The Sacklers strip-mined Purdue to avoid billions in settlements: Arizona AG

Supreme Court
Arizona's attorney general has filed a novel complaint in the Supreme Court targeting Purdue's founding family, the Sacklers. (Getty Images)

Prosecutors have been hard on the heels of Purdue's founding family, the Sacklers, for their role in fueling the nation's opioid epidemic. Now, in a "long shot," the state of Arizona is targeting the family for allegedly looting the company to avoid looming legal settlements.  

The Sacklers illegally funneled billions of dollars out of Purdue despite knowing the drugmaker faced massive liabilities for its aggressive marketing of opioid OxyContin, Attorney General Mark Brnovich said in a Supreme Court complaint filed Wednesday.

The suit names eight members of the Sackler family, including former Purdue President and CEO Richard Sackler, in alleging the financial strip-mining. The Sacklers siphoned off billions to set Purdue up for a bankruptcy filing and avoid paying potential multibillion-dollar settlements in state and federal courts, the suit says.

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Purdue came to the Sacklers' defense in a statement. 

"The Unites States Supreme Court is an improper forum to conduct a trial of the claims being made by Arizona," a Purdue spokeswoman said in an email. "This petition was filed solely for the purpose of leapfrogging other similar lawsuits, and we expect the Court will see it as such."

Arizona’s out-of-left-field SCOTUS complaint represents a new front in the battle against Purdue and the Sacklers, and it reveals plaintiff concerns about Purdue's ability to cover its share of any eventual settlements. Purdue faces around 45 state lawsuits in federal court for its opioid marketing.

RELATED: After Oklahoma payout, Purdue faces 5 new state lawsuits over OxyContin

For Brnovich, the complaint could be a shot in the dark, but the state has "evidence" proving the Sacklers' intent, according to the filing.

“I do think it’s a long shot,” Brnovich told The New York Times. “It’s a little different. It’s a little unorthodox. Sometimes you’ve just got to throw deep.”

Overall, Purdue has been targeted in dozens of lawsuits, in federal and state courts alike, for its aggressive marketing of the powerful opioid OxyContin. It recently agreed to pay the state of Oklahoma $255 million to close an investigation into its practices.

And Purdue is one of dozens of drugmakers, distributors, manufacturers and retailers named in a massive Multi-District Litigation (MDL) working its way through a federal courthouse in Cleveland. Analysts have predicted that litigation could result in a titanic $100 billion settlement, but the court has yet to decide how the case should proceed.

RELATED: Ditch the opioid 'negotiating class' proposal, experts say. State attorneys general are better suited to reach a deal

In late May, attorneys for the plaintiffs pitched a “global peace” negotiating class that would allow any of the 1,600 or so plaintiffs to opt into a single settlement negotiation. However, former prosecutors said that proposal would provide outsize influence to small municipalities involved in the suit and require plaintiffs to “opt-in” to negotiations prior to knowing what a settlement would look like.

But despite the focus put on Purdue, the billionaire Sacklers have been met with both legal scrutiny and recoil from the general public. 

On Friday, protestors gathered outside a Massachusetts state courthouse to "put pressure" on Purdue and the Sacklers in a state case targeting the company's OxyContin marketing. Protesters told the Associated Press they wanted to ensure that any settlement money was spent on treatment and recovery programs. 

Purdue and the Sacklers' $255 million settlement with the state of Oklahoma included the funding of a new opioid addiction research center. 

RELATED: Insys opioid reps rapped about boosting scripts by putting docs on the gravy train

For Brnovich, going after the Sacklers at the Supreme Court follows one recent victory: A settlement from a former VP of sales in his pursuit of another company, Insys.

In early April, Alex Burkaloff, the former sales VP who ran Insys’ speaker program and was accused of funneling millions in kickbacks to doctors in exchange for scripts, agreed to pay $9.5 million to Arizona in exchange for turning state’s witness against his former bosses.

At the time, Brnovich blasted Insys’ “patients over profits’ mentality and pledged to pursue bigger fish at Insys, including founder and former CEO John Kapoor and another former CEO, Michael Babich.

Both Burkaloff and Babich pled guilty to felony charges in a separate federal suit against Insys, and Kapoor was found guilty on racketeering charges in early May.

Editor's Note: This story has been updated to include a statement from Purdue.

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