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 years-long 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.
The Stamford, Conn., company filed for chapter 11 bankruptcy protection last year under the weight of the state and local government lawsuits. Two dozen states, as well as a group of Democratic U.S. senators, oppose the plan to disburse future profits to the communities and want Purdue’s assets to be sold to private buyers.
Other states have supported the proposed restructuring, which Purdue says will create $10 billion in value, including $3 billion from the company’s current owners, members of the Sackler family. The Justice Department separately struck a deal with the Sacklers to contribute $225 million as part of a civil settlement, without the family members admitting to any liability.
The latest criminal plea covers Purdue’s conduct from May 2007—the same year the company and three of its executives pleaded guilty to federal criminal charges of misleading the public about the addiction risk of OxyContin and paid $634.5 million in government penalties and costs—through June 2017.