Alaric DeArment is a senior reporter at MedCity News covering biotech and pharma and its convergence with information technology....
Joe and Elie are joined by Alaric Dearment of MedCity News to discuss the legal framework surrounding the opioid lawsuits. How does something like this become a stunning breakdown of regulation in the face of industry greed? This is your overview.
Above the Law – Thinking Like a Lawyer
The Opioid Suits
Intro: Welcome to Thinking Like a Lawyer with your hosts Elie Mystal and Joe Patrice talking about legal news and pop culture, all while thinking like a lawyer here on Legal Talk Network.
Joe Patrice: Well, welcome to another edition of Thinking Like a Lawyer. I am Joe Patrice from Above the Law. I am re-joined for the first time in several weeks by my co-host Elie Mystal. How are you?
Elie Mystal: Hey, I am here today, guys. What’s up?
Joe Patrice: Yeah, well — I mean, not much, but how are you?
Elie Mystal: Well, I’ve been — I was — last week I was on vacation; well, it was more of a staycation, but I just needed to unplug. So I was playing a lot of elite dangerous last week.
Joe Patrice: Is that the code name that you like, like a corporate deal the code name you have for your book proposal?
Elie Mystal: Yeah.
Joe Patrice: Because that was what you were supposed to be working on.
Elie Mystal: Right, it’s a game about flying around space.
Joe Patrice: Right, but instead you played video games?
Elie Mystal: Yes.
Joe Patrice: Yeah, that’s — that’s about right.
Elie Mystal: And then two weeks ago I was having a bad race day so —
Joe Patrice: Well, right, fair enough.
Elie Mystal: I I needed a second. I am back now.
Joe Patrice: Excellent. Well, welcome back.
Elie Mystal: Back and blacker than ever.
Joe Patrice: Welcome back. So what all is going on in your — in your world today?
Elie Mystal: So yesterday I was in the office, because I was doing a quick TV spot, so I actually stopped by work, which is rare for me, and I went downstairs to —
Joe Patrice: Trust me as your co-worker I know.
Elie Mystal: I went downstairs to bodega to buy myself a pack of Parliament, because I am a child of the 90s and I’m a smoker and I walk-in. Now I used to buy the Vape stuff from this same bodega, I haven’t in a while because the powers that be in our office have decided that vaping is not as frowned upon in this establishment.
Joe Patrice: Literally going back to the original episode of this show, I believe when I discussed that no, it’s actually always been illegal in New York.
Elie Mystal: So I do not — so I haven’t vaped in this office for quite some time, but I —
Joe Patrice: And everyone thanks you.
Elie Mystal: But the bodega guys told — you know, he knows who I am and so when I walk-in yesterday here in New York State, bodega guy goes, oh my friend, you know, we cannot sell you the vapors, only for two more weeks; and I just go, well, I can still buy regular cigarettes, of course.
Joe Patrice: Of course.
Elie Mystal: He goes, of course my friend.
Joe Patrice: Yeah.
Elie Mystal: — which is why we fail as a goddamn country.
Joe Patrice: Right.
Elie Mystal: Now, I am not here to defend smoking. What I do to my body is bad and cancerous and will lead to my death. I tend to enjoy the personal freedom to make my own choices for self-destruction, but if the New York State is going to ban something, how in the hell are we not banning cigarettes as opposed to vape pen, or just ban them all together.
Joe Patrice: Yeah.
Elie Mystal: I mean, if we care about people’s health so much that we’re going to take personal choice away from them, let’s take away the personal choice that is actually killing people which is the freaking cigarettes as opposed to just the candy flavored vape pens which people — which parents are getting their panties in a bunch over because like little, little, little teenage kids are smoking cotton candy vape pens.
Joe Patrice: Yeah.
Elie Mystal: And as long as we’re banning stuff, sorry. There’s also, you know, guns, we can also ban that; I am just saying.
Joe Patrice: Right.
Elie Mystal: If we are on the banning train.
Joe Patrice: Yeah, I mean, I think — I think it’s fair to say, and this sounds a little bit conspiracy theory, but at some — on some level conspiracy theories can occasionally stumble into the truth, and it’s true that a lot of the vaping companies have now had controlling interests bought in them by tobacco manufacturer — via cigarette manufacturers and they now have a vested interest in not fighting to defend vapes, because they were competition.
And you might think, oh, well, they own some shares of this, so aren’t they protecting it, and it’s like because the profit margin is smaller on those, they’re more complex. It’s easier to go to cigarettes, so yeah.
So that probably has a lot to do with it, but while we’re talking about bad things you can medicinally do to your body and how there’s corruption involved in that, and the need to do things, see how this is kind of a seamless transition.
Elie Mystal: Yeah, almost like we thought about it.
Joe Patrice: No — yeah and we — and trust me if you’ve listened to this show before, you know, there has been no thought about any of this before we did it. But we wanted to check in on a legal crisis that’s out there and is making news that we haven’t really touched too much upon, and what’s that?
Elie Mystal: That would be the opioid crisis or as Black people like to call it, the usual s**t, specifically from a legal angle though we want to talk about Purdue Pharma.
Joe Patrice: I thought the Black people take was to look at White people go; see, this is what we’ve had to deal with before. I’m sorry that you’ve finally figured this out, but because —
Elie Mystal: Oh, it’s a disease now.
Joe Patrice: Oh, it’s a disease now.
Elie Mystal: Oh it couldn’t wean.
Joe Patrice: Yes. So, to do that, we here at Above the Law we have a sister website who named called MedCity News, that covers this.
So we decided to bring on Alaric DeArment from MedCity News to talk with us a little bit about it from the medical reporting side of things, and we’ll talk from the legal side and we’ll do some — we’ll do some opioiding.
Alaric DeArment: Alright.
Joe Patrice: Is that a word?
Alaric DeArment: No.
Joe Patrice: Welcome.
Alaric DeArment: But it could be.
Joe Patrice: Welcome to the show. So —
Alaric DeArment: Thank you.
Elie Mystal: First of all, just for our listeners who are not following this kind of news all the time, just give us a brief overview of what Purdue Pharma is, because before this started happening I thought Purdue made chickens, and apparently they’re into more than that.
Joe Patrice: That’s not even spelled the same.
Alaric DeArment: Yeah, it’s — I think the chicken company is Per.
Joe Patrice: Yeah, it’s more like a — it’s more like the university.
Alaric DeArment: Yeah.
Joe Patrice: Yeah.
Elie Mystal: Oh, like the Boilermakers.
Joe Patrice: Yes.
Elie Mystal: There you go.
Joe Patrice: Yeah.
Elie Mystal: So I thought Purdue made bad football.
Joe Patrice: Yeah, harsh, ooh, but had a great engineering school apparently.
Alaric DeArment: Yeah, so basically Purdue Pharma is based up in Stamford Connecticut owned by the Sackler family, and they’re the company that makes OxyContin, which is a long-acting form of oxycodone, which is a an opioid painkiller that’s been on the market for ages and ages.
Elie Mystal: So, why are they in trouble now, because OxyContin seems like a — I’ve had it when I had my gallbladder out, about 15 years ago, I’ve had OxyContin at that point.
Joe Patrice: Oh interesting, because I find a lot of things you do to be particularly galling, so I thought you still had that. I’ll be here all week, folks.
Elie Mystal: You’re such a dick. So why is OxyContin bad?
Alaric DeArment: Well, OxyContin isn’t — is not inherently bad, I mean, if it’s being used the way it’s supposed to be used then it’s a perfectly fine drug. The problem is that what the company is accused of doing and what other opioid makers are accused of doing is essentially promoting improper use of the drug, getting doctors to prescribe it more often than they should and getting people hooked on it, because it is an opioid and it’s very highly addictive.
Joe Patrice: And you hit on a legal concept that’s kind of important for those who haven’t done a lot of litigation involving stuff like the FDA, but prescribing it for uses that it’s not meant to be prescribed for is the real bread and butter of this kind of litigation.
Alaric DeArment: Yeah.
Joe Patrice: Because drugs are approved for certain purposes, it’s not like you say, oh, this drug is fine; well, I guess you do kind of in the over-the-counter side, but when you’re in the prescription world it’s approved very situationally, and it’s on the doctors to make sure that it’s used in those proper forms and that’s what the FDA is there to do and when companies are reaching out and doing ad campaigns to encourage off-label prescriptions, that’s a problem, because doctors can’t prescribe things off-label.
Alaric DeArment: Correct.
Joe Patrice: But they can’t be told to be doing that or incentivize for it.
Alaric DeArment: Exactly. Yeah, so basically there was another opioid company that was involved in a scandal as well called Insys, their founders —
Elie Mystal: Incest?
Alaric DeArment: No, Insys.
Elie Mystal: Insist.
Alaric DeArment: No, Insys; I-N-S-Y-S
Joe Patrice: Yeah.
Elie Mystal: Oh, okay.
Alaric DeArment: Yeah, Insys. Insys as in “system”.
Joe Patrice: See, let’s be very clear, we are going to make fun of almost all of these companies once they come out because they all have ridiculous names, but on that note, Purdue, actually one of the more normal ones. Alright, let’s move on, Insys.
Alaric DeArment: Yeah, so several of their founders actually were found guilty in court because they promoted off-label prescribing of a form of fentanyl that is approved for treating breakthrough cancer pain, but what they did is they got a bunch of pain doctors to prescribe it for other pain issues that are not related to cancer.
So it’s — I mean it is bit of a fine line. I mean, so a doctor legally can prescribe a drug for anything, but they have to do it within ethical boundaries and according to data it has to be grounded in actual science. A company cannot promote drugs for off-label use, that’s illegal.
Elie Mystal: So, Joe, and you’ve kind of touched on this already, but can you explain why aren’t the doctors the ones being sued if they’re the ones writing the scripts for off-label use as opposed to the pharmaceutical company, like why aren’t I going after Dr. Feelgood who’s prescribing me OxyContin because I got a blister?
Joe Patrice: I mean while doctors can get in trouble for this, the real crux of this issue is the off-label promotion, and while I wasn’t involved in any of this opioid stuff, I have been a lawyer involved in cases like this before.
Elie Mystal: You are from the Midwest so I’m sure you’ve done some.
Joe Patrice: I’ve only been a lawyer in New York City, but I hear what you’re trying to do, but there was a rash of instances like this several years ago where pharmaceutical companies or medical device companies because this also applies to them — these rules apply to them too would try to — would regale shall we say doctors with trips and junkets and golf things and stuff like that.
Elie Mystal: Oh this is like when they took Dr. Richard Kimble’s friends to Pro Vasek, took them on the fishing trip, right.
Joe Patrice: Pro Vasek, you remember that company but not that — yeah, exactly, this is very much like the fugitive, and what would happen is these trips, which are sales trips, and it’s perfectly fine to sell your drug, but part of the discussion would be the FDA doesn’t — says you can’t prescribe this for using the fentanyl example pain, but buddy, we took you out here for golf and did you know it actually could help for that and that sort of thing that is a crime.
Alaric DeArment: Well, I think an interesting thing to point out is that this whole multi-district litigation with — in which Purdue is involved, it involves more than just Purdue. There’s also Mallinckrodt, there’s Johnson & Johnson and no pharmaceuticals.
Joe Patrice: Johnson & Johnson, that’s pretty normal.
Alaric DeArment: And then of course there’s also distributors, AmerisourceBergen, Cardinal Health, retailers like Walgreens. So there’s a lot of different players here. I mean —
Joe Patrice: Can you just —
Alaric DeArment: Purdue is obviously one of the bigger ones and the most infamous, but –
Joe Patrice: Right.
Elie Mystal: Can you just explain really quickly the difference between a pharmaceutical company like Purdue Pharma and a distributor like what does a distributor do —
Joe Patrice: Like the pharmacy.
Elie Mystal: But when I think of pharmacy I think of CVS or —
Joe Patrice: Oh he did say, Walgreens.
Alaric DeArment: Yeah, Walgreens is involved. They are retail pharmacy. Distributors are the ones that distribute the drugs. I mean and the pharma companies are the ones that actually develop and produce the drugs.
Elie Mystal: So they’ve been sued, they lost — they lost big time and so they filed for bankruptcy to kind of protect themselves from the lawsuit.
Alaric DeArment: Yeah.
Elie Mystal: So, for people again, who aren’t now bankruptcy attorneys and by the way with a recession on the way you all should consider being bankruptcy attorneys.
Joe Patrice: I mean, it is — it’s got to be a growth industry.
Elie Mystal: You guys are going to be fine, but people were not bankruptcy attorneys or don’t really understand bankruptcy law. One of the reasons why you file for bankruptcy is that it’s not so much just to limit your liability, it’s to order the payouts of your liabilities. So like your investors get paid off first then a bunch of other stakeholders and then you only kind of get at the very end to the people who have actually been hurt by your litigation, your litigation losses count as a debt against your company, but it’s a debt that has to stand in line against a whole bunch of other debts. And so, when a company like Purdue files for bankruptcy, the people who were likely to get screwed are the people who should have won money from the settlement, which brings us to the Sackler family, which is I am assuming rich people who own —
Alaric DeArment: Very, yeah, so —
Elie Mystal: So who are they?
Alaric DeArment: So they’re the ones who own Purdue Pharma and they have pledged to pay $3 billion of their own money toward this proposed settlement from Purdue which would be worth $10 billion and maybe even up to like $12 billion.
Elie Mystal: They are using the term “their own money” that was pretty interesting.
Alaric DeArment: Yeah — well, yeah. Well, what’s interesting about it is that Letitia James she —
Elie Mystal: That’s the New York State Attorney General?
Alaric DeArment: Yeah. So she found that apparently they had transferred like a billion dollars or something like that to Swiss Bank accounts.
Joe Patrice: As one does.
Alaric DeArment: Yeah, as one does, so that kind of complicates the whole effort because, I mean, I think some of the attorneys general are okay with the settlement but then a bunch of them are also opposing it like Letitia James and the other ones in Connecticut and Massachusetts.
Elie Mystal: So some of the 00:13:59 Sackler family is that — this is a — Purdue Pharma is a family owned business that they have been rating for generations, reaping the profits of the business and they’ve done it in a very kind of standard way where the company pays out money and then the Sacklers take the profits of the company and put it in their bank account. So when the company goes bankrupt a lot of their — what should have been produced kind of cushion, financial cushion for large settlement has already been rated by the Sackler family.
The legal issue at play here is really to the extent to which State Attorney Generals can pierce the veil and go after the Sackler money directly in order to pay off Purdue’s debts as opposed to keeping all of the debts focused solely on the Purdue Pharma company, which is bankrupt.
Joe Patrice: I mean yeah, I mean this is always the question with piercing the corporate veil, like the economy works better because we allow there to be a corporate veil that separates individual owners from the company’s assets. It allows people to take risks that they wouldn’t otherwise do if they thought their entire livelihood would go under if they gambled it on a business. These are the reasons we have this.
That said, there are perhaps too onerous blockades to getting past that when people really are basically merged with the business and they are not really, this is my separate business from my livelihood, but it is them, they are really just the actor themselves. And so that’s what you are arguing for is that in this case they may be that and they may or may not, but that’s what Elie is talking about.
Elie Mystal: Do you have a prediction on how that’s going to fall?
Joe Patrice: My guess is that the splitting of the baby will be that yes, there is a corporate veil, these folks aren’t individually liable for any of this; however, these most recent transfers were fraudulent transfers given that they knew that a bankruptcy was going to happen and therefore those transfers have to go back. That’s my guess as to how a judge would cut this up, because there are rules against basically you can’t — if you know you are about to go bankrupt, you can’t start moving money, so that you don’t have to pay it, that would defeat the purpose of bankruptcy rules. So we have provisions to claw that back.
Elie Mystal: Yeah. The other thing we wanted to talk to you about today Alaric is, I was reading on your website, there is a new peanut allergy drug, this is important in my little life, because I have two children and while my children are thankfully food allergy free, you can’t go to a school lunch or a field trip or whatever without getting bombarded with don’t break nuts, you are killing the children with your peanuts, and like it’s a big freaking thing.
Joe Patrice: Peanuts or legumes.
Elie Mystal: Yeah. And then there are also parents who are like, oh, is there gluten in that cake? Bitch, I don’t know, it’s a goddamn cake, I assume so. Sorry, my kid’s birthday party is this weekend and I am just feeding 30 kids with their own — 30, relatively speaking, upper middle class kids with all their different fucking issues is annoying, yet also terrifying, because God forbid, you put the wrong thing with the wrong kid and whatever and there is a serious allergic reaction on your watch, like you would feel horrible. So as much as —
Joe Patrice: Would you? Sorry, that was — that probably was me, I may be different here. Go on.
Elie Mystal: I would feel horrible if some child came to my son’s birthday party and left in an ambulance because of something that was in the food. So obviously you are taking it all seriously, but that’s why I noticed the peanut allergy thing, because if there was just a pill you just give all the kids and be like, all right now, have a Snickers. like that would be the best of all worlds.
Alaric DeArment: Yeah, so Palforzia, that’s the name and basically —
Elie Mystal: Palforzia.
Joe Patrice: Again, I don’t understand where this whole industry comes up with its names, there is some like random letter generator.
Alaric DeArment: Well, there is quite a lot that goes into it, believe it or not. They have to spend quite a bit coming up with drug names, because the FDA requires that it cannot sound like the brand name of a drug that’s on the market and it cannot sound like the generic name of a drug that’s on the market. So they — I mean there is a bit of 00:18:35 science that goes into it. I mean sometimes it will be some reference to the disease that its treating or the active ingredients or things of that kind.
Joe Patrice: Yeah. Well, this is also very much a patent issue, right, you can’t have this be named something and it’s a trademark issue, you are selling it under these trademarks.
Alaric DeArment: Yeah.
Joe Patrice: This is reminiscent of, for those who have seen the South Park episode, where they spend a good deal of time coming up with more and more egregious names trying to see if it’s already been patent and trademarked and I believe they ultimately come up with a pair of balls placed menacingly on the table is the only company name that was not previously trademarked.
Actually that episode, for those — if you do remember this episode, because that episode is actually a very good episode if you are interested in the law, because Cartman’s scheme is entirely legal and entirely — or was under the prevailing laws of the time and was entirely ingenious, which was he then renamed the company Washington Redskins, because the football team did not have a valid trademark at that time, given the way the courts had been and so he said yeah, we could use that.
Elie Mystal: Okay, so Palforzia, is it going to make my child’s birthday party better?
Alaric DeArment: So basically what happened is that the drug underwent review by an FDA Advisory Committee. So the FDA convenes Advisory Committees of outside experts; physicians, patient advocates, biostatisticians when there is some uncertainty about a drug, maybe there is some controversy about it or they just need outside expertise.
So the Advisory Committee voted 7:2 in favor of the drug safety advocacy — or in favor of the drug’s efficacy profile and 8:1 in favor of its safety profile, meaning that it is essentially telling the FDA you can go ahead and approve this drug.
Now, the FDA —
Elie Mystal: It works.
Alaric DeArment: Yeah. So basically the FDA is not required to follow the advice of Advisory Committees, it usually does, sometimes when the Advisory Committee says yes, the FDA says no. Sometimes when the Advisory Committee says no, it still says yes. But usually if the Advisory Committee says this is a good drug, the FDA will go along with that.
Elie Mystal: So my question here is, who wants the drug to happen and who doesn’t, right, because it seems to me that like planters would have a vested interest in making sure this drug comes out, right?
Alaric DeArment: I guess you could say that. I don’t think that’s really necessarily the reason though, because I mean the idea is that the drug is mainly for accidental exposure. Like a kid comes to your child’s birthday party and consumes something that happens to contain peanut protein and this will lessen the likelihood of an allergic reaction.
Elie Mystal: Is it a prophylactic, so you have got to take it before the party or is it like an EpiPen, you can take it after?
Alaric DeArment: Well, neither, it’s actually something that you would be taking regularly and eventually you build up a tolerance.
Elie Mystal: Oh.
Alaric DeArment: Yeah.
Elie Mystal: So then Joe, if the kid shows up to my kid’s party and Palforzia is out, it’s been out for like years, and doesn’t take Palforzia, and then gets all anaphylactic on me, do I have a defense because the parents should have been giving them Palforzia? That’s Thinking Like a Lawyer my friends, like do I have a defense because the parent didn’t do the de minimis level of protection of their kid from peanuts?
Joe Patrice: A de minimis level of this drug is inevitably going to be something that those parents probably don’t have coverage for and then will have to spend hundreds out-of-pocket for it, so no, but go on.
Alaric DeArment: Well, it is important to point out actually that — so there is what’s called a Risk Evaluation and Mitigation Strategy and this is basically what a drug label will get when there is a lot in the way of potential toxicities involved or other safety issues.
So part of that REMS, as it’s called, includes that patients who are on this drug have to have an EpiPen, or their caregivers have to have an EpiPen, because there is still a risk of — yeah, there is still a risk of allergic reaction, it’s just a lessened risk of it.
Elie Mystal: If you still have to have the EpiPen, what the hell is the point?
Alaric DeArment: And that is something that I think was sort of alluded to, which is that it is an extra expense, but then at the same time, eventually there is a lower risk of an allergy.
Elie Mystal: That’s a very, batteries not included kind of bullshit toy.
Joe Patrice: I mean thankfully, I am assuming you are not taking over America’s healthcare.
Elie Mystal: Look, there are no peanuts at the party and my wife, who is a saint on these things, has actually gone out of her way to make sure that we have gluten-free cupcakes.
Alaric DeArment: I will point out that, I think as I just mentioned before, the vote was 7:2 in terms of the efficacy and 8:1 in terms of safety, and there was one of the doctors who voted against the drug on both grounds, because he basically — yeah, he essentially said that the safety and efficacy profile of the drug do not support it. But again, he was the minority opinion.
Elie Mystal: Well, cool. All right.
Joe Patrice: Yeah.
Elie Mystal: Yeah, happy birthday.
Joe Patrice: Yeah, happy birthday. So with that, we are going to move out of this subject, but thanks for joining us today.
You should read MedCity News. You should read Above the Law obviously. You can follow us on social media. I am @JosephPatrice, he is @ElieNYC. He is @biotechvisigoth, I believe, which is one of my favorite Twitter handles of all time.
You should also listen to the entire offerings of the Legal Talk Network. You should give reviews to this podcast, subscribe to it, all that sort of stuff. Listen to The Jabot, Kathryn’s podcast; it’s also her birthday as it turns out, but whatever.
Elie Mystal: Also does not have peanut allergies.
Joe Patrice: Also does not, that’s good. Anyway, with all that, we are done. We will talk to you soon. Bye.
Elie Mystal: Peace.
The views expressed by the participants of this program are their own and do not represent the views of, nor are they endorsed by Legal Talk Network, its officers, directors, employees, agents, representatives, shareholders, and subsidiaries. None of the content should be considered legal advice. As always, consult a lawyer.
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