Addiction-riddled Kentucky out for blood in $1B suit against OxyContin-maker Purdue

To settle or not to settle? That's always the question in drugmaker lawsuits, but Purdue Pharma faces a more dramatic choice than most in a Kentucky lawsuit. As Bloomberg reports, the state accuses the OxyContin maker of Medicaid fraud, false advertising, and 10 other claims--but the addiction epidemic is the crux of the matter.

Kentucky has been hit hard by the "Hillbilly Heroin" plague: overdoses, addiction-related deaths, and the drug-related crime. Essentially, the state is trying to hold Purdue liable for that damage--to the tune of up to $1 billion. And if it succeeds, Bloomberg points out, that could not only boost other lawsuits already pending in Illinois and California. It could set off a wave of similar litigation around the country.

The state accuses Purdue of misleading doctors and others into believing that OxyContin was difficult to abuse, even though the company's own data showed that crushing the pills was an effective way to turn the extended-release pill into an abusable substance.

Purdue denies the lawsuit's claims, and says that it has bent over backward to help prevent abuse of its drug, citing its recently developed abuse-resistant version of the pill. It's no stranger to defending itself: The company spent $643.5 million to wrap up the Justice Department's off-label marketing claims. More recently, it faced a storm of criticism in California in 2013 for failing to turn over lists of high-volume OxyContin prescribers to law enforcement; the company handed over the names last fall.

But some legal setbacks make the company more vulnerable in this case than it would otherwise be. Purdue successfully kept the lawsuit out of local court for a time--a key tactic, because potential jurors have been living among the abuse epidemic--but now, it's back, and the company has no more options left to change that. Plus, as Bloomberg explains in great detail, the Pike County judge made a technical ruling that gives the state a leg up on proving that Purdue was liable for addiction and the fallout from it.

Purdue Pharma CFO Edward Mahony

"This is a billion-dollar case--a billion-dollar case," a Purdue lawyer, John Famularo, said in a hearing early this year (as quoted by Bloomberg). And that disadvantage means Purdue would go to trial with its "arms tied behind its back."

Not to mention the effect of a $1 billion judgment: CFO Edward Mahony said in an affidavit that such a ruling would cripple Purdue's operations "and jeopardize Purdue's long-term viability."

But Kentucky Attorney General Jack Conway is unmoved. He says that Purdue would have to make a handsome settlement offer to get off the hook in this case. "I want to hold them accountable in eastern Kentucky for what they did," he told the news service. "We have lost an entire generation. Half the pharmacies in Pike County have bulletproof glass. We had FedEx trucks being knocked off. It was the Wild West."

- read the Bloomberg article

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