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Purdue Pharma general counsel Howard Udell went on the road to show state officials that the drug company took their concerns about OxyContin seriously. Howard Udell could feel the mistrust in the room that September day in 2000. Seated at a conference table in a federal building in Bangor, Maine, the general counsel of Purdue Pharma L.P. faced a small but powerful group of skeptics. OxyContin, a potent painkiller made by the little-known pharmaceutical company, was causing serious problems in the state, according to U.S. Attorney Jay McCloskey, who led the Maine delegation. Teenage drug abuse was rising at an alarming rate, and McCloskey said he had linked the surge to Purdue’s fledgling wonder drug, which, when misused, triggers a heroin-like high. At first, Udell was incredulous. Yes, he’d heard anecdotal reports about OxyContin abuse. The drug had earned the moniker “hillbilly heroin,” because of its popularity in poor rural areas in the South and Northeast. But Udell didn’t buy it. He just didn’t believe that, after nearly four years of skyrocketing and largely problem-free sales, the painkiller had suddenly reached a tipping point to become the drug abuser’s narcotic of choice. Udell initially had nothing but scorn for McCloskey, the first public official to ring an alarm over the drug. “This,” thought the Purdue attorney, “is some overly zealous prosecutor with political ambition trying to grab a headline.” But as he listened to McCloskey, the GC’s skepticism dissipated. The prosecutor had done his homework. As Udell recalls, McCloskey’s evidence was both moving and convincing. The prosecutor’s story about how an employer in a Maine community was having trouble finding workers who weren’t addicted to prescription drugs was particularly compelling. As they left the meeting, the GC turned to his boss, Purdue’s chief operating officer Michael Friedman, and said, “We’ve got to figure out how to deal with this.” Unfortunately for Udelland Purduethe McCloskey t�te-�-t�te was just the beginning of their troubles. Concerns over the drug have spawned some 125 federal and state lawsuits, including approximately 20 class actions. Legislators and prosecutors around the country have launched investigations into the scope of OxyContin abuse amid charges that the painkiller may be causing fatal overdoses. Industry critics are urging the Food and Drug Administration to pull the drug off the market. If OxyContin sales were to end, Purdue would revert to its former self, a small drug concern. (Before selling the popular narcotic, its best-known products included Betadine, an antiseptic, and Senokot, a laxative.) Last year OxyContin was the eighteenth-most prescribed drug in the country, with sales of roughly $1.23 billion, or 84 percent of Purdue’s total revenues. The suits are “an attack on [our] very foundation,” says Friedman. A Test Case Purdue’s problems have ramifications for Big and “little” Pharma. The privately held business is at the center of the growing controversy over drug companies’ aggressive marketing tactics. Purdue, if critics are to be believed, pushed the envelope by promoting OxyContin to doctors for uses for which it was never intended. These allegations have led Purdue and other drugmakers to address a crucial issue: Did their marketing practices ignite, or inflame, the abuse? “Drug companies sort of embarked on [costly sales campaigns] without considering the possible tort liability consequences, and that’s what’s coming back to bite them right now,” says Richard Ausness, a product liability expert and professor at the University of Kentucky College of Law. Purdue’s trials come as pharmaceutical business GCs face other bet-the-company challenges, from fighting off generic drugs by defending patents, to allegations, like those aimed at Johnson & Johnson, that its anemia medications made patients ill. Ausness says that industry giants would do well to pay close attention to Purdue’s plight. Several plaintiffs groups, according to the law professor, are testing legal concepts similar to those brought against gun manufacturers regarding the alleged misuse of their products. If upheld in the OxyContin cases, he says, these theories could be used against drug company giants, which, unlike Purdue, “can pay a few billion dollars [in settlements] and it’s not going to put them out of business.” Purdue has spent two years trying to contain the OxyContin crisis. The company has employed a multipronged strategy that includes outreach efforts to politicians, regulators, and law enforcement, changes to some of the company’s aggressive marketing practices, and support for abuse prevention measures. Udell has also spearheaded a fierce and costly legal defense. Purdue has spent roughly $45 million fighting the OxyContin suits and isn’t about to start penny-pinching. “There is no budget for this,” says COO Friedman. His mandate to the GC and his team: “Spend the money you need to spend to win the fight.” Purdue’s counteroffensive has produced some tangible results: At press time 11 lawsuits had been withdrawn, and the company had not yet encountered a major courtroom setback. Only one state attorney general has so far hauled Purdue into court [see "The States: Will They Or Won't They?" page 60]. More significantly, OxyContin is still on the market. But Purdue is not out of the woods just yet. Lawsuits continue to be filed, and the company remains one big courtroom loss away from disaster. Into The Spotlight Udell, 60, had never faced a crisis of this magnitude before. Short and heavyset, with a hint of a New York accent, he came to Stamford, Connecticut-based Purdue in 1980 from the Manhattan law firm Millard, Greene & Udell. He was a name partner at the firm, where he represented the 110-year-old company and its founding family. High-quality legal help has always been a cornerstone of Purdue’s business. Even before the coffers were flush with OxyContin revenues, the company was willing to pay competitive rates to bring in bright but overworked associates from Simpson Thacher & Bartlett and other top New York shops. Recruits happily traded in their seven-day workweeks for the promise of a more predictable life in suburban Connecticut. Mostly, the big-firm refugees did what law departments are supposed to do: They kept the company out of the news. That is, until OxyContin came along. Now, many of the 18 lawyers in the department spend their time assisting with the litigation, working with regulators, filing patents and dealing with the legal issues that come with the company’s explosive growth. Taking It On The Road Udell got his first whiff of the trouble ahead several months before the late 2000 meeting in Maine. In April of that year, an acquaintance e-mailed him an article that appeared in the Bangor Daily News. The story recounted how prosecutor McCloskey had sent a letter to some 4,800 health care professionals in the state warning them of an alarming increase in prescription drug abuse; perpetrators were faking symptoms and tampering with prescriptions in order to get their hands on legal narcotics such as OxyContin. For the next five months, Udell and other Purdue executives tried unsuccessfully to set up a meeting with the U.S. attorney. McCloskey, now in private practice after 21 years in government, says that he was reluctant to deal with Purdue, whose overtures he regarded with suspicion. “It’s as if Ford Motor Company called up and said. ‘Can we help you with drunk driving cases?’” says McCloskey. “What can a drug manufacturer [like Purdue] do to stop drug dealers?” From workaday GC to peripatetic pugilist, Udell spent the better part of 2001 answering that question. He and COO Friedman orchestrated a full-scale offensive aimed at containing the crisis. The pairing made sense. Friedman, 53, has championed the GC and his aggressive litigation tactics within the company. It helps that, over the 17 years the two have worked together, Udell and Friedman have become close friends and often vacation together with their wives. During their workdays, they seldom go more than a few hours without touching base, relying heavily on their BlackBerry e-mail pagers. The two tried to head off legal action by wooing public officials, and for the most part they were successful. They hit the road in November 2000, meeting with state and federal prosecutors in 12 states, all but one of which, Kansas, lay east of the Mississippi. The initial meetings all followed a similar script. Udell whipped out his laptop and gave PowerPoint presentations explaining what OxyContin is, how it’s being abused, and showed the brochures and other educational products the company was developing to stop the medication’s misuse. He ended by making some offers: Purdue would sponsor training programs that would teach doctors about prescription drug abuse. The company would provide, for free, special, tamper-resistant prescription pads to any doctors who asked for them. Mostly, the GC and COO tried to convey their business’s commitment to help combat OxyContin misuse. Some officials were mollified. “This is certainly a company that has made an overt attempt to try to counter the abuse,” says Loy Ingold, the special agent in charge of drug diversion in North Carolina’s bureau of investigations. Eleven of the 12 states Udell and Friedman visited have not filed suit against the company. A June 2001 meeting with McCloskey, Udell, Friedman, and Maine attorney general G. Stephen Rowe convinced the state that widespread prescription drug abuse was the problem; singling out OxyContin obscured the larger issue, said a spokesman for the AG. (McCloskey later became an outside consultant for Purdue.) But one state meeting, with West Virginia’s attorney general, turned out to be a fiasco. On March 26, 2001, Udell and Friedman met with hostile state representatives who berated them for allegedly overpromoting the painkiller and being insensitive to its abuse. Udell spent much of the evening countering the charges; at the meeting’s end, he said he felt he had made some headway. He was dead wrong. West Virginia’s managing deputy attorney general, Frances Hughes, says that she was put off by Purdue’s dog and pony show, which included public relations specialists. “That,” says Hughes, “didn’t sit well.” In a move reminiscent of the late 1990s tobacco wars, West Virginia teamed with the plaintiffs powerhouse of Washington, D.C.’s, Cohen, Milstein, Hausfeld & Toller, and two months later launched one of the first lawsuits against Purdue and its marketing partner, Abbott Laboratories of Abbott Park, Illinois. The complaint accuses the duo of violating consumer protection and antitrust laws in the design and promotion of OxyContin and of sticking the state with millions of dollars in health care costs. The allegations are similar to those that gun manufacturers have faced for years: While the product itself isn’t faulty, its maker should be held accountable for its misuse and the sales tactics used to promote the product. Preparing For War Following the West Virginia suit in June 2001, Udell and his team started preparing for the corporate equivalent of war. And, not knowing whether the lawsuits would reach “five or 5,000,” Udell set out to hire a powerful defense team. The GC started by interviewing about ten blue-chip litigation law firms to determine who would serve as national counsel. He settled on two: New York’s Chadbourne & Parke, the company’s longtime outside counsel, and Atlanta’s King & Spalding, both veterans of the tobacco wars. The firms work closely to avoid duplication and bill at their standard hourly rate. As of late July, total defense fees were running about $3 million per month. Some of that money goes to high-priced local counsel. Udell wanted those lawyers to be more than just mail stops for filing motions; they had to be top trial attorneys with “real fire” who would fight to win. To find those warriors, Udell dispatched Richard Silbert, a Purdue vice president and in-house lawyer who now oversees the OxyContin litigation. He interviewed the candidates, most of whom had been referred to the company by Chadbourne and King & Spalding. Among those tapped: Los Angeles’s Munger, Tolles & Olson (to handle a case brought in California) and Washington, D.C.’s Covington & Burling, where former deputy attorney general Eric Holder, Jr., is one of the company’s lead lawyers in a case filed in the nation’s capital. As for Udell’s in-house crew, Silbert and one other lawyer manage the litigation full-time. Udell’s battle plan is simple enough: to win at all costs. Settling, he says, is out of the question; plaintiffs lawyers would start a feeding frenzy. Udell’s take-no-prisoners approach has paid offfor now. In a half-dozen cases where plaintiffs have tried to dismiss a case voluntarily or drop class certification motions, Purdue has pushed the court to rule on the merits of the case. It has won dismissals with prejudice that would prevent plaintiffs from refiling the suit. For instance, in a bid earlier this year by plaintiffs in Kentucky to rescind their motion for class certification, the company balked on the grounds that plaintiffs were simply judge-shopping. The court agreed and ruled on the motion anyway, rejecting class certification. The aggressive posture has taken some plaintiffs lawyers by surprise. “We’ve all been amazed,” says Jennifer Frank, an attorney in the Portland, Maine, office of plaintiffs shop Lewis Saul & Associates. A veteran of the fen-phen diet drug litigation, where she says voluntary dismissals were commonplace, Frank claims that Purdue’s defiance is just a public relations ploy. The Long Road Ahead For all his efforts, the OxyContin imbroglio continues to hound Udelland Purdue. Cases are still being filed at the rate of about a dozen per month, concentrated mostly in the South. There are signs that plaintiffs are regrouping, and some state AGs are sniffing around, too. And Purdue’s relations with the Drug Enforcement Agency, which backed critics’ claims that Purdue over-marketed the drug, continue to be strained. Recent autopsy reports show an increase in the number of overdoses from oxycodone, the main ingredient in OxyContin and other pain medications. Earlier this year the agency linked 464 fatal overdoses over the last two years to Purdue’s painkiller. Not surprisingly, Udell disputes the finding on several grounds, including flaws in the study’s methodology. A separate analysis commissioned by the company found 149 deaths linked primarily to oxycodone. Of those, only 45 were determined to be OxyContin overdoses. “That doesn’t look like we’re killing people by the hundreds,” says Udell. As he picks apart the DEA study and cheerleads Purdue’s own analysisall via slides on his laptop, of courseUdell’s tone is earnest, bordering on pedantic. It’s clear that the lawyer can recite the company’s defenses in his sleep. Not that he’s had much of that these past two years. In fact, most lawyers in his department have found themselves working past midnight and on Sundays. The extra hours got so bad at one point that Udell tried to impose an official day of rest. It didn’t work, he says ruefully. Udell readily admits that the battle over OxyContin isn’t just about saving the company or his job. It’s more than that. “I read all this bullshit [in court papers]all this stuff about ‘deliberately this’ and ‘carelessly that’ and ‘negligently that,’ ” says Udell. Purdue, he says, has been gravely misunderstood. “ There is no question in my mind that we have done more than any pharmaceutical company has ever done to deal with the problem of abuse of a drug,” he says. But is that enough to contain the epidemic?

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