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Purdue Pharma’s payments to the Sacklers soared during opioid crisis

Oxycodone, Purdue Pharma’s signature product, approved in 1995, is widely blamed for having helped to drive opioid addiction.
Oxycodone, Purdue Pharma’s signature product, approved in 1995, is widely blamed for having helped to drive opioid addiction.Keith Srakocic/Associated Press/File 2019/Associated Press

NEW YORK — As scrutiny of Purdue Pharma’s role in the opioid epidemic intensified during the past dozen years, its owners, members of the Sackler family, withdrew more than $10 billion from the company, distributing it among trusts and overseas holding companies, according to a new audit commissioned by Purdue.

The amount is more than eight times what the family took out of the company in the 13 years after OxyContin, its signature product, was approved in 1995. The audit is likely to renew questions about how much the Sacklers should pay to resolve more than 2,800 lawsuits that seek to hold Purdue accountable for the opioid crisis.

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The family has offered to contribute at least $3 billion in cash as part of a settlement to resolve thousands of lawsuits brought by state and local governments against Purdue. But 24 states, led by Massachusetts and New York, have refused to sign onto the agreement, arguing that the Sacklers should pay more.

In a statement Monday, Massachusetts Attorney General Maura Healey said that the audit “confirms what we revealed in our lawsuit: The Sacklers pocketed billions of dollars from Purdue while thousands of people died from their addictive drugs. This is the very definition of ill-gotten gains. Families deserve the whole truth about the perpetrators behind the opioid epidemic and how much money they sucked from Purdue before the ship started to sink.”

The new report, a 350-page forensic accounting prepared by Alix Partners, a consulting firm that Purdue has hired to help guide the company through Chapter 11 restructuring, was filed in US Bankruptcy Court in White Plains, N.Y., Monday evening.

Ultimately, it does not answer a key question for investigators: how much the Sacklers are actually worth and where their money is located.

“The fact that the Sackler family removed more than $10 billion when Purdue’s OxyContin was directly causing countless addictions, hundreds of thousands of deaths, and tearing apart millions of families is further reason that we must see detailed financial records showing how much the Sacklers profited from the nation’s deadly opioid epidemic,” said Letitia James, the attorney general of New York, in a statement. “We need full transparency into their total assets and must know whether they sheltered them in an effort to protect against creditors and victims.”

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The report does detail checks and disbursements that Purdue made to the family in the years after the company’s guilty plea in 2007 to federal charges that it deceptively marketed OxyContin as nonaddictive. It could be used to support allegations as to whether the Sacklers intentionally withdrew large annual sums to shield the money from litigation as legal pressures mounted.

The audit notes that in the first dozen years that OxyContin was approved — 1995 through 2007 — Purdue’s payouts to the Sacklers totaled just $1.32 billion; from 2008 through 2017, the period of intense scrutiny by the auditors, the payments totaled $10.7 billion.

By 2017, the Sacklers had voted to stop taking cash payments and so Purdue ended the practice.

The report also shows that nearly half the amount sent to the Sacklers was designated to pay taxes, suggesting that less than half the Sackler distributions might actually be available in cash. During the years covered by the audit, the report says, Purdue paid $4.1 billion to the Sacklers, $1.6 billion to their affiliated companies and $4.6 billion for taxes.

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The auditors reported that they did not know how much cash distributed to the Sacklers was actually used to pay taxes. The payments were often directed to trusts based in countries known as tax havens, like Luxembourg and the British Virgin Islands, records show.

A lawyer for some of the Sacklers, Daniel S. Connolly, said in a statement that the family had used the $10.7 billion appropriately and legally.

“This filing reflects the fact that more than half was paid in taxes and reinvested in businesses that will be sold as part of the proposed settlement, ” the statement said.

Connolly said about 90 percent of the tax distributions did go toward tax payments.

Some tax bills were paid on the Sackler family’s behalf. Purdue directed nearly $2.3 billion to the US Treasury for the Sacklers and made payments to a number of states, including nearly $97 million to New Jersey.

The Sacklers have said they will submit a report early next year to the Bankruptcy Court containing further information about their finances. But unlike this filing, it is expected to be confidential.

This report lands just ahead of a court hearing on Thursday about the Purdue restructuring, the centerpiece of which has been a dispute over the company’s settlement offer. For their part, the Sacklers, who have agreed to relinquish ownership and control of Purdue, would pay $3 billion over seven years, as well as much of the proceeds of the sale of their other companies that manufacture opioids internationally.

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As part of the settlement, the company’s new board said that it intends to reposition the company as a public beneficiary trust, donating addiction treatment drugs and paying plaintiffs. The trust would keep manufacturing a suite of medicines, including OxyContin, whose patents begin to expire in several years.

A sticking point in the negotiations has been the status of the state lawsuits against the Sacklers. The litigation has been stayed against Purdue itself, because it is in bankruptcy. But the Sacklers themselves have not filed for bankruptcy protection, and two dozen states want to keep pursuing them, to determine their real worth and where their money is.

The family wields a powerful stick, though: If the lawsuits against them continue, they could withdraw the settlement offer.


Danny McDonald of the Globe staff contributed to this report.