Who pleaded guilty in the 2007 OxyContin case, and who paid?

analysisThe District Court for the Southern District of New York, in its decision of 16 December 2021, recounted that the FDA approved OxyContin in December 1995 and in 2001 required Purdue to remove from the label the claim that the drug had a very low risk of iatrogenic addiction and to add instead the highest level of safety warning the FDA can place on an approved product; the court used 'Purdue' for the debtor group and did not say which Purdue company held the approval. By 2001, the court added, plaintiffs had begun individual and class actions against Purdue in state and federal courts, including the Southern District of New York and the Supreme Court of the State of New York. Class certification was generally refused; after five New York cases were sent to a coordinating panel in 2005, 1,117 further suits were filed and coordinated, and settlement efforts followed in 2006–2007. Members of the Sackler family were not named as defendants in that first wave. ¹

analysisAccording to a 2020 press report, an internal Department of Justice memorandum of 6 October 2006 titled 'Proposed Indictment of Purdue Pharma LP', written by Kirk Ogrosky, then deputy chief of the Fraud Section, recommended indicting the company for mail fraud, wire fraud, money laundering and conspiracy and charging the executives Michael Friedman, Paul Goldenheim and Howard Udell with felonies; the report says the memorandum described a conspiracy that 'began in October of 1992 and continues to date' and stated that the three had lied to Congress, whereas DOJ's public filings ended the conduct in 2001. A December 2020 memorandum of the majority staff of the House Committee on Oversight and Reform likewise said that DOJ reportedly declined prosecutors' recommendation to indict the three executives on felony charges. The memorandum itself is not in the retained record, and Purdue told the reporter it had nothing to add. What followed was narrower: in May 2007 The Purdue Frederick Company, Inc. pleaded to a single felony misbranding count for conduct from about December 1995 or January 1996 to 30 June 2001, the executives pleaded to misdemeanours, and Purdue Pharma L.P. was not charged; according to the report the government limited Purdue's exposure on deceptive marketing to the six years from 1996 to 2001 and left false testimony to Congress out of the deal. ^{1 2 3}

analysisThe same report said that none of the three executives had run Purdue during the years of the alleged crimes, naming Raymond Sackler and, from 1999, Richard Sackler as Purdue's presidents without saying which company they led, and that the three 'non-Sackler executives' pleaded guilty as individuals, agreed to pay a total of $34.5 million in fines and were given probation. The retained plea records itemise the executives' personal payments as $19 million, $8 million and $7.5 million to Virginia's Medicaid Fraud Control Unit plus a $5,000 fine each, and do not include their sentencing judgments. ^{1 4}

analysisThe case was brought in the Western District of Virginia, Abingdon Division, as United States v. The Purdue Frederick Company, Inc. (No. 1:07-cr-00029). The Information charged the company, doing business as The Purdue Frederick Company, in Count One with felony misbranding of OxyContin with intent to defraud or mislead under 21 U.S.C. §§ 331(a), 352(a) and 333(a)(2), and charged Michael Friedman, Howard R. Udell and Paul D. Goldenheim in Count Two with misdemeanour misbranding under 21 U.S.C. §§ 331(a), 352(a) and 333(a)(1) as senior executives and responsible corporate officers between about January 1996 and 30 June 2001; Purdue Frederick waived indictment. By written consent dated 4 May 2007 the corporation's sole director approved the Agreed Statement of Facts, the plea agreement, a stipulation for compromise settlement, an agreed order of forfeiture and a civil settlement agreement among the United States, the corporation and Purdue Pharma L.P., and authorised its Vice President Robin E. Abrams to execute them. She signed the plea agreement and the Agreed Statement as Purdue Frederick's Authorized Corporate Officer, describing herself as its Vice-President and Director and as Vice-President and Associate General Counsel of Purdue Pharma L.P. ^{1 2 3}

analysisOn 10 May 2007 The Purdue Frederick Company, Inc. pleaded guilty to Count One, stating in its plea agreement that it was pleading guilty 'because PURDUE is in fact guilty' and agreeing that everything in the Information was true and correct. Purdue Pharma L.P. joined the civil settlement and was named with Purdue Frederick as a possible payer, but did not plead guilty. In the Agreed Statement of Facts the company accepted that from about 12 December 1995 to 30 June 2001 certain of its supervisors and employees, with intent to defraud or mislead, promoted OxyContin as less addictive, less subject to abuse and diversion and less likely to cause tolerance and withdrawal than other pain medications; the statement describes Purdue Frederick as a New York corporation headquartered in Connecticut, created in 1892 and bought by its current owners in 1952, which developed and first marketed OxyContin and received about $2.8 billion from its sales between January 1996 and 30 June 2001. When the charges were announced Purdue emphasised, according to a later press report, that the conduct took place 'nearly six years and longer ago', when some employees made or told others to make certain statements about OxyContin to some health care professionals. Judge James P. Jones approved the plea agreement in July 2007; HHS-OIG excluded Purdue Frederick from federal health care programs for 25 years, and the monitoring period of Purdue Pharma L.P.'s Corporate Integrity Agreement expired on 30 July 2012, the program being completed in 2013 with no significant adverse findings. ^{3 1 4 5 2}

analysisThe plea agreement's financial obligations were owed by 'PURDUE', which that section defines as The Purdue Frederick Company, Inc. or Purdue Pharma L.P., so either company could pay; the guilty plea remained Purdue Frederick's alone. The obligations were a $500,000 criminal fine, the statutory maximum; forfeiture of $276,100,000 under a civil forfeiture complaint, in three instalments within a year; $160,000,000 to settle government civil claims, namely $100,615,797.25 to the United States plus interest and $59,384,202.75 for participating states' Medicaid programs, which also satisfied restitution; $130,000,000 set aside for private OxyContin claims, any balance unpaid after two years to go to the U.S. Treasury; $20,000,000 for Virginia's Prescription Monitoring Program; $5,300,000 to the Virginia Medicaid Fraud Control Unit; and $3,087,277.60 to Medicaid programs for miscalculated 1998–1999 rebates. The District Court summarised them as over $600 million in fines and other payments. ^{1 2}

analysisThe U.S. Attorney put the combined total for the company and the three executives at $634,515,475, about $34.5 million of it the executives' personal payments, so the figure mixes corporate and personal money. The debtors' Disclosure Statement of July 2025 calls the federal resolution a $634.5 million settlement by 'Purdue Pharma and three senior executives', made the same month as a $19.5 million settlement with 26 states and the District of Columbia, together about $650 million, and notes that cash distributions for the benefit of the Sackler Parties rose sharply from 2008; the plea, however, was entered by Purdue Frederick, not by Purdue Pharma L.P. In the federal civil settlement the United States released 'Purdue and its current and former directors, officers, employees, affiliates, owners, predecessors, successors and assigns' from civil or administrative monetary claims under federal statutes and from administrative actions, the states' releases were limited to Medicaid claims, and every state except Kentucky opted in; an attorney testified in 2021 that her roughly 5,000 clients received $75 million from the fund for private claims. ^{3 2 1}

analysisMichael Friedman, Howard R. Udell and Paul D. Goldenheim were long-serving Purdue Frederick officers. Friedman joined in 1985 and rose through Group Vice President (1988) and Executive Vice President and Chief Operating Officer (1999) to President and Chief Executive Officer in 2003; Udell joined as General Counsel in 1977 and became Executive Vice President and Chief Legal Officer in 2003; Goldenheim joined as Medical Director in 1985, became Executive Vice President of Worldwide Research & Development in 2000 and also Chief Scientific Officer in 2003, and left in 2004. The Agreed Statement records them as responsible corporate officers from about January 1996 to 30 June 2001. On 10 May 2007 each pleaded guilty, in his capacity as a corporate officer, to the strict-liability misdemeanour of misbranding a drug under 21 U.S.C. §§ 331(a) and 333(a)(1); none was charged with the company's felony, and no Sackler family member was charged. In each plea agreement the parties agreed to ask the court for a non-incarcerative sentence. The three did not agree that they had personal knowledge of everything in the Agreed Statement, but agreed that the court could accept it as part of the factual basis for their pleas. HHS-OIG later excluded each of them for 15 years; they contested the exclusions as petitioners, and an administrative law judge, Carolyn Cozad Hughes, affirmed them on 9 January 2009. A press report states that they were given probation; their sentencing judgments are not in the retained record. ^{1 2 3 4 5}

analysisTheir payments were personal and separate from the companies'. Before entering their pleas Friedman agreed to transfer $19,000,000, Udell $8,000,000 and Goldenheim $7,500,000 to the Virginia Medicaid Fraud Control Unit's Program Income Fund, described in each agreement as disgorgement and refundable only if the court rejected the plea; each also agreed to a $5,000 fine and a $25 special assessment. Friedman's agreement, for example, records the parties' stipulations that restitution did not apply to his conviction and that his fine was at the upper end of the guidelines range. ⁴

analysisHHS-OIG excluded The Purdue Frederick Company from federal health care programs for 25 years as part of the global resolution, which it described in January 2009 as one between the United States, Purdue Frederick and Purdue Pharma, under which the two companies agreed to pay $600 million in restitution and to settle their civil and criminal liabilities; the guilty plea, however, was Purdue Frederick's alone. HHS-OIG separately excluded Friedman, Goldenheim and Udell for 15 years for their roles as responsible corporate officers who failed to prevent Purdue Frederick's misbranding and fraudulent distribution of OxyContin. On 9 January 2009 Administrative Law Judge Carolyn Cozad Hughes affirmed those personal exclusions, finding that the three had the responsibility and authority to 'prevent or correct' the misbranding but 'failed to do so', and noting that the costs to government programs and individuals were 'astronomical' and that their offences 'endangered the health and safety of program beneficiaries and others'; HHS-OIG announced the ruling on 23 January 2009, describing Friedman as former chief operating officer and then chief executive, Goldenheim as former chief scientific officer and Udell as former general counsel. Any later review of the exclusions is not covered by the retained record. ¹

analysisPurdue Pharma L.P., not Purdue Frederick, entered into a five-year Corporate Integrity Agreement with HHS-OIG as part of the 2007 resolution. The plea agreement required at least $5,012,722.40 to be spent over 72 months, by Purdue Frederick or Purdue Pharma L.P., on monitoring Purdue Pharma L.P.'s compliance with that agreement and the absence of further criminal activity, any unspent balance to go to the Treasury, and the U.S. Attorney said Purdue had to retain and pay an independent monitor. The monitoring period expired on 30 July 2012, and the District Court recorded that Purdue completed the program in 2013 with no significant adverse findings. The Connecticut Attorney General's 2019 complaint describes the agreement as requiring a compliance officer from senior management reporting at least quarterly to the board and as treating all owners, officers, directors and employees of Purdue Pharma L.P. as 'Covered Persons', whose directors and chief executive were trained and certified that they would comply; the agreement itself is not in the retained record. ^{1 2 3 4}

analysisSeparately, in 2007 twenty-six states and the District of Columbia settled their investigations of Purdue's OxyContin promotion for $19.5 million, each through a consent judgment; Washington's, for example, was entered in Thurston County on 9 May 2007. The judgments define Purdue as Purdue Pharma, Purdue Pharma Inc., The Purdue Frederick Company and their U.S. affiliates, and bound them to run an OxyContin abuse and diversion detection program for at least ten years and to certify compliance annually to a multistate group of attorneys general for three years; the individual judgments are known from the District Court's recital rather than from retained copies. The court later recorded that the 2007 settlement and plea were intended to resolve for all time the issues of Purdue's misrepresentations about OxyContin, yet a second round of lawsuits followed from 2014 to 2019. ¹

analysisIn exchange for Purdue's payment and compliance, the judgments released Purdue and its past and present officers, directors, shareholders, employees, affiliates and successors from the consumer-protection claims the attorneys general could have brought; according to Bankruptcy Judge Drain, as cited by the District Court, the releases covered about seventy-seven members of the Sackler family. They left out private consumer suits, Medicaid fraud and price-reporting claims, antitrust, environmental and tax claims and any criminal liability. For Connecticut, one of the twenty-six states, its Attorney General's complaint of 6 May 2019 describes a 2007 Stipulated Judgment in a suit brought by the State, which forbade false or misleading claims in OxyContin promotion, required 'fair balance' on risks including addiction and required, from 2007 to 2017, an abuse and diversion program to identify suspect high prescribers, stop promoting to them and report them; that complaint defines 'Purdue' as Purdue Pharma Inc. and Purdue Pharma L.P., and the judgment itself is not in the retained record. ^{1 2}

analysisLater filings describe 2007 more broadly than the plea records. The District Court wrote in December 2021 that in the 2007 Plea Agreement 'Purdue admitted that it had falsely marketed OxyContin as non-addictive and had submitted false claims' and that Purdue's profits after 2007 were driven almost exclusively by its aggressive marketing of OxyContin; the court used 'Purdue' for the debtor group, whereas the plea was Purdue Frederick's felony misbranding plea and the false-claims liability was settled by civil payments. The State of New York's First Amended Complaint, brought by its Attorney General and filed as an exhibit on 13 September 2019, alleges that the Purdue board voted in May 2007 to have Purdue Frederick plead guilty; that the violations occurred while Richard Sackler was CEO and Jonathan, Kathe and Mortimer D.A. Sackler were vice presidents, with Richard, Jonathan, Kathe, Mortimer, Ilene, Beverly and Theresa Sackler on the board; that Purdue Frederick paid about $600 million in sanctions and 'the individual defendants' of that case over $34 million; that Richard, Ilene, Jonathan, Kathe and Mortimer Sackler certified to the government that they would obey the Corporate Integrity Agreement rules but continued to direct deceptive marketing; and that Purdue Frederick then went out of business while the family continued the opioid business through Purdue Pharma Inc. and Purdue Pharma L.P. These are a litigant's allegations, not findings: the complaint calls the executives' pleas felonies and cites § 332(a)(2) instead of § 333(a)(2), no Sackler family member was charged in 2007, and the exhibit notes that no answers had been filed at that date. ^{1 2}

analysisThe Connecticut Attorney General's amended complaint of 6 May 2019 alleges that the 2007 directors of Purdue Pharma Inc., namely Richard, Jonathan, Mortimer D.A. and Kathe Sackler, Ilene Sackler Lefcourt, Beverly Sackler and Theresa Sackler, decided that The Purdue Frederick Company would pay nearly $700 million in criminal fines and plead guilty to a felony; that Purdue Frederick, which went out of business in 2007, was entirely controlled by Purdue Pharma Inc.; and that Michael Friedman was chief executive of Purdue Pharma Inc., Purdue Pharma L.P. and The Purdue Frederick Company. These too are allegations: the plea records show that Purdue Frederick's plea documents were approved by written consent of its own sole director on 4 May 2007, and that its criminal fine was $500,000 within corporate payments of over $600 million. ^{3 4 1}