Purdue Pharma LP pleaded guilty to three federal felonies related to the marketing and distribution of its powerful opioid painkiller OxyContin, ending the bankrupt company’s exposure to U.S. government action but leaving other liabilities to state and local governments looming.
The guilty plea on Tuesday follows the approval last week by a U.S. bankruptcy court judge of an $8.34 billion settlement between Purdue Pharma and the Justice Department. Most of that money is unlikely to be paid; the government has agreed to treat billions of dollars in fines and penalties as junior debt, potentially paid off at less than 1 cent on the dollar.
Justice Department lawyers have said the discount is intended to leave more money for states and thousands of local governments that have sued Purdue Pharma over its role in fueling opioid addiction. Purdue has proposed emerging from bankruptcy as some form of public trust, with future profits going toward the municipalities.
The October settlement followed a yearslong investigation by the U.S. attorney’s offices in New Jersey and Vermont and the consumer-protection branch of the Justice Department.
At a Tuesday hearing held by videoconference, Steve Miller, the chairman of Purdue’s board, told U.S. District Judge Madeline Cox Arleo in New Jersey the company would plead guilty to three counts related to illegal kickbacks and misrepresentations made to the Drug Enforcement Administration. In response to questions from prosecutors, Mr. Miller admitted that Purdue pushed OxyContin on dozens of doctors that it knew were diverting the drug for improper uses, and failed to report those health-care providers to the DEA.
