How bankrupt Pa. drug firm Endo could earn $265 million on an ‘exceptionally powerful opioid’ it removed twice from market

DEA agents and Scott County police had been on the hunt for the source of thousands of Opana pills in the farming communities and small towns of southern Indiana, where drug users were dissolving the prescription medication and shooting up the opioid, spreading HIV for more than a year.

“They would share the needles in a big group,” said Patti Hall, a county preparedness coordinator for health or weather disasters. “It was a nightmare.”

The health impact in a county with a population of 25,000 was catastrophic: 88% of the patients infected with HIV injected Opana ER or a generic with oxymorphone — a highly profitable opioid with a trail of misery formed over decades by the Malvern drug firm Endo Pharmaceuticals Inc. Opana ER, the most sought Endo pill, was the “cornerstone” of the company’s pain-management business, the government says.

In 2017, two years after the Indiana crisis, the Food and Drug Administration requested that Endo remove the crush-resistant Opana ER pills from the market as drug users were shifting from snorting to injecting oxymorphone.

Thousands of government and private organizations have sued Endo for its alleged part in the nation’s opioid epidemic, which government experts say has claimed more than 500,000 lives in America. The largest U.S. opioid makers, among them Endo, have filed for bankruptcy. Prescription opioid use has declined with an awareness of addiction dangers.

“It’s hard to think of an industry with more at stake than one that deals with human lives.”

But oxymorphone is still a big money-maker for Endo, whose patent for the drug makes it the medication’s “gatekeeper,” the government says. The FDA didn’t ban oxymorphone in 2017, and generic pills based on Endo’s original Opana ER formulation are still available for doctors to prescribe for cancer, lower back and other pain.

Endo estimated in 2017 that a royalty stream from the oxymorphone ER generic pills over time was worth “close to $265 million” — non-crush-resistant pills that Endo once told the FDA should be taken off the market for safety. Endo controls a critical patent on the generic pills through 2029.

Because of patents, Endo earns a percentage of the “monopoly” profits on the generic pills distributed by Impax Laboratories LLC, a 2021 Federal Trade Commission lawsuit says. The FTC, which enforces consumer protection laws, is asking the federal court to find that the agreement between Endo and Impax violates antitrust laws and seeks unspecified monetary damages.

“It’s hard to think of an industry with more at stake than one that deals with human lives,” said Michael Carrier, a professor at Rutgers Law who has studied pharmaceutical antitrust behavior for 15 years.

Drug companies like Endo “do not have to behave like this,” he said. “They choose to because it’s easier to continue monopoly profits than it is to find the next big innovation.”

Jessica Akhrass, an opioid activist whose brother, Addison Sharp, died of an oxymorphone overdose in early 2012 in Knoxville, Tenn., said, “It’s dangerous. It kills. They know it, but as long they’re making millions, they don’t care.”

The FDA, she said, is “in place to protect and in this case, they are doing the opposite.”

Deluged by 3,100 opioid-related lawsuits and billions in debt, Endo filed for bankruptcy in August in New York. According to the FDA, drugstores dispensed 968,000 Opana ER or oxymorphone ER generic prescriptions in 2015, as the FDA was evaluating the safety of Opana ER.

Before its bankruptcy filing, Endo paid a handful of top executives $55.5 million in bonuses. The bonuses were doled out in “secret” and drained financial resources available for victims of Endo’s addictive pills, according to seven state attorneys general who filed their objections as a committee to the bankruptcy court in September. Pennsylvania Attorney General Josh Shapiro was one of the seven whose filing called the top executive pre-bankruptcy bonuses “excessive.”

Endo could complete its bankruptcy reorganization later in 2023 with the new owners agreeing to pay $550 million for Endo’s part in the opioid epidemic.

» READ MORE: Opioid maker Endo paid top executives $55.5 million in bonuses before bankruptcy

This is a story of one opioid, oxymorphone, that has spun out profits over decades and still does, while repeatedly raising concerns in Washington and states over drug abuse.

“Drug companies tell us all the time that they save lives with their innovations. But what they really innovate is abuses of the regulatory system,” said David Balto, a former policy trade director at the FTC who started the pharmaceutical enforcement program at the regulatory agency.

“What we have is a tremendous failure of the regulatory system and antitrust laws,” he said. “They provide a superhighway for the abuse of monopoly power.”

First approved by the FDA in 1960 as Endo’s Numorphan pain pill, oxymorphone is estimated to be three times stronger than morphine as a pill — a typical comparison for opioids‚ and much more powerful when injected.

In 1970, 309 “addict-patients” at the city-run Philadelphia General Hospital spoke about their drug abuse. One-in-five said they abused Numorphan at least once, according to the 1972 published report on the findings.

“While a number of patients indicated a preference of this drug over heroin, heroin was described as more readily available,” the researchers said. “The authors believe their findings suggest the first stages in the evolution of a drug abuse pattern.”

The National Institute on Drug Abuse put the Philadelphia report in a 1974 compendium of similar research titled “Drugs and Addict Lifestyles” to disseminate information on problems and potential drug-abuse solutions.

In 1982, Endo’s then-owner DuPont withdrew Numorphan tablets from the market for “commercial reasons” and amid “anecdotal reports of abuse by injection,” according to a FDA review of oxymorphone’s regulatory history.

Andrew Kolodny, president of Physicians for Responsible Opioid Prescribing and medical director for the Opioid Policy Research Collaboration at Brandeis University, said it was a “terrible mistake” for the FDA to approve a new oxymorphone medication after the health crisis in the 1960s and ‘70s.

“Oxymorphone should be off the market, period,” Kolodny said.

Because there were other opioids for end-of-life pain, he said, “there was never a clinical need for the product.” But oxymorphone pills would become available again as doctors became more comfortable in the 1990s treating pain with opioids. “You could have five to 10 people sticking the needle in the same spoon,” he said.

In late 1995, the FDA approved Purdue Pharma’s time-release OxyContin pain pill. OxyContin’s active ingredient is oxycodone, a less powerful opioid than oxymorphone. OxyContin’s popularity with doctors and illicit users set off the prescription-opioid boom and helped create vast wealth, estimated at $11 billion, for the Sackler family who control Purdue Pharma.

“Purdue proved that you could take your old generic and turn it into a blockbuster,” Kolodny said.

In 1997, three top managers at DuPont Merck Pharmaceuticals Inc. — Carol Ammon, Mariann MacDonald and Louis Vollmer — spun Endo out of Dupont Merck as an independent company with the help of investors. They bought a portfolio of languishing DuPont Merck drugs and based the company in Chadds Ford.

Endo marketed Percocet, a low-dose oxycodone and acetaminophen pill, and the Lidoderm patch for shingles. The firm also filed with the FDA to rejuvenate oxymorphone as a pain pill.

The FDA approved Endo’s Opana IR (immediate release) and Opana ER (extended release) in 2006. The Opana ER pills contained higher opioid doses for longer pain relief.

An FDA official noted of the 2006 pills that “crushing, chewing, snorting, or injecting the dissolved product will result in uncontrolled delivery and pose significant risk that could result in overdose and death.”

“We feel Opana’s launch will be the next chapter in Endo’s commercial success story,” Peter A. Lankau, who replaced co-founder Ammon as CEO, said in 2006. (Ammon was the highest-paid CEO in the Philadelphia region in 2005 with compensation of $171.7 million, The Inquirer reported. Ammon retired as CEO in 2005 and a board chair in 2007. MacDonald and Vollmer had left the company earlier.)

A 2019 lawsuit brought by the Tennessee attorney general against Endo over opioids says that OxyContin “provided the blueprint for later competitors. Endo wanted its own OxyContin and sought to outdo Purdue in both drug potency and marketing.”

Sales for Opana ER soared to $384 million annually in 2011, making it Endo’s second-best-selling drug.

Because of Opana’s popularity, Endo faced competition as other drug firms rushed to the market lower-cost oxymorphone pills. To differentiate Opana and in response to health concerns over opioid abuses, Endo modified the Opana ER with a harder-to-crush pill, with the FDA agreeing with the modification in 2011.

Endo discontinued the original Opana pill and asked the FDA in a “citizen petition” to ban the copycat generics as less safe. Citizens or corporations can file citizen petitions to flag health concerns for the FDA to investigate. Endo urged the FDA to act for public safety.

Robert Barto, Endo’s then-vice president for regulatory affairs, said in the Aug. 10, 2012, citizen petition to the FDA that first-time abusers of prescription opioids rose to 2.4 million in 2004 from 628,000 in 1990: “Prescription opioid-related deaths in 2008 have nearly quadrupled from 1999 figures.”

The original Opana ER “is safe and effective when taken as prescribed,” Barto wrote. But it was “was … subject to abuse, misuse and diversion” — in other words, illicit use. The new Opana ER tablets resisted “crushing and pulverizing.” They offered “poor syringe-ability” for injection, he said.

Endo declined to comment for this story on the citizen petition.

The FDA denied Endo’s petition in 2013, concluding there was insufficient data to tell whether crush-resistant Opana ER was safer than original Opana ER.

Endo — and FDA — also began hearing troubling reports: Drug users were injecting crush-resistant Opana ER.

In southern Indiana, doctors flagged the first HIV cases in the developing health crisis in Scott County when pregnant women tested positive in blood tests, said Hall, the Scott County preparedness coordinator.

Health officials narrowed the cause to drug users sharing dirty needles.

From Nov. 18, 2014, to Nov. 1, 2015, HIV was diagnosed in 181 patients in Scott County with almost 90% of those infected reporting having injected Opana ER, or its generic version, according to a report published in the New England Journal of Medicine. Almost all of those infected with HIV also contracted the Hepatitis c virus.

Typically, Scott County would see about 10 cases of HIV a year, according to a local news report.

To slow infections, then-Indiana Gov. Mike Pence issued an executive order allowing a needle-exchange program to put clean needles in drug users’ hands.

“Studies show that 80% of the new heroin users started with prescription painkillers.”

And in early February 2016, law-enforcement officers arrested Bennito Rodriguez, 39, in Scottsburg and accused him of dealing almost 10,000 Opana pills over two years, according to court documents. Nine others were arrested with him in a drug gang dealing heroin and meth, in addition to Opana.

Indiana U.S. District Judge Sarah Evans Barker sentenced Rodriguez to 20 years in prison that October.

“Heroin and opioid prescription drug abuse is priority number one” for the Drug Enforcement Agency, Greg Westfall, a top DEA agent in Indianapolis, said in a statement at the time of Rodriguez’s sentencing. “Studies show that 80% of the new heroin users started with prescription painkillers. This case shows that people who poison our communities with drugs will be identified and prosecuted to the fullest extent.”

The health crisis “was in our face 24/7,” Hall said. “We could not go anywhere without somebody talking about it. We got a lot of national news that was not pleasant.”

FDA officials convened meetings in March 2017 to discuss abuse of the supposedly safer crush-resistant Opana ER. Four months later, the federal agency requested that Endo take the pills off the market, and the company complied, estimating that it would lose $85 million in earnings in 2017.

But Endo still controlled patents to the original Opana. Within a month of pulling the crush-resistant Opana ER from the market, Endo reached an agreement with Impax, which agreed to pay Endo a royalty equal to a percentage of Impax’s oxymorphone ER’s profits — as long as Endo did not introduce a competing opioid pill or license patents to other drug firms, according to the 2021 FTC suit. The percentage is redacted in court documents.

Endo is the “the gatekeeper to competition in the oxymorphone ER market.”

Endo “estimated that the payments under the 2017 Agreement were close to $265 million” over time, the suit says. Endo declined to comment on the estimate.

The FTC contends the Endo-Impax agreement has led to higher oxymorphone ER prices and is anticompetitive. Endo is the “the gatekeeper to competition in the oxymorphone ER market” and has “every incentive to preserve Impax’s monopoly,” the FTC suit says. “No company other than Impax and Endo may sell a version of oxymorphone ER until November 2029.”

Endo says that it does not manufacture or market oxymorphone pills now, and it does not control Impax’s business decisions on the generic oxymorphone ER. Endo collects royalties only on intellectual property, the company says.

Amneal Pharmaceuticals, a generics manufacturer based in Bridgewater, N.J., completed its acquisition of Impax in 2018. The FTC suit also named Amneal as a defendant.

Amneal did not respond to requests for comment.

Endo and Impax say that the agreement is not an illegal monopoly. In March, a federal judge in Washington sided with the drug companies and decided that the agreement falls within the bounds of patent law. The FTC appealed the decision; the case is pending.

Rutgers law professor Carrier believes that Endo will continue to milk its oxymorphone franchise for profits. As Endo’s patent expiration date nears in 2029, Carrier expects the drug company to “magically introduce a new version [of an oxymorphone pill], which is really safer and one that we have to give 20 more years of protection for.”