STATEMENT OF UNITED STATES ATTORNEY
JOHN BROWNLEE
ON THE GUILTY PLEA OF THE PURDUE FREDERICK COMPANY AND ITS EXECUTIVES FOR ILLEGALLY MISBRANDING OXYCONTIN

May 10, 2007

One of the oldest and most challenging medical mysteries is the treatment of pain. For centuries, scientists and doctors have searched for a drug that would safely relieve patients of their chronic pain without inflicting the dangerous side effects that routinely come from the use of addictive narcotics. The discovery of this �wonder� drug would bring hope and relief to millions of suffering patients and wealth beyond one�s imagination to its creators.

In 1996, Purdue and its top executives claimed that they had developed such a drug; a safe drug that would help those suffering in pain. The name of that drug was OxyContin. Backed by an aggressive marketing campaign, Purdue�s OxyContin became the new pain medication of choice for many doctors and patients. Purdue claimed it had created the miracle drug � a low risk drug that could provide long acting pain relief but was less addictive and less subject to abuse. Purdue�s marketing campaign worked, and sales for OxyContin skyrocketed � making billions for Purdue and millions for its top executives.

But OxyContin offered no miracles to those suffering in pain. Purdue�s claims that OxyContin was less addictive and less subject to abuse and diversion were false � and Purdue knew its claims were false. The result of their misrepresentations and crimes sparked one of our nation�s greatest prescription drug failures. OxyContin is nothing more than pure oxycodone � a habit forming narcotic derived from the opium poppy. Purdue�s OxyContin never lived up to its hype and never offered a low risk way of reducing pain as promised. Simply put, the genesis of OxyContin was not the result of good science or laboratory experiment. OxyContin was the child of marketeers and bottom line financial decision making.

Accordingly, this morning, in a federal courtroom in Abingdon, Virginia, the Purdue Frederick Company, the manufacturer and distributor of OxyContin, pleaded guilty to a felony charge of illegally misbranding OxyContin in an effort to mislead and defraud physicians and consumers. Purdue has agreed to pay over $600 million in criminal and civil penalties, fines and forfeitures, subjected itself to independent monitoring and an extensive remedial action program, and acknowledged that it illegally marketed and promoted OxyContin by falsely claiming that OxyContin was less addictive, less subject to abuse and diversion, and less likely to cause withdrawal symptoms than other pain medications � all in an effort to maximize its profits. Also, Purdue�s Chief Executive Officer Michael Friedman, General Counsel Howard Udell, and former Chief Medical Officer Paul Goldenheim pleaded guilty to a misdemeanor charge of misbranding OxyContin and collectively agreed to pay $34.5 million in penalties. With its OxyContin, Purdue unleashed a highly abusable, addictive, and potentially dangerous drug on an unsuspecting and unknowing public. For these misrepresentations and crimes, Purdue and its executives have been brought to justice.

We have released a Criminal Information, Plea Agreements, a Corporate Integrity Agreement, a Statement of Facts, and a Complaint for Forfeiture that have been filed in U.S. District Court in Abingdon. Purdue and its top three executives have pleaded guilty to illegally misbranding OxyContin from 1996 thru 2001. The company has admitted that it misbranded OxyContin with the intent to defraud and mislead the public.

As part of this plea agreement, Purdue and its top three executives will pay $634.5 million in criminal and civil fines, penalties, and forfeitures, to be distributed as follows. First, Purdue will forfeit to the United States $276.1 million, a portion of which will be shared with the state and federal law enforcement agencies for their work during this investigation.

Second, Purdue will pay $130 million for compensation and settlement of private civil liabilities related to OxyContin. Any part of the $130 million that Purdue fails to distribute within two years will be immediately paid to the United States.

Third, Purdue will pay $100.6 million to the United States as reimbursement for payments made by government agencies for the settlement of false claims related to the misbranding of OxyContin. Those federal agencies include the Department of Health and Human Services, the Department of Labor, the Department of Defense, the Office Personnel Management, and the Veterans Administration.

Fourth, Purdue will pay $59.3 million to the State Medicaid programs as reimbursement for payments made by Medicaid for the settlement of false claims related to the misbranding of OxyContin. This money is available to any state to settle claims related to Purdue�s criminal conduct. Fifth, Purdue and its top three executives will pay $39.8 million to the Virginia Attorney General�s Medicaid Fraud Control Unit Program Income fund. Virginia�s MFCU is an important partner in our efforts to fight fraud against our medicaid programs. Sixth, Purdue will pay $20 million to the Virginia Department of Health Professionals� operation of the Virginia Prescription Monitoring Program. The prescription monitoring program was initiated in part because of the big spike in prescription drug abuse that accompanied the illegal marketing of OxyContin. Currently, the program is largely funded by the Virginia taxpayers, and the $20 million payment by Purdue should endow the program for the foreseeable future. Seventh, Purdue will pay $4.6 million to cover the costs of the five year internal monitoring program that is a part of the company�s Corporate Integrity Agreement with the Health and Human Services Office of the Inspector General. Eighth, Purdue will pay $3.4 million to the federal and state Medicaid programs for improperly calculated Medicaid rebates for years 1998 and 1999, and finally, Purdue and the three executives will pay $515,475 in criminal fines and special assessments to the court.

In addition to the guilty pleas and monetary penalties, the United States has directed Purdue, as part of the Corporate Integrity Agreement, to retain and pay for an Independent Monitor and staff to monitor Purdue�s compliance with this agreement and federal law. The monitor and staff will be independent from Purdue�s management and must file periodic reports with the government concerning Purdue�s conduct and business practices. We believe this monitoring program, in conjunction with the Corporate Integrity Agreement, will ensure that in the future Purdue will market and promote its products in an honest and responsible manner. The public must be confident that we will keep close watch on how Purdue sells its most dangerous products.

I would now like to provide to you a brief summary of the investigation and some of our findings. The main violations of the law revealed by the government�s criminal investigation are set forth in detail in the Statement of Facts released to you today.

The defendant The Purdue Frederick Company, a New York corporation headquartered in Connecticut, was created in 1892 and purchased by its current owners in 1952. Defendant Michael Friedman joined Purdue in 1985 and was appointed President and Chief Executive Officer in 2003. It is our understanding that Mr. Friedman has announced his intention to leave Purdue this year. Defendant Howard Udell joined Purdue in 1977 and is presently Purdue�s Executive Vice President and Chief Legal Officer. Defendant Dr. Paul Goldenheim joined Purdue in 1985 as its Medical Director. Dr. Goldenheim left Purdue in 2004.

This case began in early 1995, when Purdue used focus groups of primary care physicians and surgeons to determine whether physicians would be willing to prescribe OxyContin for patients with non-cancer pain. According to Purdue�s research, many of these physicians had great reservations about prescribing OxyContin because of the drug�s addictive potential and side effect profile, and its abuse potential. It was clear from these focus groups that physicians were concerned about the safety and risks of OxyContin.

Purdue also learned from these focus groups that physicians wanted a long lasting pain reliever that was less addictive and less subject to abuse and diversion. Purdue understood that the company that marketed and sold that drug would dominate the pain management market. And that is exactly what Purdue tried to do.

Despite knowing that OxyContin contained high concentrations of oxycodone HCL, had an abuse potential similar to that of morphine, and was at least as addictive as other pain medications on the market, Purdue, beginning in January 1996, with the intent to defraud and mislead, falsely marketed and promoted OxyContin as less addictive, less subject to abuse and diversion, and less likely to cause tolerance and withdrawal than other pain medications. Purdue did so in the following ways:

First, Purdue trained its sales representatives to falsely inform health care providers that it was more difficult to extract the oxycodone from an OxyContin tablet for the purpose of intravenous abuse. Purdue ordered this training even though its own study showed that a drug abuser could extract approximately 68% of the oxycodone from a single 10 mg OxyContin tablet by simply crushing the tablet, stirring it in water, and drawing the solution through cotton into a syringe.

Second, Purdue falsely instructed its sales representatives to inform health care providers that OxyContin could create fewer chances for addiction than immediate-release opioids.

Third, Purdue sponsored training that falsely taught Purdue sales supervisors that OxyContin had fewer �peak and trough� blood level effects than immediate-release opioids resulting in less euphoria and less potential for abuse than short-acting opioids.

Fourth, Purdue falsely told certain health care providers that patients could stop therapy abruptly without experiencing withdrawal symptoms and that patients who took OxyContin would not develop tolerance to the drug.

And fifth, Purdue falsely told health care providers that OxyContin did not cause a �buzz� or euphoria, caused less euphoria, had less addiction potential, had less abuse potential, was less likely to be diverted than immediate-release opioids, and could be used to �weed out� addicts and drug seekers.

The results of Purdue�s crimes were staggering. According to DEA, the number of oxycodone related deaths increased 400 percent between 1996 and 2001. During that same time period, the annual number of prescriptions for OxyContin increased from approximately 300,000 to nearly 6 million. Also, in February of 2002, the DEA released a report detailing the death rates caused by OxyContin abuse up to that time. According to the DEA, there were 146 deaths in which OxyContin was determined to be the direct "cause of" or �a contributing factor to.� DEA identified an additional 318 deaths that were �most likely� caused by OxyContin. In Virginia, our medical examiner reported that 228 people died in western Virginia from overdoses of oxycodone from 1996 to 2005.

For some communities, the danger went beyond just addiction and death. Beginning in 2000, localities began to report dramatically higher crime rates � some up as much as 75% from the year before. This sharp increase in crime was directly attributable to the abuse of OxyContin. Tazewell County estimated that OxyContin was behind 80-95% of all crimes that were committed there. From 1998 to 2003, burglaries, robberies, and larcenies jumped 131% in Buchanan County and 102% in Russell County.

During the last 10 years, Virginia�s law enforcement community has fought hard against the devastating effects OxyContin has had on our citizens and communities. During that time, we have convicted the OxyContin addicts who committed serious crimes to get money to buy more OxyContin, and we convicted street dealers who preyed upon the addicts� craving for this powerful narcotic. We also convicted pharmacists and physicians who illegally diverted OxyContin for personal gain and profit. With today�s conviction of the maker of OxyContin, we have finally brought to justice the main component involved in this ring of abuse. The conviction of Purdue and its executives will end the misbranding and fraudulent marketing of OxyContin, deter other companies from committing like crimes, and provide desperately needed resources to fight addiction and abuse that threatens the health of millions of Virginians.

Thank you.