OxyContin made the Sacklers rich. Now it’s tearing them apart

OxyContin made the Sackler family rich. Now it’s tearing them apart.

As prestigious museums and universities reject Sackler donations, activists of P.A.I.N. (Prescription Addiction Intervention Now) association protest in front of the Pyramid of the Louvre museum in Paris, condemning the museum for maintaining their relationship with the family. Picture: AFP

Jacqueline Sackler was fed up. HBO’s John Oliver had just used his TV show to pillory her family, the clan that owns Purdue Pharma, the maker of OxyContin. In a nearly 15-minute Sunday-night segment, he joined a long line of people who blamed the Sacklers in part for the nation’s opioid crisis.

When the show was over, Ms. Sackler, who is married to a son of a company co-founder, emailed her in-laws, lawyers and advisers. “This situation is destroying our work, our friendships, our reputation and our ability to function in society,” she wrote.

“And worse, it dooms my children. How is my son supposed to apply to high school in September?”

The Sackler family, with its competing branches, has long been fractious. The arrival of nearly 2,000 lawsuits accusing its company of helping to spark a public-health crisis in America has forced the family to a crossroads as it weighs the future of a company that helped make its members wealthy.

For years the Sacklers avoided being publicly linked to the opioid crisis and OxyContin, a prescription painkiller containing a morphine derivative called oxycodone. They cultivated an image as global philanthropists, donating millions to New York’s Metropolitan Museum of Art, Columbia University and scores of other institutions both in the US and abroad.

The host of lawsuits, some of which name as defendants many individual Sacklers who served on Purdue’s board, has unravelled the family’s standing in philanthropic, academic and financial circles. Family members have been leaving the boards of non-profits. Prestigious museums and universities are rejecting their donations. Some investment funds are returning their money.

The backlash has intensified infighting among family members, whose disagreements have threatened efforts to resolve the litigation, according to emails reviewed by The Wall Street Journal and to interviews with dozens of current and former Purdue employees and people who have spoken with the Sacklers.

For years, family members argued over matters large and small, from corporate strategy to board-meeting agendas. Often the conflicts were between the two sides of the family that equally control the closely held Stamford, Conn., company — co-founding brothers Mortimer Sackler and Raymond Sackler and their heirs.

In the current legal melee, family members disagreed on the strategy for settling a lawsuit with the state of Oklahoma and on how to respond to media requests. Members of the Mortimer side wanted a member of the other side to express remorse over derogatory comments that person once made about addicts.

For some family members, dealing with the mounting litigation and its fallout is consuming most of their time, said people who speak with them. Several Sacklers have retreated from public life.

In the New York philanthropic and arts circles in which some Sacklers moved, “it’s a topic of some gossip around town that there are ruptures in the family and that they are people struggling to deal with this wave of bad news and throngs of litigation,” said Euan Reille, an investment banker who knows some of the Sacklers socially.

Sackler family members contacted for this article referred questions to spokespeople. The two family branches said in a joint statement they support efforts to work together, along with Purdue and other stakeholders, to find solutions to the opioid crisis.

Asked about various matters by the Journal, they said: “This story paints a very misleading and inaccurate picture of our families, our views and approach to this litigation.” The lawsuits by cities, states and Native American tribes allege Purdue misled the public and physicians about the addictive nature of OxyContin, which Purdue began selling in 1996. The company and eight family members who are named in some of the suits have denied the allegations. In previous written statements and legal filings, they have noted that OxyContin was approved by regulators and said its prescriptions have made up a small percentage of all opioids and the company’s marketing was appropriate.

They have said they are united in wanting to resolve all of the opioid litigation. Meanwhile, Purdue Pharma is struggling with weakening sales and restructuring challenges.

LP’s roots trace to 1952, when three Sackler brothers, all psychiatrists, acquired a small predecessor company in New York for $50,000. Raymond and Mortimer bought out the share of the oldest brother, Arthur, after his death in 1987, and Arthur’s heirs weren’t involved in Purdue after that.

Purdue initially made simple products such as laxatives, earwax removers and antiseptics. In 1995 it won US marketing approval for a breakthrough product, OxyContin, an extended-release opioid designed to last 12 hours, to treat moderate-to-severe pain.

Purdue is widely credited with helping create many aspects of modern pharmaceutical marketing. For OxyContin, it recruited doctors as paid speakers at resort gatherings, helped fund non-profits focused on pain patients, and blanketed physicians with promotional items such as plush toys shaped like a pill. Decades earlier, Arthur Sackler pioneered methods of drug-industry marketing and, posthumously, was inducted into the Medical Advertising Hall of Fame, which said he “helped shape pharmaceutical promotion as we know it today.” Raymond and Mortimer, who lived into the 2000s, split control and ownership of the business equally, a structure that made it difficult to resolve disagreements. Other family members were active in the company, and up to 10 of them at a time were on the board of directors. The two sides selected their own nonfamily directors and set their pay under separate guidelines.

Board meetings were raucous, casual affairs attended by dozens of people, like a “family picnic with PowerPoint presentations,” said one former employee. The meetings, held monthly for many years, could go on for days. The longtime corporate counsel usually ran them.

Mortimer’s side of the family was known by staff and advisers as the “A Side,” for the share type they owned, and Raymond’s as the “B Side.” Relations between the brothers were strained for years. The brothers sat on opposite sides at board meetings and communicated through intermediaries, said people who attended.

At one meeting years ago, according to a person who was present, Mortimer tried to punch Raymond but, missing him, hit a company attorney in between.

Reasons for the strain are murky, although some people close to the family said Mortimer opposed tapping Raymond’s son Richard Sackler to be president in 1999, a post he held until 2003. Clashes between Richard and two of Mortimer’s children — Kathe Sackler and Mortimer D.A. Sackler — accounted for much of the sparring at board meetings, according to several people who attended.

One source of tension was when to take profits from the company. Mortimer’s heirs, who are more numerous, wanted to do so more frequently, while the Raymond side was more inclined to let Purdue reinvest in its business, according to people familiar with the situation.

Purdue has sold more than $35 billion of OxyContin since its introduction. Just since 2007, Purdue has distributed more than $4 billion in profits to its owners, civil complaints have said.

At times, the family considered selling Purdue. Raymond’s side usually opposed a sale, said people close to the company.

The Sacklers also often couldn’t agree on the types of assets to buy. The risk-averse board reviewed dozens of potential acquisitions over the years.

Once, at a meeting held in Europe in 2016, Kathe Sackler commented that the board should assert more authority and wasn’t just a “secretariat.” Cousin Jonathan Sackler, from the Raymond side, cracked an expletive-laden joke about whether she meant the Triple Crown-winning racehorse, said people who were there. Kathe demanded an apology, they said.

From the beginning of OxyContin sales, Purdue deployed hundreds of sales representatives to call on physicians and try to persuade them to write more OxyContin prescriptions. It had a bonus system that was considered the most lucrative in the industry, according to former sales reps and a 2003 US General Accounting Office report.

The GAO report was subtitled “OxyContin Abuse and Diversion and Efforts to Address the Problem.” It quoted a revised label, approved in 2001, that said OxyContin had been reported as being abused “by crushing, chewing, snorting, or injecting the dissolved product.” Food and Drug Administration officials said they didn’t anticipate that abuse would become widespread, the report said.

In 2007, Purdue and three executives who weren’t family members pleaded guilty to federal criminal charges of misleading the public about OxyContin’s addictiveness between 1995 and 2001. They agreed to $634.5 million in penalties, and Purdue signed a five-year corporate-integrity agreement with the US government. In 2013, the US said Purdue had met the agreement’s requirements.

At least one in-house Purdue lawyer saw the 2007 pleas as a way to protect former president Richard Sackler from legal exposure, according to people familiar with the matter.

In a written statement to the Journal, Purdue said it pleaded guilty to resolve the probe and accept responsibility for “misconduct committed by certain of Purdue’s supervisors and employees,” and that it is “wrong to assert that the purpose of the guilty plea was to protect Richard Sackler” or anyone else.

Raymond’s heirs, in a separate written statement, called suggestions that the 2007 agreement was meant to protect any family member “lies.”

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