OxyContin Made The Sacklers Rich. Now It’s Tearing Them Apart. - WSJ

Jacqueline Sackler was fed up. HBO’s John Oliver would soon use 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.

Before the show aired, 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 U.S. and abroad.

The host of lawsuits, some of which name as defendants many individual Sacklers who served on Purdue’s board, has unraveled the family’s standing in philanthropic, academic and financial circles. Family members have been leaving the boards of nonprofits. 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.

Purdue Pharma 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 U.S. 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 nonprofits 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 U.S. 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 U.S. government. In 2013, the U.S. 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.”

After the pleas, the company and family regarded their OxyContin legal problems as behind them. But about a decade later, municipalities affected by opioid addiction, which has taken roughly 218,000 lives in the U.S. over two decades, began filing lawsuits accusing Purdue and several other drugmakers and distributors of creating a health crisis.

Most of the suits have been consolidated in federal court in Ohio, where companies and the plaintiffs have been working for more than a year on reaching a settlement.

Since 2010, Purdue has sold OxyContin in a form designed to be harder to abuse. Early last year, Purdue stopped promoting the drug and cut remaining members of its sales force. The last family member on the Purdue board left this year.

The Sacklers continue to own the company through family trusts and will need to agree on its future, including whether this should include a bankruptcy filing, an idea the company has considered for several months.

The Sacklers are addressing these questions the same way they control Purdue: on separate tracks. Each side of the family has its own law firm and its own public-relations firm, as does the company. While both sides have said they want to reach a deal that would give them finality in the litigation, until recently Raymond’s side was more interested in fighting the allegations, according to several people familiar with the matter.

One disagreement came in late March, shortly before Purdue said it would settle with Oklahoma for $270 million. Attorney David Bernick, representing Raymond’s heirs, was concerned that settling might encourage other plaintiffs to seek similar amounts and wanted Purdue to file for bankruptcy reorganization instead, according to people familiar with the matter.

The family ultimately agreed that settling would let Purdue avoid an approaching trial date and have time to possibly settle more cases and do a restructuring through a bankruptcy filing. Mr. Bernick declined to discuss a client matter.

Family members disagreed on how to respond to media inquiries about emails Richard Sackler sent as president, made public in lawsuits this year. In one 2001 email, he wrote: “I’ll tell you something that will totally revise your belief that addicts don’t want to be addicted. It is factually untrue. They get themselves addicted over and over again.”

Mortimer’s son Mortimer D.A. Sackler and his wife, Jacqueline Sackler, found such notes embarrassing and were horrified when they became public, according to people who spoke with the couple. They were among family members who wanted Richard, the former Purdue president, to go beyond calling the emails insensitive and to express remorse for them.

Richard’s son, David, supported doing this for one media inquiry but didn’t believe that John Oliver’s HBO show in April was an appropriate forum for such a statement, said people familiar with the matter.

Richard recently said in a deposition and through a spokesman that he has learned more about addiction and has compassion for addicts.

Some Sacklers who aren’t involved with Purdue have singled out Richard for blame. Arthur Sackler Jr., son of the brother who died before OxyContin’s introduction, got into a heated argument with Richard late last year in a conference room at company headquarters, accusing him of tarnishing the family name, according to two people familiar with the exchange.

There is one thing on which the family appears united: a belief they aren’t responsible for fueling the addiction crisis, according to internal emails and interviews with people who have spoken with the Sacklers.

Raymond’s heirs generally believe the company may have made some mistakes nearly two decades ago, and blame former executives, but think family members shouldn’t be held responsible years later, according to people who have spoken with them. They regret they weren’t more proactive in stating the family’s belief they aren’t responsible for the opioid crisis.

For Ilene Sackler Lefcourt, a daughter of Mortimer, the litigation and scrutiny are a distraction from her work running a child-parent mental-health nonprofit, according to a friend, Patricia Nachman. “She says, ‘It’s not that we did everything right, but it’s not at the magnitude that it seems to be in the press,’ ” said Dr. Nachman.

Jacqueline Sackler, in the email she sent before the John Oliver show in April, wrote that “I have yet to see anything illegal or even immoral that this company has done. I’ve seen distasteful and disrespectful.”

Ms. Sackler criticized the family’s communications strategy and said she was through serving as the nation’s punching bag. She expressed concern about how the criticism of the Sacklers was affecting her family. “Lives of children are being destroyed,” she wrote.

—Jim Oberman and Elisa Cho contributed to this article.

Corrections & Amplifications
Jacqueline Sackler’s email was sent before John Oliver’s HBO show aired. An earlier version of this article incorrectly stated it was sent afterward. (July 13, 2019)