The family that owns Purdue Pharma, manufacturer of the narcotic painkiller OxyContin, transferred $1.36 billion to overseas accounts and affiliated companies after 2008, part of $10.3 billion in total profits distributed out of the company, according to an accounting of family cash transfers filed by Purdue Pharma in U.S. Bankruptcy Court on Monday.
Overseas transfers have been a source of inquiry by the New York state attorney general and other states seeking information about where the billionaire Sackler family moved Purdue profits over the last decade.
Purdue Pharma filed for bankruptcy in September to shield itself from more than 2,600 lawsuits by state and local governments. The bankruptcy is part of a broader settlement plan that has been approved by about half of the states but remains opposed by the rest.
A central question in the proceedings is what happened to the many billions taken out of the company by the Sacklers, who controlled the company for years.
One set of overseas cash transfers of $312 million came in 2017, the same year states and counties began filing lawsuits against the company accusing the company of stoking America’s opioid epidemic with misleading marketing, according to the report. But the money was subsequently characterized as a loan and paid back to Purdue, the report said.
The report said $4.7 billion of the total transfers was paid out in taxes. Other sums went to family holding companies and offshore corporate affiliates. The largest recipients of funds were family-owned companies called Rosebay Medical and Beacon, which were repositories of about $4.2 billion.
Millions of dollars went to reimbursing Sackler family members for travel, cellphone payments, and other expenses, including legal fees. The Sacklers reimbursed Purdue $477,000 for cellphone usage in August 2019.
“We need full transparency into their total assets and must know whether they sheltered them in an effort to protect against creditors and victims,” New York Attorney General Letitia James said after the filing. “We are committed to holding the Sacklers responsible for the role they played in fueling the opioid crisis and will not stop fighting until we have achieved justice for victims.”
Monday’s filing was the result of an internal review by a special committee of the Purdue Pharma Board of Directors. It was undertaken in an effort to satisfy creditors that the company is being transparent about the whereabouts and circumstances of large cash transfers.
Some states have alleged that the transfers amount to a “fraudulent conveyance” and should be subject to recovery from the family in bankruptcy. Purdue and the Sackler family have denied that the money was taken out improperly.
“These distribution numbers were known at the time the proposed settlement was agreed to by two dozen attorneys general and thousands of local governments,” said Daniel Connolly, an attorney for the branch of the family that includes Raymond Sackler, former Purdue Pharma board chairman and president. “They have been public for months, and this filing reflects the fact that more than half was paid in taxes and reinvested in businesses that will be sold as part of the proposed settlement.”
The family has pledged to contribute $3 billion from family accounts to the settlement with plaintiffs, a large share of which would be derived from the sale of overseas affiliates.
It also has agreed to turn the company into a novel public trust that would manufacture and distribute overdose antidote and anti-addiction drugs. OxyContin, which Purdue heavily marketed, was the first time-release oxycodone pill when it was introduced in 1996. Local authorities soon reported an epidemic of addiction and criminal behavior associated with the drug; people crushed the tablets and snorted or injected them. The company and three of its executives pleaded guilty to federal criminal charges of improper marketing in 2007.
Purdue introduced an abuse-deterrent form of the drug in 2010 while continuing to aggressively market it to doctors.
“The special committee report is the latest step in a much larger effort undertaken by Purdue to restore confidence in the company and ultimately to prepare it to become a public benefit corporation to help address and mitigate the opioid epidemic,” the company said in a statement Monday.