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Justice Department Dropped the Ball on OxyContin Probe, Public Citizen Tells Senators

July 31, 2007

Justice Department Dropped the Ball on OxyContin Probe, Public Citizen Tells Senators

WASHINGTON, D.C. – The Justice Department’s criminal probe into the maker of OxyContin fell short in three key areas, allowing company officials to get off the hook for their misdeeds and failing to force the company to disgorge a much larger amount of its profits, Public Citizen told a Senate panel today.

First, the prosecution of drugmaker Purdue Frederick Corp. was limited to the period of 1996 to 2001,   thereby ending well before the company ceased engaging in illegally misbranding OxyContin, Dr. Sidney Wolfe, director of the Health Research Group at Public Citizen, told the Senate Judiciary Committee.

Second, the criminal penalties paid by the company were also limited to that interval despite the fact that much of the subsequent sales and profits stemmed from the earlier illegal promotional activities. Third, the Justice Department missed an opportunity to send corporate executives to jail, Wolfe said.

“We seem to have a double standard of justice,” Wolfe said. “The damage to the public from these white-collar drug pushers surely exceeds the collective damage done by traditional street drug pushers of this drug.”

The government in May announced that it was imposing $634 million in criminal and civil penalties and had secured the guilty pleas of three current and former Purdue Frederick executives for misbranding the potent narcotic. Despite the fact that the Justice Department investigation uncovered a corporate culture that allowed OxyContin to be misbranded with the intent to defraud, no company officials went to jail because there was no felony conviction of any company executive.

Further, not only was the prosecution limited to the 1996-2001 period, but the Justice Department even signed an agreement that would prohibit the government from further prosecuting the company or company officials for any activities undertaken before May 19, 2007.

The Justice Department has said that the amount of the fines imposed – $634 million – represented 90 percent of the profits on OxyContin during the prosecution period. But the IRS has said that Purdue Frederick made $2.57 billion in profits on OxyContin between 1995 and Sept. 30, 2004 – meaning that the company was not fined on the enormous profits made after 2001. The three biggest sales years for OxyContin were between 2002 and 2004. “There is little question that the company should have been forced to disgorge much more of its ill-gained profits than the $634 million that was settled upon, possibly as much as $2 billion or more,” Wolfe said.

Purdue Frederick misbranded OxyContin by falsely claiming that it was less addictive and less subject to abuse than other pain medications.

READ Wolfe’s testimony.