Money, One Hell of a Drug (Empire of Pain: The Secret History of the Sackler Dynasty)
"A saga about three generations of a family dynasty and the ways in which it changed the world."
I recently finished Empire of Pain: The Secret History of the Sackler Dynasty, a chronicle of the former owners of bankrupt Purdue Pharma and purveyors of Oxycontin. This was the most upsetting book I touched this year and I feel conflicted even writing about it.
I picked it up after coming across this chart:
The timeline seems to be: Oxycontin gets introduced in 1996. Purdue aggressively promotes it and becomes a pioneer and driving force behind the opioid crisis (though many other firms get involved, too). Oxy leads the way for a resurgence of heroin and, more recently, fentanyl.
I learned a lot from the book but it is a long and ugly ride to the dark side of the American Dream. The Sacklers start out as ambitious immigrants before becoming the villains and the book highlights hair-raising institutional failure at the FDA and Justice Department.
At the heart of the story is a thorny issue: addiction is great for business but it can quickly negatively affect lives. Opioids are an extreme example but products like alcohol, tobacco, gambling, and social media (even coffee and sugar or junk food) exist with this tension. Painkillers’ vast profit potential proved irresistible to those able to maintain a state of denial about the consequences of their actions.
They were so profitable that smart and educated people created slides like the one below one at a time when overdose deaths were already soaring:
This is why I hesitate to recommend the book despite it being well-written and researched (only a few sections are overly detailed). It will make your blood boil. The Sacklers got away with it (though it seems that the bankruptcy settlement may be overturned). No prison. Even the Met’s Sackler Wing was renamed only last December.
As the name indicates, the book is focused on the Sacklers, not the opioid crisis or pharmaceutical industry:
“My intention was to tell a different kind of story, however, a saga about three generations of a family dynasty and the ways in which it changed the world, a story about ambition, philanthropy, crime and impunity, the corruption of institutions, power, and greed.”
Morgan Housel recently wrote perceptively about the process of acquiring wealth:
“I think for a lot of people the process of becoming wealthier feels better than having wealth.
When people are addicted to the act of becoming wealthier – the numbers going up more than just the numbers being big – and the numbers going down is an integral part of how investing works, of course you’ll find some shattered souls. Some broken egos. Some terrible decisions being made.”
That seems to be a big part of what happened here. The Sackler story was all about ambition, about hunger for wealth and status. Philanthropy and art allowed the former to catalyze the latter. Their ascent into the ranks of America’s richest was marked by drive and resourcefulness before turning into a relentless quest for more that led them to disregard all warnings.
Information about the risks of abuse and addiction were ignored. Instead, the Sacklers maintained a state of delusion in which all blame could squarely be placed on the weakness of drug users:
“‘The company distributed a pamphlet to doctors that suggested addiction “is not caused by drugs.’ Rather, ‘it is triggered in a susceptible individual by exposure to drugs, most commonly through abuse.’”
As late as a deposition in 2019, one family member even fought for credit of having come up with “the idea” for OxyContin.
For the Sacklers, and many others in their industry, selling painkillers was simply too profitable. Money was the drug they could not resist. Faced with the consequences of their actions they chose denial.
Author Patrick Keefe noted:
“There is a notable absence of whistleblowers in the OxyContin story. This may be due to the fact that when people did attempt to blow the whistle, Purdue did its best to crush them … But I came to believe that it was also a function of denial. I would spend hours talking with intelligent people who had worked at the company … when it came to OxyContin’s role in the opioid crisis, they would do their best to explain it away.
Even in the face of voluminous evidence … felony charges, thousands of lawsuits, of study after study, of so many dead, they retreated to the old truths, about abuse versus addiction, about heroin and fentanyl. I wondered if … it was simply too much for the human conscience to bear.”
If there is one lesson from this book it is to take a hard look at our own lives and choices and be mindful of the impact we have on others.
“The first principle is that you must not fool yourself — and you are the easiest person to fool.” Richard Feynman
A few things that stuck out:
“Any dream can be yours.”
The power of an integrated business
The homerun bet
What kind of lawyer do you want?
The trap of high profitability
People were happy to take their cut
“Any dream can be yours.”
“ARTHUR SACKLER WAS BORN in Brooklyn, in the summer of 1913, at a moment when Brooklyn was burgeoning with wave upon wave of immigrants from the Old World.”
The Sackler’s story starts like that many of wealthy Americans: with little but big dreams, wits, and hard work. Poor immigrants arrive in New York from Eastern Europe. The first generation struggles. The father runs a grocery store, reinvests the earnings in real estate, sells the store. He loses everything during the Great Depression.
But his three sons, the three Sackler brothers, create the original family fortune. They find the American dream:
“As the firstborn child of immigrants himself, Arthur came to share the dreams and ambitions of that generation of new Americans, to understand their energy and their hunger. He vibrated with it, practically from the cradle.
From an early age, he evinced a set of qualities that would propel and shape his life—a singular vigor, a roving intelligence, an inexhaustible ambition.”
Their path was education (medical school) and business. The Sacklers were driven, creative and resourceful. They shared “the sense that any dream can be yours, no matter how outlandish it might seem, and that sometimes you just have to plunge forward and ask, ‘Why not?’”
The power of an integrated business
An early surprise in the book is that Oxycontin wasn’t the family’s first rodeo. Far from it. Arthur started his career in pharmaceutical advertising. He was a pioneer who created an integrated little empire of an advertising agency, medical journal, and events. Eventually, the brothers acquire a pharmaceutical company, Purdue Frederick, and entered manufacturing.
Arthur was an advertising genius but also quickly started to play fast and loose with the truth. For Pfizer he and his team created an ad with fake endorsements by physicians across the country.
“It looked so plausible, so real, with the special patina of authority conferred by eight MDs. The ad was polished, impressive, and fundamentally deceptive.”
One of his early hits was marketing Valium for Roche. Arthur recognized that the path to wealth was in equity ownership of businesses - or at least profit participation.
“Before he agreed to promote Librium and Valium, he had struck a deal with Roche in which he would receive an escalating series of bonuses in proportion with the volume of drugs sold.”
Unfortunately, the pharmaceuticals business creates bad incentives at odds with patients:
“Librium and Valium … both did pretty much the same thing. What Arthur’s team at McAdams had to do was convince the world—both doctors and patients—that actually the drugs were different. If Librium was the cure for “anxiety,” Valium should be prescribed for “psychic tension.”
“Librium and Valium made Arthur Sackler very rich. But troubling signs were starting to emerge that the miracle drugs might not be quite so miraculously free from side effects as the advertising had suggested. Roche had informed doctors and regulators that the drugs … were not addictive. As it turned out, this assurance was based more on wishful thinking than on science.”
The emerging Sackler empire was investigated for its ties to a corrupt FDA official. But Arthur was saved by his eloquence and ability to talk himself out of the hearing. It’s one of those moments that could have been a turning point in the story. Instead, boxes full of evidence caught dust in a storage room.
“The Sackler empire is a completely integrated operation,” Blair wrote. They could develop a drug, have it clinically tested, secure favorable reports from the doctors and hospitals with which they had connections, devise an advertising campaign in their agency, publish the clinical articles and the advertisements in their own medical journals, and use their public relations muscle to place articles in newspapers and magazines.
At one point, Lear clipped a cartoon he had come across in a medical journal that depicted an octopus with tentacles that extended to “drug manufacturing,” “medical advertising,” and “medical journals.” Lear sent the clipping to John Blair, with a note that said, “The owner of this particular octopus is a family of three.”
The homerun bet
The next generation of Sacklers was intent on taking their family business to the next level. The way to do this was to develop blockbuster drugs. However, developing drugs is notoriously expensive and risky. Instead, the Sacklers focused on incremental improvements - innovation in the delivery of existing substances. Their first success with a sustained-release morphine for cancer patients, MS Contin, gave the family a taste of real wealth.
“MS Contin would go on to generate $170 million a year in sales, dwarfing anything that Purdue Frederick had sold in the past. The Sacklers had already been rich, by any measure. But with the introduction of their first painkiller, they suddenly became a lot richer. From the beginning, Richard Sackler had entertained dreams for the company that exceeded his father’s grandest ambitions.”
After this success, the Sacklers were high on their own supply. They were on the dangerous treadmill of wanting “more” that Housel described earlier.
When they introduced their next potential blockbuster they were careful to target the largest possible market:
“The company should be very careful about marketing OxyContin too explicitly for cancer pain, because that might complicate the nonthreatening “personality” of the drug. “While we might wish to see more of this product sold for cancer pain,” Friedman wrote, “it would be extremely dangerous at this early stage … to make physicians think the drug is stronger or equal to morphine.” Of course, OxyContin was stronger than morphine. That was a simple fact of chemistry—but one that the company would need to carefully obscure. After all, there are only so many cancer patients. “We are better off expanding use of OxyContin.”
OxyContin would not be a “niche” drug just for cancer pain, the minutes of an early Purdue team meeting confirm. By the company’s estimates, fifty million Americans suffered from some form of chronic pain.”
To succeed they had to combine several skills:
PR: de-stigmatize the use of painkillers by doctors through education, events, favorable press, sponsored advocacy groups.
Regulatory: cultivate key relationships at the FDA to get the drug approved and get the right language on the package leaflet.
Sales: build, motivate, and incentivize a large salesforce. This seems to have boiled down mostly to a monetary incentive. Sell a lot of drugs, make a lot of money.
The Sacklers were already adept at shaping the narrative within the medical community. They also knew how to build fruitful relationships with people at the FDA. The person who approved OxyContin at the FDA later resigned, joined a small firm for a year, then “moved on, to a new position at Purdue Pharma, in Norwalk, with a first-year compensation package of nearly $400,000.”
What kind of lawyer do you want?
It should come as no surprise that (expensive) lawyers started playing a big role at Purdue, both in defending against litigation and, initially, when during the push to introduce and get approval for Oxycontin. The Sacklers opted for lawyers willing to do more than shield them from risk (and blow up risky ideas in the process). They wanted people who were creative, aggressive, and loyal.
Their general counsel was compared to a consigliere, “like Tom Hagen in The Godfather. Very loyal to the family.”
“Corporate attorneys can do one of two things,” Bart Cobert said. “They can go to management and tell them, ‘You can’t do that.’ Or they can go to management and say, ‘Tell me what you want, and I’ll figure out a way to do it.’”
This is a distinction worth keeping in mind when selecting counsel. The emphasis of avoiding risk or “figuring out how to make things happen” can make a big difference in a complex deal. However, the Sackler case also illustrates that using creative lawyers tends to lead to more need for legal work later on.F
One other relatable incident concerned the relationship between the family and Purdue staff. In 2007, the firm and three three top executives entered a guilty plea. Those three “had to take the fall to protect the family,” the Sackler family’s top lawyer said.
“The company’s strategy,” he said, was “to protect the family at all costs.”
(Two former employees recall witnessing this exchange. Afterward, one of them said, “I remember going home and saying, ‘Where the fuck am I working?’”)
This is a dramatic example but I would not be surprised to find traces of this in many family-run companies or family offices. On the one hand, friends of the family can survive in the company by virtue of their loyalty. On the other hand, employees should be careful to never mistake themselves as being part of the family.
The trap of high profitability
Another lesson comes from Oxycontin’s insane success. The drug became “the best-selling painkiller in America, with more than $3 billion in annual sales, almost double the number of its nearest competitor drug.” The company didn’t invest in a diversified product portfolio because it could find nothing offering comparable returns. As a result, when growth slowed the firm had few levers to pull.
“There were efforts to make them diversify,” one former executive recalled. They looked at products for Parkinson’s. For migraines. For insomnia. “But the board wasn’t interested. The profit margins weren’t the same as with opioids.”
People were happy to take their cut
The illustrates that there is a lot of blame to go around. The Sackler’s earned the most from their painkillers but make no mistake, a lot of people and institutions were happy to partake. Law firms, consultants, and museums were happy to look past the source of the Sackler money. Some were happy to help grow the money fountain:
“After the guilty plea in 2007, the Sacklers engaged with the consulting firm McKinsey, which began to advise the company on how to keep growing the market for OxyContin.
McKinsey made a series of recommendations to the Sacklers about how Purdue could “turbocharge” the sales of OxyContin.
McKinsey made a presentation to the board about how the Sacklers could reverse the decline in OxyContin profits by increasing sales calls on the most prolific high-volume prescribers.”
How disconnected from reality and ethics do you have to be to recommend increasing sales efforts to America’s worst pill mills?
The book also highlights the revolving door of former prosecutors going into private practice (names like Mary Jo White, Eric Holder, Rudy Giuliani make appearances). Their relationships, status, and the prospect of future private practice work seems to have had a significant influence on prosecutors. It’s a really bad look for America’s legal system.
For example, charges were dropped for the guilty plea in 2007:
“After the meeting [with the assistant attorney general] concluded, Brownlee was informed that notwithstanding the evidence he and his prosecutors had spent five years assembling, the department would not support them seeking felony charges against the three executives. Instead, the company could be indicted for felony misbranding, and Friedman, Goldenheim, and Udell could each be charged with a single misdemeanor.
“Brownlee was ripshit pissed.”
This was “a political outcome that Purdue bought,” one former Justice official who was involved in the case said.”
The chief lobbyist for Purdue in this case walked away with “more than $50 million.”
Once an avalanche of lawsuits got underway, the Sacklers used the bankruptcy court to sinkhole all liability. Ironically, the bankruptcy judge supported this out of a desire for an efficient (=speedy) resolution because of the steep legal fees accruing. What’s the lesson here? The law can be used as a weapon or tool (Sumner Redstone did this). And elite lawyers will continue to get paid.
My pessimistic take is that the bad guys and gals won. They made their money, spread some around, but kept most of it. Nobody went to prison. The system that allowed this to happen persists unchanged. And we all live among the ruins of its consequences.
“My pain is constant and sharp.” Patrick Bateman