Purdue Pharma, the company that planted the seeds of the opioid epidemic through its aggressive marketing of OxyContin, has long claimed it was unaware of the powerful opioid painkiller’s growing abuse until years after it went on the market.
But a copy of a confidential Justice Department report shows that federal prosecutors investigating the company found that Purdue Pharma knew about “significant” abuse of OxyContin in the first years after the drug’s introduction in 1996 and concealed that information.
Company officials had received reports that the pills were being crushed and snorted; stolen from pharmacies; and that some doctors were being charged with selling prescriptions, according to dozens of previously undisclosed documents that offer a detailed look inside Purdue Pharma. But the drug maker continued “in the face of this knowledge” to market OxyContin as less prone to abuse and addiction than other prescription opioids, prosecutors wrote in 2006.
Based on their findings after a four-year investigation, the prosecutors recommended that three top Purdue Pharma executives be indicted on felony charges, including conspiracy to defraud the United States, that could have sent the men to prison if convicted.
But top Justice Department officials in the George W. Bush administration did not support the move, said four lawyers who took part in those discussions or were briefed about them. Instead, the government settled the case in 2007.
Prosecutors found that the company’s sales representatives used the words “street value,” “crush,” or “snort” in 117 internal notes recording their visits to doctors or other medical professionals from 1997 through 1999.
The 120-page report also cited emails showing that Purdue Pharma’s owners, members of the wealthy Sackler family, were sent reports about abuse of OxyContin and another company opioid, MS Contin.
“We have in fact picked up references to abuse of our opioid products on the internet,” Purdue Pharma’s general counsel, Howard R. Udell, wrote in early 1999 to another company official. That same year, prosecutors said, company officials learned of a call to a pharmacy describing “OxyContin as the hottest thing on the street — forget Vicodin.”
Mr. Udell and other company executives testified in Congress and elsewhere that the drug maker did not learn about OxyContin’s growing abuse until early 2000, when the United States attorney in Maine issued an alert. Today, Purdue Pharma, which is based in Stamford, Conn., maintains that position.
The episode remains relevant as lawmakers and regulators struggle to stem a mounting epidemic that involves both prescription opioids and, increasingly, illegal opioid compounds like heroin and counterfeit forms of fentanyl. President Trump has declared the problem a public health emergency.
Over the past two decades, more than 200,000 people have died in the United States from overdoses involving prescription opioids. States and cities continue to file a wave of lawsuits against Purdue Pharma and other opioid manufacturers and distributors.
A spokesman for Purdue Pharma, Robert Josephson, declined to comment on the allegations in the report but said the company was involved in efforts to address opioid abuse.
“Suggesting that activities that last occurred more than 16 years ago are responsible for today’s complex and multifaceted opioid crisis is deeply flawed,” he said in a statement.
In 2007, Purdue Pharma pleaded guilty to a felony charge of “misbranding” OxyContin while marketing the drug by misrepresenting, among other things, its risk of addiction and potential to be abused. Three executives — the company’s chief executive, Michael Friedman; its top medical officer, Dr. Paul D. Goldenheim; and Mr. Udell, who died in 2013 — each pleaded guilty to a misdemeanor “misbranding” charge that solely held them liable as Purdue Pharma’s “responsible” executives and did not accuse them of wrongdoing. The company and the executives paid a combined $634.5 million in fines and the men were required to perform community service.
The head of the Justice Department’s criminal division at the time, Alice S. Fisher, did not respond to emails seeking comment about the decision not to pursue indictments. That decision followed meetings with a Purdue Pharma defense team whose advisers included Rudolph W. Giuliani, a onetime United States attorney and former New York mayor. Mr. Giuliani, who was then regarded as a potential Republican presidential candidate, is now a legal adviser to Mr. Trump.
The Justice Department hailed the settlement as a victory. But several former government officials said the decision not to bring more serious charges and air the evidence prosecutors had gathered meant that a critical chance to slow the trajectory of the opioid epidemic was lost.
“It would have been a turning point,” said Terrance Woodworth, a former Drug Enforcement Administration official who investigated Purdue Pharma in the early 2000s. “It would have sent a message to the entire drug industry.”
Prosecutors did not accuse any Sackler family members of wrongdoing. But they wrote that Richard Sackler was told in 1999 while he was president of Purdue Pharma about discussions in internet chat rooms where drug abusers described snorting OxyContin, which contains oxycodone, a powerful narcotic. Other family members, including Raymond and Mortimer Sackler, the drug maker’s founders, were sent reports about the abuse of OxyContin’s predecessor drug, a long-acting form of morphine sold as MS Contin, the report said.
A spokesman for Sackler family members involved with the company, Linden Zakula, declined to comment. Richard Sackler, who is now a director of Purdue Pharma, also declined to comment.
The three executives, who prosecutors described as reporting directly to the Sacklers, have always asserted they had done nothing wrong and had moved quickly to address the drug’s growing abuse after they became aware of it in 2000.
“Everyone was taken by surprise by what happened,” Dr. Goldenheim testified in 2001. “We launched OxyContin in 1996, and for the first four years on the market, we did not hear of any particular problem.”
A Powerful Marketing Claim
When the Food and Drug Administration approved OxyContin in late 1995, the agency permitted Purdue Pharma to make a unique claim for it — that its long-acting formulation was “believed to reduce” its appeal to drug abusers compared with shorter-acting painkillers like Percocet and Vicodin.
The F.D.A. decision was not based on findings from clinical trials, but a theory that drug abusers favored shorter-acting painkillers because the narcotic they contained was released faster and so produced a quicker “hit.”
Purdue Pharma viewed the agency’s decision as “so valuable” that it could serve as OxyContin’s “principal selling tool,” an internal 1995 company report shows. The drugmaker admitted in 2007, when confronted with evidence gathered by prosecutors, that it trained sales representative to tell doctors that OxyContin was less addictive and prone to abuse than competing opioids, claims beyond the one approved by the F.D.A.
But even as Purdue Pharma aggressively promoted OxyContin as safer, prosecutors wrote, it soon learned that drug abusers were seeking out OxyContin and its other long-acting opioid, MS Contin. The reason: They had far higher narcotic levels than standard, shorter-acting painkillers, and could be snorted or injected intravenously.
In May 1996, five months after OxyContin’s approval, Richard Sackler and Mr. Udell were sent an older medical journal article describing how drug abusers were extracting morphine from MS Contin tablets in order to inject the drug, prosecutors reported. A Purdue Pharma scientist researched the issue and sent his findings to several Sacklers, the government report states.
“I found MS Contin mentioned a couple of times on the internet underground drug culture scene,” the researcher wrote in that 1996 email. “Most of it was mentioned in the context of MS Contin as a morphine source.”
By the following year, prosecutors wrote, Purdue Pharma learned that drug addicts in Australia and New Zealand were abusing MS Contin and Dr. Goldenheim was sent an article from American Family Physician, a publication, about the ease of extracting morphine from MS Contin.
Then in 1998, as OxyContin’s marketing campaign was taking off, Purdue Pharma learned of a medical journal study that appeared to undercut its central message — that OxyContin, as a long-acting opioid, had less appeal to drug abusers.
In the study, which was published in The Journal of the Canadian Medical Association, researchers from the University of British Columbia in Vancouver interviewed local drug dealers and abusers to learn what legal drugs sold for on the black market. They found that MS Contin commanded the highest price of any prescription opioid with a 30-milligram tablet that cost $1 at a pharmacy bringing up to $40 on the street.
In an accompanying editorial, a Canadian physician, Dr. Brian Goldman, wrote that the findings turned thinking about the supposed safety of long-acting opioids like OxyContin on its head by showing that drug abusers “coveted” such drugs.
“This should ring alarm bells,” Dr. Goldman, who was then a paid speaker for Purdue Pharma, wrote in the editorial.
Purdue Pharma did not send the Canadian study to the F.D.A. or tell its sales representatives about it. Instead, one sales official testified later to a federal grand jury that the company gave him an older survey to show doctors that had concluded that drug abusers were not attracted to time-release opioids.
Mr. Josephson, the Purdue Pharma spokesman, said it was not required to tell the F.D.A. about the Canadian study or editorial. He added that the company did not consider the small study’s results significant because it was already known that morphine could be abused.
However, in March 1998, a few months before the study’s publication, Mr. Udell, the chief counsel, sent seven members of the Sackler family a memo titled “MS Contin Abuse,” described by prosecutors as containing articles from Vancouver-area newspapers about the drug’s abuse there and the price MS Contin was bringing on the street.
Two years later, as OxyContin’s abuse publicly exploded in early 2000, a Purdue Pharma executive described in an email to Mr. Friedman, the chief executive, how he was reminded of what he had seen earlier managing MS Contin sales in the Midwest.
“I received this kind of news on MS Contin, all the time and from everywhere,” the company’s vice-president of marketing, Mark Alfonso, wrote in June 2000. “Some pharmacies would not even stock MS Contin for fear they would be robbed. In Wisconsin, Minnesota and Oklahoma, we had physicians indicted for prescribing too much MS Contin.”
Mr. Friedman’s response, prosecutors reported, was to forward that email to Mr. Udell with a question: “You want all this chat on email?”
‘We Have a Credibility Problem’
By 1997, Purdue Pharma was also aware that OxyContin was becoming a popular topic online, according to one email cited in the prosecution report previously published in Fortune magazine. As sales of the drug began to boom, prosecutors found, so did the number of reports the company received about abuse, addiction and crimes connected to the drug.
During one brief period in 1999, they reported, company officials learned from articles in small-town newspapers and other sources that a doctor in Pennsylvania had stopped writing prescriptions for OxyContin because patients eager to get more of the drug were getting arrested for altering them; that a Connecticut man had been arrested for trying to illegally purchase OxyContin; that a man in Massachusetts had told the police that he preferred crushing the drug because it worked better “if he sniffs it;” and that a pharmacy in Maryland had been robbed of OxyContin.
“I continue to see OxyContin increase in abuse with our doctor shoppers and sellers,” a drug investigator near Cincinnati wrote in a message that was forwarded to Mr. Udell, prosecutors reported.
Mark Ross, a former company sales representative, testified during a grand jury appearance that after he warned a manager that one doctor’s office was filled with drug seekers he was told his job was to sell drugs, not to determine if a “doctor was a drug pusher,” according to a summary of his testimony in the report.
A sales representative in Jacksonville, Fla., also questioned the company’s claim that OxyContin had less abuse potential after the arrest of a doctor there on charges of illegally prescribing the opioid and other drugs, an email cited by prosecutors shows.
“I feel like we have a credibility problem with our product,” the sales representative, Jim Speed, wrote in a 1999 email.
By late 1999, other doctors had been arrested nationwide on similar charges. But when one Purdue Pharma executive, Dr. J. David Haddox, suggested after the arrest in Jacksonville that the company adopt a crisis-response plan, Mr. Friedman responded that he did not think such action was needed, prosecutors wrote.
“I simply do not want us to overreact to this specific story,” he wrote, according to prosecutors. “This has not been a repetitive pattern or something new.”
Settlement Talks Begin
In mid-2006, prosecutors notified Purdue Pharma and the three executives about the charges they planned to seek. Over a two-day meeting in September, a high-profile team of defense lawyers rebutted those allegations and argued that the government’s case would collapse when tested in court, according to lawyers present. They also presented evidence which they said proved that the executives were unaware of significant OxyContin abuse before early 2000.
The prosecutors and their boss, the United States attorney for the Western District of Virginia, John L. Brownlee, were not swayed.
In late September 2006, the recommendations for indictments were forwarded to Justice Department headquarters in Washington. A few weeks later, defense lawyers representing Purdue Pharma and the executives met with top Justice Department officials to again make their case.
Top officials such as Ms. Fisher, the head of the department’s criminal division, soon made it clear that they did not support the indictments, former government lawyers said. Talks to resolve the case through a plea bargain began.
“We made a presentation of evidence and advocacy to DOJ without having seen the prosecution memo,” a defense lawyer, Andrew Good, who represented Dr. Goldenheim, said in a statement. “No charge of false testimony or concealment of abuse was brought because none of that happened.” Mr. Friedman did not respond to requests seeking comment.
Mr. Brownlee, the United States attorney, later testified that he believed the misdemeanor charges against the executives were “appropriate” given the evidence. But former government officials said he was upset by the department’s decision not to support more serious charges.
A former Drug Enforcement Administration official, Joseph Rannazzisi, said Mr. Brownlee told him that the decision had left him with little choice but to settle the case because his small team of prosecutors faced being overwhelmed by Purdue Pharma’s unlimited resources.
“He told me he was outgunned,” Mr. Rannazzisi said. Mr. Brownlee, who is now in private practice, declined to comment.
At a court hearing held in 2007 to approve the settlement, a prosecutor who had worked on the case, Randy Ramseyer, said the misdemeanor pleas by the three officials would send a message to drug industry executives that they faced being held “to a higher standard.”
But drug companies continued to flood areas rife with drug abuse with more opioids. Starting in 2007, the year of the settlement, distributors of prescription drugs sent enough pain pills to West Virginia over a five-year period to supply every man, woman and child there with 433 of them, according to a report in the Charleston Gazette-Mail.