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Ky. lawsuit against OxyContin maker could deal huge blow

PIKEVILLE — No one rises as Circuit Judge Steven Combs enters his courtroom.

Combs wears a white shirt and yellow tie, no robe. Lawyers approach the bench as their cases are called, shake the judge's hand and exchange small talk before getting to business. Today's docket includes a woman convicted of public intoxication, an accused trafficker of painkillers, and a procedural matter involving Purdue Pharma, a multibillion-dollar pharmaceutical company based in Stamford, Conn., that's effectively accused of laying waste to this Appalachian coal town.

Purdue, which makes the best-selling painkiller OxyContin, has never gone to trial on a case of OxyContin abuse. It has won dismissals in more than 400 personal-injury lawsuits related to the drug. And while it has settled some product-liability cases related to OxyContin under secret terms, Purdue has defeated more than 10 efforts to wage class-actions against it.

In this county courthouse in southeastern Kentucky, the company faces a potential legal reckoning that its own chief financial officer called "crippling." Purdue already has lost initial procedural decisions that might force it to go to trial with its "arms tied behind its back," the company said in pretrial arguments.

Purdue is accused in a civil suit filed by the state of Kentucky of actions that helped create addiction on a sweeping scale. Many of the abusers went on crime sprees to feed their OxyContin habits and ended up in jail, in public treatment facilities, or dead from overdoses, the state alleges. The company denies all claims.

The lawsuit, once dismissed as a quixotic mission, has become Purdue's legal nightmare — one that the company says could result in a catastrophic $1 billion judgment against it, based on the state's allegations and the potential for punitive damages and pre- and post-judgment interest. With other lawsuits filed this year in Illinois and California against Purdue and other opioid makers, the Kentucky case could trigger more litigation along the lines of the suits that cost Big Tobacco billions during the 1990s.

OxyContin is a powerful opioid that works to alleviate pain, and the 12 hours of relief it offers on a time-released basis means patients can take far fewer pills each day. After the drug hit the market in 1995, addicts soon discovered that crushing the pills defeated the time-release system. They then could snort or inject the drug for an intense, immediate high.

Reports of the opioid's widespread abuse in rural America — and its nickname, Hillbilly Heroin — began more than a decade ago. Purdue has fought hundreds of largely successful legal battles since then to defend its marketing approach.

The Kentucky suit alleges that the company trained its sales force to falsely portray OxyContin as difficult to abuse, even though its own study found a drug abuser could extract most of the active ingredient from a tablet by crushing it. Addicts quickly learned how to get high from a single pill, which contained far more pain-relief medicine than older drugs because of its long-acting feature.

The Kentucky action contends that sales representatives misled doctors and others into thinking OxyContin didn't produce a "buzz" and was less addictive than shorter-acting drugs. It alleges the company concealed information about the dangers of OxyContin. The 12 claims against the company include Medicaid fraud, false advertising, creating a public nuisance, and unjust enrichment. Abbott Laboratories, which at one time co-promoted OxyContin with Purdue, is also named as a defendant. Abbott has denied any wrongdoing, and Purdue is required by contract to indemnify the company in the lawsuit.

Purdue has said it and its executives took "extraordinary measures" to combat the abuse of OxyContin. In 2010 it won approval for a tamper-resistant form of the drug that's been credited with reducing OxyContin abuse, although a 2012 study found that some pill addicts switched to such drugs as heroin as a result.

The company settled litigation with federal prosecutors in 2007, when a Purdue unit and three of the company's top executives pleaded guilty to "misbranding" OxyContin as less addictive than other narcotics and paid $634 million in fines. The company's fine was the 11th largest paid by a pharmaceutical firm in a U.S. Department of Justice case.

"Purdue Pharma accepted full responsibility for the actions some of its colleagues took during a period that ended in 2001," the company said in a statement. "Since then we've dedicated ourselves to combating prescription drug abuse, most significantly by formulating OxyContin and other pain medications with abuse-deterrent properties."

About $160 million of the fines paid in 2007 was set aside to reimburse the federal government and states for damages suffered by Medi caid programs as a result of the improper promotion of OxyContin. States share the cost of Medicaid, the government health insurer for the poor, with the federal government. Kentucky, which was offered $500,000, was the only state to refuse the money. Instead, it filed its own lawsuit.

"I want to hold them accountable in Eastern Kentucky for what they did," says Kentucky Attorney General Jack Conway, who said the wave of addiction led to misery and crime. "We have lost an entire generation. Half the pharmacies in Pike County have bulletproof glass. We had FedEx trucks being knocked off. It was the Wild West."

Purdue can avoid a trial in Kentucky only by making a "very, very significant" settlement offer, Conway said.

A trial, which could take place as early as next year, might provide the first detailed public airing of how the company marketed OxyContin to doctors and patients, along with disclosures about whether company officials understood how easily their pills could be abused.

Purdue has spent six years trying to get the case moved out of Pike County, arguing that it can't get a fair trial there. Kentucky, along with neighboring Tennessee and West Virginia, is among the top five states for painkiller prescriptions per 100 people. The rate of painkiller use in Kentucky is twice that of New York and New Jersey.

"Anyone you talk to in this county has someone in their family who has been hooked on this," says Wayne Rutherford, judge-executive for Pike County. He's sitting in a conference room at the Pike County Courthouse below a framed portrait of Jesus. An eighth-generation resident of the area, Rutherford wears a "Friend of Coal" button on his suit coat lapel. He has seen family members become hooked on painkillers.

"There was a time when I was going to three funerals a week," he says. "I couldn't get to them all."

In one of many unsuccessful efforts to have the case moved, lawyers for Purdue hired a consultant to survey Pike County residents last year — to try to gauge whether it would be possible to seat an impartial jury there.

The results were filed in court: Almost 40 percent said they knew someone who ran into criminal trouble because of an OxyContin addiction. One-third said they knew someone who overdosed or was seriously hurt taking the drug, and 29 percent said they knew someone who died. Nine out of 10 agreed that OxyContin had a "devastating effect" on the community.

Illegal drug deals went down in hospital parking lots and school zones. Coal miners snorted painkillers on the job. Those who got caught up in the wave of crime and addiction included a star football player, a beauty queen, a deputy sheriff and a trucking business owner, according to local newspaper accounts and court filings. The judge denied the motion to change venue.

Shortly after Kentucky's suit was filed in 2007, Purdue did succeed in having the case transferred to federal court in New York, which kicked off a six-year delay. By January 2013, a federal appeals court upheld an order to return the case to Kentucky, and the company last year exhausted its legal options for keeping the case out of Pike County. And then, court records show, Purdue took another blow.

On April 1, 2013, Judge Combs ruled that Purdue missed a deadline for responding to the state lawyers' "request for admissions." Such requests are laundry lists of statements presented by the plaintiff; the defendant may admit or deny each one. In this case, the requests included several statements claiming that Purdue caused OxyContin to be overprescribed and caused the state to spend excessive amounts of money combating the drug's abuse.

The effect of the judge's ruling is to treat the entire list of statements as admissions, giving the state an advantage in proving Purdue was liable for the addiction and resulting effects alleged in the lawsuit.

Purdue — which has steadfastly denied it helped cause addictions and argues that it therefore should not have to pay for government costs in treating addicts — has said Combs' ruling will force the company to go to trial with its "arms tied behind its back" or pay an exorbitant amount to settle, Purdue attorney John Fam ularo argued in a February hearing.

Purdue says that after the state's requests for admissions were served in 2007, they were never mentioned again. The company argues the state was obligated to re-serve the requests once the case was sent back to Kentucky from federal court or to give Purdue another chance to submit responses.

The appeals court ruled against the company, which has made a final pre-trial appeal to the state Supreme Court. Finding relief there might be tough. The appeals court said that in deciding the issue, it was going by case law that was "firmly entrenched by our Supreme Court." Purdue still may appeal any verdict based on the admissions issue.

As the case moves toward trial, Kentucky lawyers plan another first for Purdue: They want to elicit testimony from the company's board, which is dominated by members of the Sackler family, wealthy philanthropists who own the company and have until now remained largely untouched by the controversy tied to the blockbuster drug that netted their business billions of dollars.

In the almost two decades since its introduction, OxyContin sales have probably helped the Sackler family earn as much as $3 billion, based on Purdue's financial records and public sales figures. In all, nine members of the Sackler family are Purdue directors.

None of the Sacklers has been named in the Kentucky suit.

As it fights the Kentucky case, Purdue also must prepare to defend itself on a new front against a pair of lawsuits, one filed jointly by Orange and Santa Clara counties in California, the other by the city of Chicago. The allegations and demands for relief are far more sweeping than those in the Kentucky lawsuit or the 2007 federal settlement.

As for the Kentucky case, Pike County prosecutor Rick Bartley, who has been involved in law enforcement for four decades, says the ripple effects of OxyContin's abuse will be felt far into the future in his region.

Babies were born addicted to painkillers, their mothers in jail, their fathers dead. Grandparents were left to try to clean up the mess. Says Bartley: "This being ground zero, I think there could be no better place for Purdue Pharma to have to stand its ground and answer to the people in our community as to the horrors OxyContin has brought over the years."

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