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Abbott Skates Free in Spite of Illegal Marketing of OxyContin
Back in the early days of the opioid epidemic, few people if any had the idea that the opioid painkiller OxyContin was going to precipitate the tsunami of addictions and overdose deaths that continues today across America.
It was the late ’90s and early 2000s, a heady time for OxyContin maker Purdue Pharma LP. The closely-held, family-owned drug company was reveling in soaring sales for their extended-release opioid painkiller – from $49 million in its first year, 1996, to $1.6 billion in 2002. Total receipts by 2002 had reached nearly $5 billion, said to be roughly 90 percent of the company’s income.
As the decade progressed and overdose deaths continued to soar along with the company’s profits, Purdue’s marketing of OxyContin came under close state and federal scrutiny. The investigations led to charges by several states of fraudulent and misleading marketing and, in 2007, a settlement with the U.S. Department of Justice for $634 million for the same charges, in one of the largest fines ever levied by the DOJ against a U.S. corporation.
What has been hidden from broad public knowledge until now is the role that drugmaker Abbott Labs played in the early days of that fraudulent marketing of OxyContin.
Purdue – by then essentially a one-drug company with a smallish sales force – contracted with Abbott for its larger, more experienced sales force to rep the drug to physicians, clinics and hospitals nationwide. The agreement extended from the drug’s introduction in 1996 until 2002.
Abbott a “crucial partner” in OxyContin sales
At the request of medical news journal STATNews, court records were recently unsealed by a West Virginia state court judge that reveal how Abbott “was a crucial partner in the aggressive – and misleading – selling of OxyContin during its first decade on the market,” STATNews reports.
The records were from a case brought by West Virginia against both Purdue and Abbott that alleged both firms engaged in “inappropriate” marketing of OxyContin. The state case resulted after countless addictions and deaths in the state – and enormous costs to the state health system – were found to largely involve an explosion in OxyContin use and abuse.
When the West Virginia case was settled in 2004, Purdue agreed to pay $10 million to the state (neither company admitted any wrongdoing) but nothing was done about Abbott’s participation.
Abbott simply skated free.
Abbott made $millions from OxyContin sales
Abbott was much larger than Purdue at the time, with an experienced sales force “entrenched in hospitals and surgical centers, and had existing relationships with anesthesiologists, emergency room doctors, surgeons, and pain management teams,” STATNews says.
Records reveal that Abbott fielded “at least 300 sales reps to OxyContin sales – about the same number of people Purdue initially dedicated to the drug – as part of a co-promotional agreement with Purdue.”
The higher Abbott sales were, the more they were paid by Purdue. Abbott received 25 percent of net sales, up to $10 million, for prescriptions written by doctors that Abbott called on, and 30 percent of sales above $10 million, the records show.
Abbott refused to reveal to West Virginia’s legal team its earnings from OxyContin sales. But internal Abbott and Purdue memos, sales documents and marketing materials expose how the reps from both companies “closely coordinated their efforts, met regularly to strategize, and shared marketing materials.”
Abbott reps were “instructed to downplay the threat of addiction with OxyContin and make other claims to doctors that had no scientific basis.” Massive amounts of material clearly spell out how Abbott reps were deeply involved in making false and misleading (fraudulent) marketing claims for years.
And other documents the state obtained showed “millions of dollars in earnings to Abbott.” From late 1996 through 2002, Abbott was paid about $374 million in commissions, while total sales of the drug during that time was nearly $5 billion.
According to the West Virginia court records, STATNews reports, Abbott still received “residual payments” of 6 percent of net OxyContin sales from 2003 through 2006, long after it had stopped selling for Purdue. OxyContin sales during that time were nearly $6 billion.
When the DOJ’s federal charges of fraudulent and misleading marketing were brought against Purdue in 2006, the case covered the years that Abbott Labs was involved. Yet Abbott again skated free, similar to in West Virginia. There was no mention of Abbott in the DOJ’s charges and none by the defendants. And there was no mention of Abbott in any of the considerable media coverage of the landmark case.
So why wasn’t Abbott penalized in the West Virginia suit? Why was it omitted from the DOJ’s record-setting federal suit later on?
Why has Abbott continued to skate free?
Purdue executives acknowledged that it marketed OxyContin to America’s physicians “with the intent to defraud or mislead” during its first decade on the market. They admitted that OxyContin sales reps falsely claimed that OxyContin was less addictive and less subject to abuse and less likely to cause narcotic side effects than other pain medications. And Abbott was fully involved in the illegal marketing schemes, yet has never been brought to court to answer for its actions.
STATNews has discovered that to get Abbott’s agreement to rep OxyContin, Purdue agreed to “indemnify the larger company from any legal costs that might arise from the selling of the drug.”
Estimates put Purdue’s legal costs from dozens of individual, state and federal lawsuits over OxyContin at many hundreds of millions of dollars – including its covering for Abbott.
The indemnification has saved Abbott countless millions of dollars in legal costs and other legal repercussions. The agreement also “kept the company out of the headlines as Purdue was forced to pay huge fines and settlements from the illegal marketing of OxyContin,” STATNews said.
Abbott declined to comment to STATNews about its OxyContin marketing techniques, or to disclose how much it was paid by Purdue. A spokeswoman’s only comment was that “Abbott was indemnified by Purdue in the lawsuit.”
Abbott no longer sells pharmaceutical products in the United States, having split off that business into a new company in 2013.
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