all they are responsible for thousands of deaths. And they knew it. I
don't know why they aren't in jail already.

~~~
cies
That's because of the "limited" of private limited.

(Under capitalism) many costs of having PtLds are externalized.

~~~
smhost
is that inherent? i haven't read Capital, but this doesn't seem so much of an
inherent problem with capitalism than it seems like a very dumb implementation
liability protection.

~~~
filleokus
What do you suggest instead?

The possibility to bankrupt a company without losing more than you put into
the venture is in my eyes a feature of capitalism, not a bug.

~~~
NeedMoreTea
It's a feature when it's good faith efforts. It's very clearly a bug when it's
used to evade no end of abuse, illegality and fraud, or to avoid paying the
pollution cleanup.

There probably _needs_ to be some exceptional way in law to pierce the shell
of limited liability and go after officers, perhaps even claw back from
investors and shareholders.

~~~
tomp
Limited liability only protects the _capital_ of the _shareholders_ , it
doesn't protect the management of the company against criminal prosecution.

(In practice, however, managers are only rarely put in jail, both because it's
notoriously difficult to prove white-collar crime (except in few cases, like
insider trading, which are the pursued with extra vigor), and because CEOs are
generally rich and well connected... but the problem there is corruption, not
some inherent feature/bug of the idea of limited liability company.)

~~~
NeedMoreTea
Perhaps I could have expressed it better. I meant to go for the financials.
There are countless cases where the factory or mine has declined and instead
of cleaning it up, as promised, they shutter the company. Then there's the
countless cases where the company is doing something illegal. Take the
proceeds back.

We take money earned from theft and drug dealing, we take the stolen car from
the person who innocently bought it. There's an offence of receiving stolen
property. We don't take the millions from the execs who made millions pushing
pharmaceuticals illegally, or the nuclear plant CEO and shareholder that has
now, by dint of closure, given the job of decommissioning to the state - i.e.
all of us. Once in a blue moon there's a criminal prosecution, but they just
about always manage to stay wealthy.

We need to rethink the limits of limited liability as it's become a convenient
shield to hide all sorts of unethical, shitty and outright illegal behaviour
behind.

~~~
michaelt
I have always thought there should be a law that funds for things like mine
clearup and pensions should be paid as the debt is incurred, and locked up so
there's no way for the company to get at it.

------
bgorman
One naive question - why are doctors who overperscribed opiates still allowed
to practice medicine?

~~~
fucking_tragedy
We spent the better part of decade catching and locking up doctors who
prescribed opioids out of guidelines, so much so that doctors are now
terrified of prescribing them to people who legitimately need them.

The problem is that the prescribing guidelines, which were written by the
pharmaceutical companies themselves, described a regimen that would get pretty
much anyone physically addicted to their product.

So you had doctors acting in good faith, prescribing medications only when
indicated and following their manufacturer's prescribing guidelines,
inadvertently creating new addicts where the manufacturer's literature said
there would be none.

Not only that, but we spent several decades treating chronic pain patients
with opioids, such that they are completely dependent on that class of drugs
to manage their condition. Only very recently have prescribing guidelines
adjusted to reflect the reality that opioids are not a good treatment for
chronic pain. When those pain patients are driven off of their opioid
prescriptions, even if their doctor is well-meaning, some of them turn to
heroin/fentanyl to manage their pain.

~~~
evandijk70
Shouldn't the FDA be checking whether the guidelines written by the
pharmaceutical companies are safe?

~~~
dsfyu404ed
The guidelines are almost always on the conservative side of safe because
people who died as a result of taking the medication the manufacturer
recommended way turn into slam dunk lawsuits. Part of the reason the opioid
problem flew under the radar is because people got hooked and weren't dying
until they OD'd so it never came back to bite the manufacturer. What are the
odds of another opioid type situation? What else could the FDA do with those
resources?

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Havoc
Seems like an abuse of the limited liability. Does the US have a way to set
that aside? I know other countries do

~~~
YokoZar
The US indeed has this concept, known as "piercing the corporate veil".

Excess payments to ownership (especially if you think the company is about to
face a huge liability) is a classic example of one of the justifications for a
judge to do just that: make the owners personally liable rather than just the
company.

~~~
Scoundreller
The smart way is to pay yourself 10% dividends every year into your own
holding companies from the start. Sounds like that’s what they did.

Don’t store your gold next to a nuclear reactor and all.

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dantheman
Are the other manufacturers of oxycontin being sued too? I know that Purdue
tried to underplay their role, but from the best #s I've seen they've only
sold 20% of the market.

[https://www.statnews.com/2019/09/09/purdue-pharma-data-
downp...](https://www.statnews.com/2019/09/09/purdue-pharma-data-downplay-its-
role-in-opioid-epidemic/)

~~~
Scoundreller
That's 20% of the whole opioid pill market, not just oxycontin.

As far as I know, generic manufacturers of off-patent drugs usually aren't
sued.

On the one side, they don't actively promote/market their products to
prescribers or patients, but I'd still think they share some blame by
manufacturing it.

~~~
peteretep
> but I'd still think they share some blame by manufacturing it

Nah. Opioids are an essential medication. The problem is not that OxyContin
exists, it's the creation of irregular demand for it through the actions that
Purdue Pharma are having to settle for.

~~~
Scoundreller
It’s a question of what extent, if any, vendor liability exists.

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joshmn
With the Sackler family funneling out money prior to this, is there any chance
a judge would refuse the bankruptcy?

~~~
Aloha
Last I heard the transfers were several years ago

~~~
mcbain
Recently in the news: [https://www.nytimes.com/2019/09/13/health/sacklers-
purdue-op...](https://www.nytimes.com/2019/09/13/health/sacklers-purdue-
opioids.html)

~~~
loeg
People keep misreading this, or maybe just looking at the headline and getting
the wrong impression.

The news in that piece is that NY discovered the transfers at all. The
transfers themselves are a decade old. The payments to the Sacklers from
Purdue are from 2008-2016 but the lawsuits only date to 2018. All of this is
_in the article_ if you read it.

I.e., no self-payments after lawsuits became material threat.

~~~
casefields
"Sackler was involved in 137 wire transfers totaling nearly $20 million, and
some of those transfers occurred as recently as 2018, the filing indicates."

Who's misreading what now?

~~~
loeg
mcbain's comment that I am replying to,
[https://news.ycombinator.com/item?id=20981242](https://news.ycombinator.com/item?id=20981242)
, is referring to the NYTimes story on $1B in transfers.

Those substantial transfers ($1B) were a decade ago.

The sentence you quote does not appear in the NYTimes piece and is, in
comparison, peanuts. I do not have access to the Bloomberg piece for full
context, but the sentence you quote does not say the movements were self-
payments from Purdue rather than just personal transfers between personal
accounts. It also does not say all $20M was in 2018; there could be a $1k wire
in 2018 for all we know from the single sentence.

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paulie_a
The amazing thing is when I was in legitimate pain in the hospital I couldn't
get more than Tylenol. After I was released I drove by a pain clinic and I
guarantee I could have scored some oxy that day. I didn't but it's nuts when
people that need medication can't get a few pills.

Dont get me started on testorone or ADHD medication hypocrisy.

~~~
cies
Just accept that the system is broken and get 'm on the most free market we
currently have: the market of stuff that is merely illegal.

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bythckr
I am legal expert but I have a logical question.

Shouldn't they look at the fund the company had on the "day that the lawsuit
started".

Where ever they funneled the money, I am sure they are just look at the bank
statement.

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BLanen
Without criminal charges, there's no justice.

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1024core
The Sacklers are running around free, enjoying their wealth, while El Chapo is
in jail.

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jbottoms
Go To Jail, Go Directly To Jail, Do Not Pass Go. Do Not Collect $200B.

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Scoundreller
SO what does this mean for non-US litigants, or future non-US litigants?

~~~
rosybox
Well according to the WSJ, what's left of Purdue after the bankruptcy will be
owned by a trust who's only purpose is to repay the litigants. So I imagine
they'll just be part of that.

Also not all US based litigants are part of the settlement that is being
worked out. There are also individuals who are being personally sued that
aren't part of this as well.

~~~
jmcguckin
I guess they’ll have to flog even more pills in order to pay the litigants...

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ykm
Recommended read: Dopesick from Beth Macy. For a non-American, it reads like a
horror script.

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tjpnz
Are any of the Sackler family going to face real consequences for this?

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lysp
It's ok, they've already moved all their billions away.

Their fortune is safe.

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artpop
How can this be legal?

~~~
refurb
Bankruptcy? What do you propose as an alternative when liabilities exceed
assets?

~~~
throwawayjava
Piercing the veil. This is not a lemonade stand going under. Here,
"Liabilities" correspond to dead bodies. In the thousands.

~~~
jeffdavis
What law permits this now; or are you proposing a new law? If so, how would it
work?

~~~
YokoZar
[https://www.law.cornell.edu/wex/piercing_the_corporate_veil](https://www.law.cornell.edu/wex/piercing_the_corporate_veil)

> "Piercing the corporate veil" refers to a situation in which courts put
> aside limited liability and hold a corporation's shareholders or directors
> personally liable for the corporation’s actions or debts.

------
simplecomplex
Great now all the opioid production and prescriptions and thus addiction will
stop! Oh wait...

~~~
jmcguckin
Most opiod deaths are from fentanyl. Most fentanyl comes from China, not
perscription medication.

~~~
trimbo
75% of opioid/opiate addicts started with pills.

Source:
[https://www.ncbi.nlm.nih.gov/pubmed/24871348](https://www.ncbi.nlm.nih.gov/pubmed/24871348)

~~~
loeg
True, but I added a little more nuance here:
[https://news.ycombinator.com/item?id=20981382](https://news.ycombinator.com/item?id=20981382)

~~~
youeseh
Those conversion rates are not low.

~~~
loeg
They're not zero, but single digit percent times single digit percent is
generally considered a small percent. The math works out to 0.32-0.72% _total_
, taking either the low end of both ranges or the high end of both. I think
anyone should agree that in an absolute mathematical sense, 0.3-0.7% is a "low
percent."

In this specific context? Sure, it's subjective and reasonable people can
disagree.

