Business, Features

BU professors analyze Purdue Pharma shutdown, aftermath

Nearly 450,000 people overdosed and died from opioid use between 1999 and 2018, according to the U.S. Centers for Disease Control and Prevention.

Pharmaceutical company Purdue Pharma agreed to plead guilty Oct. 21 to criminal charges against the marketing and selling of opioids that resulted in a nationwide crisis.

The business, which has declared bankruptcy, has also announced a settlement of more than $10 billion toward the opioid crisis through funding addiction treatments and overdose reversal medicines, according to its website.

James Post, a professor emeritus at Boston University’s Questrom School of Business, said he recognized the unusual nature of the Purdue Pharma case.

“[Ten] billion dollars is an enormous sum of money: one of the largest, if not the largest, penalties that had been invoked,” Post said. “The second thing that makes this very unusual and makes part of the landmark is that the remedy for this bad behavior … was to dissolve the company and turn the assets into a new kind of organization, a public-benefit company.”

Public-benefit corporations are companies that work to create a positive impact on society rather than adhere to the traditional corporate goal of maximizing profits.

Companies normally would be penalized for similar criminal violations by paying “financial remedies,” Post said, but given the extremely high cost of the charge, as well as the nature of the drugs involved, the courts sought alternate solutions for Purdue.

Part of this new business model, Post said, involves Purdue offering up profits and legitimately producing prescription medicines as a public-benefit company.

Paying off the billions of dollars, Post said, would not have been enough to fix the problem after the unethical marketing the company conducted.

“The company can’t afford to pay that, and yet it’s making drugs, pharmaceutical products, that are helpful to many people,” Post said. “These can be very addictive, and Purdue’s business sin here was to push the marketing and the distribution of these drugs very aggressively and get people hooked on them.”

Rena Conti, an associate professor of markets, public policy and law at Questrom, said the impacts of Purdue’s malpractice were far-reaching, affecting children, teenagers and adults alike, many of whom she said had been unnecessarily over-prescribed for “minor pain-related needs.”

Conti said many physicians should be held accountable as well.

“[They] are, frankly, directly responsible,” Conti said, “for the number of prescriptions of these products that were being given to people for which there’s other therapeutic alternatives and who are vulnerable and now are permanently vulnerable because of the addictive properties of these drugs.”

The Sackler family, who was largely in charge of Purdue Pharma, have terminated their roles at the company since it was charged. Post said those leading the company now are new employees.

Declaring bankruptcy, Post said, protects Purdue by giving it the ability to maintain operations, but under a judge’s surveillance.

Post, a professor who has taught business ethics, said the situation could be an educational moment.

“It’s a terrible case,” Post said, “but it’s also a very important case from which we should learn lessons about the oversight of companies that produce products that are necessary and helpful, but are also potentially addictive.”

Conti said she hopes to use Purdue Pharma as an example of unethical business practice and of the type of work students should not associate themselves with.

“This is a cautionary tale of multiple failures of leadership and ethics,” Conti said. “As training BU students, to be leaders of pharmaceutical companies in the future, you don’t want to be Purdue.”

Madeline Humphrey contributed to the reporting of this article.

One Comment

  1. If the valid personal injury claims are paid fairly in compensation, then I have no problem with these end games. I am afraid this is the federal government snatching up any money they can and leaving the actual victims high and dry.

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