The wheels grind slowly but they sure do grind.
After four years of legal wrangling, this morning, Purdue Pharma--one of the biggest private drug companies in the US--and three top executives pled guilty in Virginia court to mishandling the pre-2001 promotion of Oxycontin, the company's blockbuster pain drug. The punishment: $600 million.
Purdue can afford the settlement; it won't lay off anyone, apparently. Except its own top management--the company's president Michael Friedman, one of the executives pleading guilty--is getting the boot and, according to the New York Times, an $18 million fine; likely to follow is chief legal officer Howard Udell, who also pleaded guilty (and, says the Times, is on the hook for $9 million). The final misdemean-er--former research head Paul Goldenheim--left Purdue in 2004 for Transform Pharmaceuticals, which was sold soon after. He'll owe $7.5 million.
The settlement is bad news--potentially really bad news--for other companies in the pain space, in particular Cephalon and Endo. Both of these public companies are being investigated for over-aggressive promotion. If those two companies end up with a settlement anything like Purdue's--and federal and state attorneys are likely to feel pretty good about their chances, given the success of the Virginia US attorney--the picture won't be pretty.
They could bring in an internal candidate--like Ed Mahony, the current CFO, a savvy finance guy who's managed to keep enough cash to pay the fines. Or they could bring on someone from one of the international affiliates. Possibles: John Stewart, a long-time employee who manages the Canadian, New Zealand and Australian businesses, or--less likely given his shorter tenure--Ake Wikstrom, the GM of Munidpharma in Europe.