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Sacklers Would Give Up Ownership of Purdue Pharma Under Settlement Proposal (nytimes.com)
91 points by pseudolus 51 days ago | hide | past | web | favorite | 77 comments



Dave Chappelle's sketch on if we treated corporate criminals like street drug dealers is relevant (and funny) https://youtu.be/HeOVbeh2yr0.

Yet more relevant when the corporate criminals are drug dealers.


The short of it from the article (my interpretation much simplified): the Sacklers would keep the bulk of their prior gains (however that may be defined) but will give up their ownership of the manufacturer of Oxycontin, a large contributor of their potential future gains. So yeah. That certainly doesn't seem like much of a penalty, given the fortune the family has already made and doesn't seem to provide any real disincentive for others not to follow suit in the future ....just make enough money before the lawsuits start. <sarcastic tone> Feels a little like FB's recent FTC "slap on the wrist".


The thing is though, this stuff is hard. Getting the law to punish stuff like this is not as easy as people think it is. Prosecutors are out trying to find creative ways to sanction these sorts of people and corporations, but it's just not this simple, quick thing you can do.

Also, keep in mind a lot of this is being done with an eye to the future. In a very real way, the Sacklers are only, what? Maybe 8 to 10% of the problem? The rest of the opioids came from other corporations. So you get a settlement with the little guy, all of a sudden you're in a better position to pressure the other guys.

Maybe it does suck. Maybe it is infuriating. But the alternative is that you potentially lose leverage and you never get any of the bad guys. I guess I'm just saying, this stuff is harder than people think it is.


That’s the problem. You have 30,000 statutes to deal with a street dealer, but a billionaire family selling drugs is “hard” to prosecute. Justice never comes for the rich in the US.

Settlements for criminal conduct should be illegal full stop. Money shouldn’t be a get out of jail free card.


Why is it hard? Certainly, it is not a shortcoming of the prosecutors, but of the laws. Why don't these regulations have any teeth? Why do so many white collar criminals get away with so much? Once you're rich enough, you can lobby for (or against) laws.

But the alternative is that you potentially lose leverage and you never get any of the bad guys.

I see the alternative as voting in politicians who will pass laws and regulations with teeth, not kowtow to lobbyists.


Givimg up their ownership sounds like selling their shared at a profit, than using those profits to pay a fine. While keeping all of the other accumulated games.


Which is exactly what's happening. They also already shifted all the important assets out of Purdue and set it up for immediate Chapter 11 Bankruptcy-based restructuring. It's corporate raiding, family style.


It also kicks the can on future liabilities.

What a joke.


It's very sad that they were allowed to willfully do this for years. And now that law is finally catching up on them, they will pay a chunk of their blood money and go scott free.


> they will pay a chunk of their blood money and go Scott free

Based on what?

We saw similar pronouncements following Elizabeth Holmes' civil charges. And pretty much every scandal preceding and succeeding that.

This settlement is similar to the J&J public-nuisance ruling in Oklahoma. Public nuisance does not require proving intent. Proving intent is difficult.

Many believe prosecutors in the United States, Canada, and Europe, will find evidence of ill intent amongst members of the Sackler family. That would lead to additional confiscations of property and, if criminal convictions can be attained, potentially even jail time.

But that's a longer, more difficult and more expensive process. Hence why this comes first.


Except profit motive is not often considered ill intent, and that's something I take issue with. More often than not, this basically goes down as something like 'bad business decisions' which carries little if any personal liability for the executives of the given company, and why exactly is that? Just because you were a decision maker at a large company, or part of a team that made a given decision, when the harm done is this catastrophic, how do you get to just walk away?

And before you say "this comes first" or "we're not there yet" just think back to the 2008 banking crisis, and how the people who got incredibly rich(er) off of the backs of working class people are still very much incredibly rich, many still working in the industry they royally screwed up in.


I concur. I think their family-name is ruined, a number of other organizations are cutting ties with them:

https://www.nytimes.com/2019/03/25/arts/design/sackler-museu...

https://www.businessinsider.com/sackler-family-over-opioid-c...


Easily solved by having their kids marry into another family.

Then again, having all that wealth, would one still care?


In the US, changing names doesn't require marrying someone. It's usually just some paperwork at the local courts and paying some fees.


That is the question I found myself still asking, despite the above articles...


This is a payoff from the Sacklers to stay out of jail. Accountants and Lawyers crunch the numbers to come up with a payoff that allows them to keep their wealth and move on as if it never happened. They'll negotiate a little and bump the number by 20% and live out their lives like the Kennedy's.


For those who are ignorant.

What about this parallels the lives of the Kennedys?


I believe it's the being ludicrously wealthy part.


I think it has to do with the bootlegging maybe?


And securities fraud.


Joseph Kennedy made his fortune off securities fraud, and was appointed by FDR as the first SEC Chairman, saying "set a thief to catch a thief".

https://www.professorbainbridge.com/professorbainbridgecom/2...

https://www2.gwu.edu/~erpapers/mep/displaydoc.cfm?docid=erpn...


And involuntary manslaughter (Chappaquiddick)


Law and order doesn't apply to the wealthy.


Turn it into a generic manufacturer and distribution hub that will lower generic prices deep and wide...


I would go one step further. Nationalize the company.

There is always talk about "if companies are people, how do we punish them when they break the law?". Well, what about nationalizing them for the public good for a certain number of years that matches what a person would get in prison for a similar crime?

Purdue Pharmaceuticals could be put under the umbrella of Medicaid and ordered to manufacture generic drugs for the next 30 to 50 years (or forever if contributing to tens of thousands of deaths would be equivalent to a life sentence)


> what about nationalizing them for the public good for a certain number of years that matches what a person would get in prison for a similar crime?

Forcing their IP into the public domain followed by a liquidation of their hard assets would be simpler, and not put the U.S. government in the narcotics business.


Oxy is already out of patent ... but they got the FDA to agree that it's too dangerous for any other firm to make and market it, so they got to continue.


Another option would be to revoke the companies charter in the state they are registered in. Basically, a corporate death penalty.


How does it serve the public interest to have government management run a company into the ground? Do you want more Amtraks? That’s how you get more Amtraks. If you want a nuclear bomb for corporate misconduct, it seems like the best approach would be to distribute the shares to the victims while keeping the company privately owned and operated.

(Downvoters are on the wrong side of history. Nationalizing companies is a failed experiment. Privatization of state-owned companies is one of the few things nearly everyone agree on, from the US to Sweden to putatively Marxist countries like Vietnam: https://www.forbes.com/sites/ralphjennings/2018/12/30/vietna...)


> Do you want more Amtraks?

That gave me a good belly laugh. In the metrics I care about, Amtrak could be seen to represent the government at their best.

The trains run on time, are more comfortable than flying, and often cheaper too. The dining cars are surprisingly good (snack cars are lackluster though), and I've found every Amtrak employee I've ever dealt with to be a kind and courteous professional. And they look after their customers in other respects too, such as chasing away the notorious serial-gropists known as the TSA. Amtrak treats regular people like humanely in a way that contrasts sharply with how American airlines behave.

From my perspective the primary problem with Amtrak is disappointing coverage of the country, so yes I want more Amtraks!

(Incidentally, my experience with them is more limited, but I found the workers of the Alaska Marine Highway, a ferry service operated by the state of Alaska, to be similarly pleasant people. So maybe there is a trend here..)


> The trains run on time

Amtrak has abysmal reliability, even on the Northeast Corridor (which is Amtrak-owned and doesn't share traffic with freight lines). On-time performance on the northeast corridor is just 75% https://www.washingtonpost.com/news/wonk/wp/2014/07/10/the-s.... Many scheduled flights along that route (e.g. DCA to JFK or LGA) have 90% on-time performance. And of course, trains aren't supposed to have airline-like delays. One of the key selling points of trains is that they don't have to deal with airport congestion, late arriving equipment, etc., and so relatively short intercity trips are predictable and hassle-free. (Unlike Amtrak.) My wife and I rode Amtrak twice a day for two years between DC and Delaware. It was a nightmare. Routinely delayed trains, cancelled trains at least once a month, etc. No private business would survive operating like that.

It's also odd that you'd cite TSA as a bad thing. TSA is, of course, what happened when the government nationalized airport security, taking it away from the private security forces airlines previously used.


To be clear I don't blame airlines for the TSA, but I certainly credit Amtrak with keeping them at a distance. If you had opened with criticism of the TSA, not Amtrak, then I would have upvoted you.

As for the rest, I'd rather be a little late than be treated like shit. The Amtrak delays I've encountered have all been less than an hour, compared to numerous incidents of multi-day delays when flying (I'll never do business with Delta again under any circumstances. Being stuck in Atlanta for two days is pretty bad, but the shear malicious joy their employees were expressing at the situation was as bad as any stereotypical DMV encounter.) A few hours of delay isn't such a problem, but some Americans seem to enjoy being in a perpetual state of hurry...

I can't help but wonder if such impatience is somehow related to the general surliness of airline employees, relative to Amtrak and the Alaska ferry. The last ferry I was on got delayed for several hours one morning after responding to a mayday and being kept on the scene by Canadian Coast Guard during the search. The crew was unnecessarily apologetic while nearly all the passengers were, if anything, a bit proud or appreciative. I shudder to think of what such a delay on a plane would look like, with the sort of personalities that would likely be involved...


Good story I guess. I've commuted up and down the NE corridor for 25 years on Amtrak and airline shuttles and there's just no comparison whatsoever. Amtrak is leaps and bounds more reliable, cost effective, and pleasant than any airline competition I've found. Most New Yorkers I know agree for DC/Boston trips.

Perhaps your experience is a little atypical.


A lot of airlines seem to pad their arrival times tho, so it might not be an apples to apples comparison. Like a week ago I sat on a plane that was stuck on the tarmac for an hour, and we still arrived on time at the destination after a couple hours in the air.


TSA was only in small part a nationalization of existing airport security. Private airport security pre-TSA only did a fraction of what the TSA does now. They don't have the same purpose either... I'd say the TSA exists to expand authority of the federal government as much as it exists to protect travelers or secure air travel infrastructure.


> The trains run on time, ....

I'll see your belly laugh, and raise you hysterical laughter, rapidly increasing in intensity until I pass out.

The last time I rode Amtrak, from Denver to Chicago, I spent a 24-hour delay waiting on a siding in the middle of the Great Plains. A train filled with passengers motionless for a complete day as cargo train after cargo train just whoosh by.

I once worked out that a internationally-competitive professional cyclist could have beaten me home, even taking a full 8 hours of sleep somewhere along the route. Slow and steady, but with right-of-way, wins the race.

The previous instance of riding Amtrak, from Indianapolis to Chicago to catch some touristy activities, and then back again the same day, gave the party just enough time to arrive, take a deep breath, and immediately board the return train, which was also late getting back.

The Amtrak customer-facing employees seem courteous and satisfied, but the ones in the corporate offices, setting the timetables, must be completely delusional. I have never once been on an Amtrak train that left on time, or arrived on time. Never. And I likely never will be, since I have stopped giving them the opportunity to disappoint me.


A 24 hour delay on a train is still significantly more comfortable than a delay in an airport, or worse, on a plane. I'd sooner spend a day in a train than an hour on the tarmac in a plane; the train is that much more comfortable. Let alone the multi-day delays I've experienced when flying...

(And better to sleep on a train than whatever bedbug infested shitbox of a hotel the airline offers you a stay in during your delay... Airlines are up there with Comcast when it comes to customer service.)


> A train filled with passengers motionless for a complete day as cargo train after cargo train just whoosh by.

It's way past time America stopped prioritizing cargo over people. We sold almost all our rails to cargo companies for cheap, and now have almost no passenger travel left. It's an unbelievable farce.


"Sold?" Those rails were built by those companies.


On public right of ways acquired through eminent domain with requirements that they also serve the public as passenger transport.

We don't expect the rights on toll roads to revert back to the tolling company at the end of the tolling period and become a private road reserved only for cargo trucks, we expect them to continue to serve all traffic, for cheap as free once the tolls are "paid off". (Though Indiana and some other states are certainly working hard to create such privatized disasters this century, because no one remembers these states made the same exact mistakes with their rails.)


"Public right of way" isn't a magic incantation for justifying Marxism. Railroad companies purchased the rights of way at fair value--which is an essential requirement for the exercise of eminent domain. The only function of eminent domain in that context is avoiding the hold-out problem, where a property owner can demand far more than market value for a parcel that stands in the middle of an already-acquired railroad alignment. Eminent domain isn't "private companies getting property for free"--it's a limited exercise of government power to prevent what would otherwise be a market failure.

Privately operated toll roads are completely different. There, the operating company generally never owns the right of way to begin with. Even if they build the toll road, all they are buying is the right to operate the road for for some term.


> Eminent domain isn't "private companies getting property for free"--it's a limited exercise of government power to prevent what would otherwise be a market failure.

The key word there is limited. Eminent domain is supposedly limited to things in the Public Good. It's not meant to be a transference of wealth to private companies at the expense of the Public, and it's supposed to and does include attached riders on the usage of such eminent domain-appropriated properties. Such as required passenger travel quotas that were supposed to be applied to railroad companies as a public service.

> Privately operated toll roads are completely different. There, the operating company generally never owns the right of way to begin with. Even if they build the toll road, all they are buying is the right to operate the road for for some term.

It's not completely different. Obviously things varied hugely between different states, but some states did own their railroad right of ways as public goods (as they should have, and just as they generally do with utility pole right of ways, toll road right of ways, and interstate right of ways). It was only after the fact that many of the railroad owners decided they should also own the rights of way to avoid further regulation and abscond from original contract terms (such as, and most importantly, passenger travel minimums), and only then worked very hard (through monopolies and hard bargains) to purchase said rights of way from states desperate for quick cash or easily swayed by privatizer lobbies and deregulationists.

We do not vilify the early railroad folks as the "Robber Barons" for nothing, and it is incredible how much that history is forgotten or overlooked. It's also incredibly naïve to think that roads are immune from the same folly that happened to the railroads!

Indiana has a couple of toll roads today that are "in hock" to an Australian company that essentially wins the right of ways in the right circumstances of the tolls not paying enough for the loans that the Australian company bought from Indiana and the tolls are supposed to cover (just as passenger fares were supposed to cover railroad rights of ways and underages used to steal them from the public). It's amazing, ridiculous, and absolutely history repeating itself, because Indiana lost so much of its railroad right of ways in very similar overly privatized financial games.


The history of railroads in North America is a lot dirtier than what you describe.

A lot of railroads did, in fact, get their trackway for free. They didn't get it by eminent domain, but by land grant, as the first [white] owner of record. They got a checkerboard of land [0], so they could trade adjacent lands with the other grantees in order to establish a continuous railway.

The only holdouts were the Ghost Dancers.

[0] https://en.wikipedia.org/wiki/Checkerboarding_(land)


+1 to this. Amtrak Northeast Corridor is amazing and the proof is how it competes just fine with airplanes and auto. I wish the food were better. I can't wait for LEO internet (e.g. SpaceX) to fix the WiFi which drops off in cellular deadzones (along with my tethered cellphone).

The delays are mostly structural: Amtrak is required to share the tracks with unscheduled cargo. I budget an extra hour and I'm fine. The same cannot be said for airplanes. It's like conflating TSA gropings with airline (de)regulation.

The rest of Amtrak is wonderful: website / e-ticketing / free changes / frequent traveler program, communication, seats, power outlets, etc. All this would get replaced by toll booths carefully metering out every convenience until your knees are in your chest.


> The delays are mostly structural: Amtrak is required to share the tracks with unscheduled cargo. I budget an extra hour and I'm fine. The same cannot be said for airplanes. It's like conflating TSA gropings with airline (de)regulation.

Absolutely not true on the NEC. It's dedicated track and the delays are due to operational mismanagement and failing infrastructure.


But in some cases the public can be well-served by having a public option available for "essential" products / services (however we choose to define that), alongside private sources. See, e.g.:

+ deliveries - you have your choice of the (public) Postal Service, FedEx, UPS, etc.

+ police protection - many companies use private security-guard services in addition to the (public) police.

+ schools - there's always the public-school option in addition to the myriad private schools available for those who can afford it.

+ local transportation -- private taxis and ride-sharing services operate alongside public bus service.

It's not axiomatic that essential pharmaceuticals shouldn't have a public option too.

EDIT: You can argue that the public options listed above are inefficient compared to their private counterparts. But max efficiency isn't necessarily the primary goal; some folks are faced with the choice between a comparatively-inefficient option and none at all. (Or: Perfect is the enemy of Good Enough.)


Having a public company be an "option" is tough. If you subsidize the public option, then you destroy the market because private companies can't compete on level ground with a subsidized competitor. And if you don't subsidize the public option then there really isn't a point.

For services that are really "essential,” I’d probably argue that the best course is to have markets that are properly regulated for antitrust issues, and then pay low-income people to purchase the services they need.


> If you subsidize the public option, then you destroy the market because private companies can't compete on level ground with a subsidized competitor.

That assumes apples vs. apples; the examples I listed above aren't.


In every example the public option is considered the lesser one.

People ship UPS/Fedex unless the object is heavy and fits in a flat rate box.

Private security is not known for doing ethically questionable things to maximize revenue and excessive force like public police are. The only time people want "real cops" is when the extra violence can work to your advantage (which is why many large events where alcohol is served tend to use police for security).

People who can afford it often opt to send their kids to private school, particularly if local schools are not "good".

People who can afford it generally take a taxi (uber/lyft in this day and age) instead of public transit.

Heck, it's worth getting an AAA membership just so you don't have to go to the DMV for certain transactions.

While it's essential to have a government provided backstop for all these services I wouldn't say the public is "well" served by any of them.


> In every example the public option is considered the lesser one.

And for some people, the lesser option is Good Enough, because their alternative is — nothing, because they can't afford one of the better options.


Except look at the East Coast line in the UK. It was handed back TWICE because it "wasn't profitable enough to make the payments agreed to the government" ... and when taken back into government ownership it had widespread acclaim from the people travelling on it as it was run far better.

The problem with privatisation, especially in the UK with the trains, is there are only so many tracks and so many routes ... you therefore can't have rival operators competing so they just charge what they want for unregulated fares, which is why it's cheaper to fly to Edinburgh from London than get the train.

The largest irony is, most of the franchises that run train companies in the UK are ultimately state owned enterprises in their own countries (SNCF, DB etc.)


Both SNCF and DB are in the midst of an ongoing process of privatization, pursuant to an EU-wide directive: https://uk.reuters.com/article/uk-france-reform-sncf-explain....

It’s obviously a process to go from these big state owned enterprises to private companies without disrupting the apple cart. There are degrees of privatization: from the US model of an organization running a “public service” to the Singaporean model of a hands-off government that owns the equity as a passive investor. And the government may have an interest in supporting otherwise “money losing” operations.

But there is broad consensus, not just in the developed world, but in the competitive Asian economies like Japan, Hong Kong, and Singapore which are in many ways ahead of the curve, that the goal should be to privatize as much as possible, within the constraints of things like natural monopolies. Those calling for not just nationalization (the government being the shareholder) but active government involvement in operations are on the wrong side of that trend.


And what do those competetive asian economis have? Effective regulation.

We also have it in the UK so the large monopoly telecoms provider BT OpenReach have to provide network services to rival ISP's at regulated prices.

In the current climate of fewer regulations in the US this just looks like a road to further exploitation of the populace.


The worst-affected victims are dead, what use do they have for money?

And you're ignoring that nationalization can work well in the US: look at GM in the wake of the financial crisis.


The money would go to their estates, the same as any wrongful death suit. Also, GM wasn’t nationalized. The government acted as a private lender, loaning a large amount of capital in return for 60% equity. At no point did the government start directing company operations for “public interest” ends, as the OP suggested. That’s a line that most countries are correctly loathe to cross. For example, even though the German government owns Deutsche Bahn, it doesn’t micromanage the operations of the company to achieve political ends.


It seems likely enough that the ownership isn't the only problem.

For instance, if you consider something like the "normalization of deviance", the culture of the company and groups within the company have almost certainly contributed to the situation.

Perhaps it would work well enough to give the victims shares in several poorly constructed successor companies. Poorly constructed because structuring them well is going to preserve culture.


From the article: "The bulk of the funds would come from restructuring the company under a Chapter 11 bankruptcy filing that would transform it from a private company into a “public beneficiary trust.” That would allow the profits from all drug sales, including the opioid painkiller OxyContin, to go to the plaintiffs — largely states, cities, towns and tribes."

That sounds like nationalization under another name to me...


I like part of this idea but what really needs to happen is CEOs need to spend the same time in jail. They knew their drug was a killer but it made too much money so they sold it anyways. If you or I knowingly sold poison we would be doing life in jail.


what would be the benefit of "ordering them" to manufacture generics.

Wouldn't it cost more to the taxpayers to manufacture them here. Or do you mean till the company goes bankrupt?


It's a great idea. It's unfortunate that it would get shot down almost immediately under the guise of "socialism", just like the the idea to nationalize the banks after the financial crisis of 2008.


I can't tell from this whether the Sacklers are being contrite and genuinely sorry for what's happened, or they've simply decided this is the best way to preserve whatever assets they have. I'm guessing they'll still be mega-rich whatever happens.


If they have suddenly become contrite, it's not because they didn't know there was problem before now. Here's an excerpt from a Massachusetts' pre-trial memorandum:

"In January 2001, Richard Sackler received a plea for help from a Purdue sales representative. The sales rep described a community meeting at a local high school, organized by mothers whose children overdosed on OxyContin and died. “Statements were made that OxyContin sales were at the expense of dead children and the only difference between heroin and OxyContin is that you can get OxyContin from a doctor.”

The next month, a federal prosecutor reported 59 deaths from OxyContin in a single state.[...]Sackler wrote in a confidential email: “we have to hammer on the abusers in every way possible. They are the culprits and the problem. They are reckless criminals.”

https://arstechnica.com/wp-content/uploads/2019/01/Mass_AGO_...


They didn't want people to get hurt, but they wanted money and didn't care that people got hurt. Sure they are "sorry" but not enough to volunteer to pay for their crimes.


They're probably sorry for what's happened, but not that sorry. They're likely too disconnected from many of the effects of the opioid crisis to truly feel its devastation. Just like other high-level drug dealers, really.


They're sorry they were caught.


Why not charge them with a few 100,000 counts of reckless engagement and a few thousand counts of depraved indifference?

The punishment for causing this level of death and suffering should not be limited to writing a check.


What criminal wouldn't trade 1/3 of profits for immunity for their crimes?


As long as they end up in jail for the rest of their life, it's OK by me.


Walking away seems like a pretty sweet deal


Of course, when it comes to the rich and powerful, no mention of jail time.


It's amazing how they took calculated risk and ended up with net gains and avoided any criminal charges.

Do you need a really high IQ to think way? Is one person able to make such strategy or do you need a group of high IQ people to pull off something like this?

Are there lots of people they know in power?


Does anyone have a workaround for this paywall, please?


Just subscribe and pay for good journalism. it's like asking for a workaround for the SAAS website people here work on.


I would, if there was something like a global Netflix for newspapers. I'm European, what point do I have in subscribing in a shitload of US newspapers?

Media desperately needs a convenient and affordable financing model that does not depend on selling off their users' data to the highest bidder.


Turn off javascript and you'll be able to read it


Good start, but not good enough.

The executives should be facing execution [0]. In exchange for dropping the death penalty they should get no better then life time in prison.

[0] if can execute a black kid for being a driver in a botched robbery, why can’t we RICO these assholes to the gurney? Purdue Pharma can supply the execution drugs


Because RICO doesn't work that way - period. The drugs provided were clean and of the specified doses and they never ordered any capital crimes. Thus nothing to RICO chain for overdoses or secondary effects.

The felony murder rule has some messed up assignment of responsibility (fair enough for eggshell patients and causing dangerous situations but dead accomplices or absolving reckless use of force by pinning it on the felon are problematic) but it also isn't one of the enumerated crimes.




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