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Court Labels Big Pharma ‘Dealers’

In the first ruling of its kind in Tennessee, an appellate court says opioid makers who act like drug dealers can be treated like ones.

The state Court of Appeals on Wednesday ruled opioid makers Endo Pharmaceuticals, Purdue Pharma, Mallinckrodt Pharmaceuticals and Teva Pharmaceuticals can be sued as drug dealers — and Tennessee’s district attorneys generals have the right to sue them.

It is the first test of an experimental use of an unusual Tennessee law known as the Drug Dealer Liability Act to hold opioid makers financially responsible for the opiate epidemic that claims thousands of lives in the state annually.

In its ruling, the court struck down a decision last year by 8th Judicial District Circuit Court Judge John McAfee. Siding with opioid makers’ argument, McAfee ruled drug makers can’t be considered drug dealers because the product they deal — opioids — are legal and approved for distribution by the Food and Drug Administration.

The appellate court, though, says McAfee — and the drug makers — are wrong.

Court: Big Pharma drug dealers

“Drug manufacturers cannot, as is alleged here, knowingly seek out suspect doctors and pharmacies, oversupply them with opioids for the purpose of diversion, benefit from the process, and then cynically invoke their status as otherwise lawful companies to avoid civil liability,” Appellate Judge D. Michael Swiney wrote.

“The common perception of a drug dealer may be that of the street dealer, but the DDLA does not make that distinction,” the opinion continued. “If plaintiffs’ allegations are correct … (opioid) manufacturer defendants knowingly flooded the affected areas with drugs they knew were to be diverted.

“That is the basis for civil liability under the DDLA whether one’s headquarters is an office building or a back alley,” the court ruled.

DA: ‘Substantial victory’ in ruling

Fourteen prosecutors representing 47 counties in Middle and East Tennessee in 2017 filed lawsuits against opioid makers, including OxyContin maker Purdue Pharma, and distributors under the Tennessee Drug Dealer Liability Act.

It was a new twist on that law — which allows “innocent third parties” to sue drug dealers for damages — and a new front on the nationwide legal battle to try to hold Big Pharma financially accountable for the deadly epidemic its opioid drugs have caused.

One of those lawsuits — filed by top prosecutors in East Tennessee judicial districts including Campbell, Knox, Anderson, Sevier, Roane, Loudon and Bradley Counties — is the first to put this new twist on the law to the legal test.

It was that lawsuit, filed on behalf of the prosecutors by Nashville law firm Branstetter, Stranch and Jennings, McAfee shot down before a trial could be held. The prosecutors appealed. The appellate decision means the case can now move forward.

“This is a substantial victory for the cities and counties represented in this case, and sound affirmation of our complaint,” 8th Judicial District Attorney General Jared Effler said in a statement. “We look forward to bringing this case to trial and holding these companies accountable for the damage they have inflicted.”

Lawsuits and settlements

Tennessee logs more opiate prescriptions per capita than any state in the nation except West Virginia. In just two years, Tennessee pharmacies filled 12 million prescriptions for opioids. The annual death toll from opioid overdoses in the state has climbed steadily in the last decade, with 1,837 logged by the Centers for Disease Control and Prevention in 2018 alone.

Internal records from Purdue and its fellow opioid makers show the firms targeted Tennessee doctors who had a history of overprescribing opiates, offered coupons to addicts, lied to both doctors and patients about the drug’s addictive properties and infiltrated the approval process at the FDA with sham experts they secretly funded.

Tennessee’s DAs opted in 2017 to take action against Big Pharma after accusing the Tennessee attorney general’s office of inaction. They noted the state attorney general’s office — under current Attorney General Herbert Slatery’s predecessor — was part of a 2007 settlement with Purdue Pharma, the manufacturer of widely abused opioid OxyContin.

In that case, Tennessee received roughly $720,000 of the $19.5 million settlement. Of that money, $400,000 went to cover attorneys’ fees for the attorney general, according to the district attorneys.

The DAs also pointed out the attorney general’s office had authority under that settlement to force Big Pharma and its partners to reveal when communities received shipments of more opiates than population but did nothing.

Several East Tennessee county governments also have filed suit in recent years against Big Pharma via racketeering laws and federal court, where U.S. District Judge Dan Aaron Polster of Ohio has already been tapped to try to marshal what’s known as a multidistrict litigation, or MDL.

States split on settlement talks

Just this week, authorities announced a tentative settlement in that MDL, involving roughly half the states and local governments who are suing. Under that agreement, Purdue would file for a structured bankruptcy and pay as much as $12 billion over time.

But several states are refusing to sign on and vow to continue fighting Purdue even if members of the Sackler family who own it file bankruptcy as threatened.

Slatery’s office also has pending lawsuits against Purdue and Endo in Knox County Circuit Court. Samantha Fisher, a spokeswoman for that office, said those lawsuits would be dismissed as part of that tentative MDL settlement.

“This plan, if approved in a structured bankruptcy proceeding for Purdue Pharma, would secure billions of dollars nationwide to go toward addressing the devastating effects of the opioid epidemic and will result in the Sackler family divesting themselves of their business interests in the pharmaceutical industry forever,” Fisher said on behalf of the Tennessee AG.

But several states are refusing to sign on and vow to continue fighting Purdue even if members of the Sackler family who own it file bankruptcy as threatened.

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