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While I totally agree that the Sacklers should be considered like a criminal organization conspiring to kill people and would deserve long jail time, there is a

by Iv 7y ago

While I totally agree that the Sacklers should be considered like a criminal organization conspiring to kill people and would deserve long jail time, there is another goal to this confiscation than punishment. It is a way to change incentives. I don't know what part of their $13B wealth comes from opioids, but this tax made it suddenly far, far less profitable. They will make their calculation of what would have been a better course of action, but if they had found a way to stay within the law and only lost $3B in revenues, it would have been profitable. Fines are an efficient way to regulate companies and always welcomed, even if insufficient. Not only this is like a tax, but there is a randomness factor it: it depends on a court decision. A lot of companies are risk-adverse so such a fine can have a chilling multiplier.

geofft 7y ago
I think the argument of the comment you're replying to is that it was profitable and they did make the calculation. They're left with $7B, which is a lot. It's hard to make $7B. And the multiplier works in the other way. Because of the non-deterministic chance of whether you get caught and whether you get punished and whether all of this happens before you donate all your money to charitable causes and die, the expected value of your loss is a fraction of the fine. A truly effective penalty would fine them many times the illegal profit to account for that.
- loeg 7y ago
  They also did not end up giving up any of their personal wealth in the settlement. $5B was just the starting bid. > A truly effective penalty would fine them many times the illegal profit to account for that. How much of the profit was illegal and how would you go about quantifying that?
  - geofft 7y ago
    > How much of the profit was illegal and how would you go about quantifying that? I mean, I haven't done a criminal investigation of the Sacklers, so I'm the wrong person to ask. But on general principle - if the goal is to use fines to disincentivize future criminal behavior (which seems reasonable to me, but it's not the only factor at play in setting fines), you should treat all profit that was related to the criminal behavior as criminal and not try to reverse-engineer "How much money would they have made if they hadn't done this crime." Otherwise you're still incentivized to try 10 different legally-questionable strategies and keep the profit from the 9 that were found to be on the other side of the line. As a concrete example, if Google's copying of Java interfaces were ruled illegal (and to be clear I don't think it should be), then an appropriate fine is (some multiple of) all profit from Android, not some attempt at retconning how much money Google would have made if they had used something other than Java or waited for OpenJDK. (That's a fine, to be clear, not damages. Oracle's damages should be calculated by retconning how much they would have gained had Google kept the laws, and nothing more.)
    - loeg 7y ago
      I mean, the first step is establishing a second crime. What's the crime on which to say any profit since 2001 is related to a crime? The company and some executives already plead guilty in 2007 to, essentially, false advertising, during the 1995-2001 period immediately after the drug was developed. During that time, "OxyContin brought in $2.8 billion in revenue for Purdue Pharma."[1] Double Jeopardy means that specific crime during that specific period is done and settled. The company paid out $600 million in fines and the execs another ~$35 million. So that's 22% of revenue in fines in that instance. (I guess the courts didn't agree with your notion that fines should be 100+% of revenue.) The New Yorker estimated in 2017 that OxyContin has brought in $35 billion in total revenue for Purdue[2]; if that's true, subtracting the 2.8 from earlier suggests that it produced $32 billion in revenue 2001-2017. Did Purdue Pharma commit another crime (or the same mislabeling / false advertising kind of crime) after 2001? [1]: https://www.nytimes.com/2007/05/10/business/11drug-web.html https://www.nytimes.com/2007/05/10/business/11drug-web.html [2]: https://www.newyorker.com/magazine/2017/10/30/the-family-that-built-an-empire-of-pain https://www.newyorker.com/magazine/2017/10/30/the-family-tha...
      - geofft 7y ago
        Right, my claim is the first crime should have been penalized more harshly, if committing it was net profitable. I'm not involved in prosecuting the case so I can't tell you if any other crimes have been committed.
        loeg 7y ago
        Thanks, I understand better now.
cameldrv 7y ago
From what I can quickly find on the web, I'd estimate that they sold about $35 billion worth of Oxycontin. That doesn't include all of the other opioids they sold through Purdue and other affiliated companies. I'd say it's likely that the vast majority of the Sackler fortune is from Oxycontin. If you rob a bank you can't just give the money back if you get caught, and you certainly can't just give half of it back.
- loeg 7y ago
  > If you rob a bank you can't just give the money back if you get caught, and you certainly can't just give half of it back. How much less oxycontin do you think they'd have sold if their advertising was less reprehensible? Notably, Purdue produced some of the first extended-release opioid formulations on the market, which does have some real value even without exaggerated sales. It developed MS Contin (XR morphine) in 1984 and OxyContin (XR Oxycodone) in 1996. (CONTIN™ is Purdue's extended-release drug delivery system developed in the 70s.) OxyContin was also the first "Abuse-deterrent Formulation" (ADF) approved by the FDA, for whatever value that has[1]. Today, ten such formulations are approved and of those, five are actually available. So tl;dr, I don't think your metaphor is especially apt. They should be punished for their sales tactics, which were outrageous, but there seems to be this mentality that all opioid manufacture is evil, and I don't believe that. [1]: https://anesthesiology.pubs.asahq.org/article.aspx?articleid=2667599#195475682 https://anesthesiology.pubs.asahq.org/article.aspx?articleid...
  - cameldrv 7y ago
    The problem is that they used the XR aspect of it to argue (evidently without basis) that patients would not become addicted to it. There was loads of lobbying of the FDA/DEA, sending doctors to seminars in Hawaii, I even remember numerous op-eds in the NYT arguing that doctors were committing malpractice for undertreating pain. This led to the rise of the Pain Management Clinic, which primarily existed to prescribe opioids. Without the FDA/DEA lobbying by Purdue, these clinics would have been shut down by the DEA for prescribing too many opioids. The message that this huge PR/Sales/Lobbying effort was sending was: XR opioids have a low addiction potential, and not prescribing them, or preventing them from being prescribed is malpractice and insensitive to patients that are in pain. I don't doubt that many fewer people are in significant pain now, but we also have something like 4% of the entire U.S. population addicted to opioids.

by Iv 7y ago

geofft 7y ago

I think the argument of the comment you're replying to is that it was profitable and they did make the calculation. They're left with $7B, which is a lot. It's hard to make $7B. And the multiplier works in the other way. Because of the non-deterministic chance of whether you get caught and whether you get punished and whether all of this happens before you donate all your money to charitable causes and die, the expected value of your loss is a fraction of the fine. A truly effective penalty would fine them many times the illegal profit to account for that.

loeg 7y ago
They also did not end up giving up any of their personal wealth in the settlement. $5B was just the starting bid. > A truly effective penalty would fine them many times the illegal profit to account for that. How much of the profit was illegal and how would you go about quantifying that?
- geofft 7y ago
  > How much of the profit was illegal and how would you go about quantifying that? I mean, I haven't done a criminal investigation of the Sacklers, so I'm the wrong person to ask. But on general principle - if the goal is to use fines to disincentivize future criminal behavior (which seems reasonable to me, but it's not the only factor at play in setting fines), you should treat all profit that was related to the criminal behavior as criminal and not try to reverse-engineer "How much money would they have made if they hadn't done this crime." Otherwise you're still incentivized to try 10 different legally-questionable strategies and keep the profit from the 9 that were found to be on the other side of the line. As a concrete example, if Google's copying of Java interfaces were ruled illegal (and to be clear I don't think it should be), then an appropriate fine is (some multiple of) all profit from Android, not some attempt at retconning how much money Google would have made if they had used something other than Java or waited for OpenJDK. (That's a fine, to be clear, not damages. Oracle's damages should be calculated by retconning how much they would have gained had Google kept the laws, and nothing more.)
  - loeg 7y ago
    I mean, the first step is establishing a second crime. What's the crime on which to say any profit since 2001 is related to a crime? The company and some executives already plead guilty in 2007 to, essentially, false advertising, during the 1995-2001 period immediately after the drug was developed. During that time, "OxyContin brought in $2.8 billion in revenue for Purdue Pharma."[1] Double Jeopardy means that specific crime during that specific period is done and settled. The company paid out $600 million in fines and the execs another ~$35 million. So that's 22% of revenue in fines in that instance. (I guess the courts didn't agree with your notion that fines should be 100+% of revenue.) The New Yorker estimated in 2017 that OxyContin has brought in $35 billion in total revenue for Purdue[2]; if that's true, subtracting the 2.8 from earlier suggests that it produced $32 billion in revenue 2001-2017. Did Purdue Pharma commit another crime (or the same mislabeling / false advertising kind of crime) after 2001? [1]: https://www.nytimes.com/2007/05/10/business/11drug-web.html https://www.nytimes.com/2007/05/10/business/11drug-web.html [2]: https://www.newyorker.com/magazine/2017/10/30/the-family-that-built-an-empire-of-pain https://www.newyorker.com/magazine/2017/10/30/the-family-tha...
    - geofft 7y ago
      Right, my claim is the first crime should have been penalized more harshly, if committing it was net profitable. I'm not involved in prosecuting the case so I can't tell you if any other crimes have been committed.
      - loeg 7y ago
        Thanks, I understand better now.

cameldrv 7y ago

From what I can quickly find on the web, I'd estimate that they sold about $35 billion worth of Oxycontin. That doesn't include all of the other opioids they sold through Purdue and other affiliated companies. I'd say it's likely that the vast majority of the Sackler fortune is from Oxycontin. If you rob a bank you can't just give the money back if you get caught, and you certainly can't just give half of it back.

loeg 7y ago
> If you rob a bank you can't just give the money back if you get caught, and you certainly can't just give half of it back. How much less oxycontin do you think they'd have sold if their advertising was less reprehensible? Notably, Purdue produced some of the first extended-release opioid formulations on the market, which does have some real value even without exaggerated sales. It developed MS Contin (XR morphine) in 1984 and OxyContin (XR Oxycodone) in 1996. (CONTIN™ is Purdue's extended-release drug delivery system developed in the 70s.) OxyContin was also the first "Abuse-deterrent Formulation" (ADF) approved by the FDA, for whatever value that has[1]. Today, ten such formulations are approved and of those, five are actually available. So tl;dr, I don't think your metaphor is especially apt. They should be punished for their sales tactics, which were outrageous, but there seems to be this mentality that all opioid manufacture is evil, and I don't believe that. [1]: https://anesthesiology.pubs.asahq.org/article.aspx?articleid=2667599#195475682 https://anesthesiology.pubs.asahq.org/article.aspx?articleid...
- cameldrv 7y ago
  The problem is that they used the XR aspect of it to argue (evidently without basis) that patients would not become addicted to it. There was loads of lobbying of the FDA/DEA, sending doctors to seminars in Hawaii, I even remember numerous op-eds in the NYT arguing that doctors were committing malpractice for undertreating pain. This led to the rise of the Pain Management Clinic, which primarily existed to prescribe opioids. Without the FDA/DEA lobbying by Purdue, these clinics would have been shut down by the DEA for prescribing too many opioids. The message that this huge PR/Sales/Lobbying effort was sending was: XR opioids have a low addiction potential, and not prescribing them, or preventing them from being prescribed is malpractice and insensitive to patients that are in pain. I don't doubt that many fewer people are in significant pain now, but we also have something like 4% of the entire U.S. population addicted to opioids.