On May 2nd, the Department of Justice (DOJ) announced that an opioid manufacturer was ordered to pay $1.086 billion in criminal fines and an additional $450 million in criminal forfeiture for violations of the Federal Food, Drug, and Cosmetic Act. This marks the second-largest set of criminal financial penalties ever imposed on a pharmaceutical company.
Endo Health Solutions Inc. (EHSI) pleaded guilty on April 18 to one misdemeanor count of introducing misbranded drugs into interstate commerce; specifically, Opana ER with INTAC (Opana ER). The government alleged that from April 2012 through May 2013, certain EHSI sales representatives marketed Opana ER by promoting its purported abuse deterrence, tamper resistance, and crush resistance, despite lacking clinical data to support these claims.
The government alleges that certain EHSI sales managers were aware of the unsupported claims made by sales representatives regarding Opana ER’s abuse deterrence, tamper resistance, and crush resistance when marketing the drug to prescribers. According to the DOJ, some sales representatives conducted demonstrations involving smashing non-medicated sample pills with a hammer to convey the message that Opana ER was crush-proof and tamper-resistant. According to the plea agreement, EHSI was responsible for misbranding Opana ER by marketing it with a label that failed to include adequate directions for its claimed abuse-deterrent use. EHSI withdrew Opana ER from the market in 2017.
EHSI’s affiliated corporate entities successfully emerged from bankruptcy proceedings on April 23. However, EHSI itself will not continue operations in its current form post-bankruptcy. The settlement addressing all monetary claims against these corporate entities includes provisions for paying the criminal fine imposed during sentencing.
Under the confirmed bankruptcy plan, the reorganized company has established voluntary trusts to settle claims related to opioids. Notably, public trusts will allocate over $450 million to state, municipal, and Tribal entities to support programs aimed at combating the opioid crisis. To account for these payments, the Department of Justice is offsetting up to $450 million against the agreed forfeiture amount. The EHSI affiliates that have emerged from bankruptcy are also now subject to an injunction prohibiting future sales and marketing of opioids. Additionally, they are mandated to disclose millions of documents pertaining to their involvement in the opioid crisis.
DEA Administrator Anne Milgram remarked, “The opioid crisis we continue to face today originated, in part, from companies like EHSI building their business on false claims and deceptive business practices.” She emphasized the DEA’s commitment to holding companies like EHSI accountable.
The attorneys at Chilivis Grubman represent healthcare clients of all types and sizes in connection with government investigations. If you need assistance with such a matter, please contact us today.