In a time of upheaval in our society, this case could be seen as an opportunity for our judicial system to “walk the talk” of our Government’s recent claims to be enforcing Corporate Responsibility.
In 2007, three top executives at Purdue Pharma (maker of OxyContin) were criminally charged for their role in the marketing of the addictive narcotic painkiller. The executives were each convicted of a criminal misdemeanor under a somewhat obscure law known as the “responsible corporate officer” doctrine and could have faced a year in prison. Instead, former CEO Michael Friedman, former medical director Paul Goldenheim and former general counsel Howard Udell agreed to deals that included three years of probation and fines totaling $34.5 million.
As part of their plea bargain, the Purdue Pharma trio also agreed to a sanction prohibiting them from doing business with Medicare and other taxpayer-funded healthcare programs for 20 years. This sanction effectively bars them from working in the healthcare and pharmaceutical industries. Following legal maneuvering by lawyers for the executives, the sanction was reduced to 12 years.
Only four years later, lawyers for the trio are again challenging this portion of their sentence. A Washington, D.C. judge upheld the sanction last year, but now the executives have taken their appeal to a circuit court. Through their lawyers, the executive are claiming not to have known what was being done by lower-level employees of Purdue Pharma.
Purdue Pharma was found to have misled doctors and patients over a period of five years by claiming that OxyContin is less addictive than other narcotic painkillers because it has a long-acting time-released formula. The executives say they were unaware that company representative were making this claim about the drug. As it turned out, OxyContin was more addictive than other painkillers when the time-released mechanism was circumvented by crushing the tablet. Thousands of people have become addicted to OxyContin and died from overdoses since the drug’s release.
The sanction targeting the executives was handed down by the U.S. Department of Health and Human Services. Carter Phillips, the lawyer who heads the executive’s defense team, is arguing that the 12-year employment ban is unsupported by evidence and unreasonable. He has also stated that the sanction will end the careers of the executives. Federal prosecutor Robin Meriweather argued in a brief that the executives are responsible for failing to prevent or correct the fraudulent misbranding of their highly-profitable OxyContin product, despite having responsibility for the company’s conduct.
According to legal experts, the OxyContin case will test the authority of government to punish executives for corporate misconduct.