Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Sackler Family Built and Lost a Pharma Fortune
Transcript
- Lucas: Today we're looking at a family that built one of the largest fortunes in pharma — and lost it almost entirely within a decade. Luna: The Sacklers. I think most people know the name, but the full story of how they built Purdue Pharma — and what happened — is genuinely astonishing. Lucas: Exactly. And before we dive in — if these conversations have moved your work forward in some small way, a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that is literally what funds making this many of these. So thank you if you're one of them. Luna: Yeah, it makes a real difference. Now, the Sacklers — where do we even start? Lucas: We start in the 1950s, when three brothers — Arthur, Mortimer, and Raymond Sackler — took over a small New York pharmacy called Purdue Frederick. Arthur was the visionary. He was a psychiatrist who understood the power of marketing to doctors. Luna: He basically invented the modern pharmaceutical sales rep, right? Lucas: That's the conventional wisdom. Arthur pioneered the practice of sending salespeople directly to physicians' offices with branded materials, free samples, and studies — often funded by the company itself. By the 1980s, Purdue Frederick was a multimillion-dollar business, but it was still a relatively small player. Luna: Then came OxyContin. Lucas: Approved by the FDA in 1995. Purdue marketed it as a revolutionary painkiller — one that would be less addictive because of its time-release formulation. The tagline was literally 'the one to start with and the one to stay with.' Luna: And it was a blockbuster. Within a few years, OxyContin was generating billions a year. But we now know the company's sales force was trained to downplay the addiction risk. Lucas: There's a famous 2001 memo from a Purdue sales manager that said, 'OxyContin has a lower abuse potential than short-acting opioids.' That was false, and they knew it. By the early 2000s, the opioid crisis was already surging, and OxyContin was at the center. Luna: The Sackler family themselves — they weren't just shareholders. They were on the board. They controlled the company through a complex trust structure. So when lawsuits started piling up, the family's personal wealth was largely protected. Lucas: That trust structure is key. The Sacklers had set up a series of trusts in the 1990s that essentially insulated their personal assets from the company's liabilities. By the time the first big state lawsuits came in the 2010s, the family had already extracted an estimated $10 billion from Purdue through dividends. Luna: Ten billion dollars. And that money was largely untouchable. Lucas: Right. So in 2019, Purdue filed for Chapter 11 bankruptcy as part of a proposed settlement with thousands of plaintiffs — states, cities, tribes, individuals. The deal would have dissolved Purdue and forced the Sacklers to pay about $4.5 billion out of their own pockets. Luna: But that deal also included a provision that would shield the Sacklers from any future civil lawsuits. And that's where things got really contentious. Lucas: Exactly. The Sacklers argued that the bankruptcy court had the authority to grant them that release. The Department of Justice and many victims said no — that would be a 'non-consensual third-party release,' which is legally dubious. The case went all the way to the Supreme Court. Luna: And in 2024, the Court ruled against the Sacklers. They said the bankruptcy code does not allow the release of non-debtors — meaning the Sacklers themselves — without the consent of the plaintiffs. That effectively killed the settlement. Lucas: So now there's no deal. Purdue is still in bankruptcy limbo. The Sacklers still face thousands of lawsuits. And the $10 billion they took out? Most of it is still in those trusts. Some of it they've used for philanthropic donations — museums, universities — but a lot of those institutions have since removed the Sackler name. Luna: The Guggenheim, the Louvre, Tufts University, Oxford — they all took the Sackler name off buildings. It's a remarkable fall from grace for a family that was once seen as among the great art patrons. Lucas: And yet, the family has never admitted wrongdoing. In public statements, they've said they acted ethically and that the lawsuits are misguided. But internal emails released during discovery showed executives discussing how to 'hit the sweet spot' of maximizing sales while avoiding regulatory scrutiny. Luna: So what's the lesson for family businesses? I mean, the Sacklers are an extreme case, but there are echoes in other family-owned pharma companies. Lucas: I think the key lesson is about governance. The Sacklers had a family trust that gave them total control without accountability. They could make decisions that enriched themselves while putting the company — and the public — at risk. If there had been independent directors, or a family council with real oversight, maybe the outcome would have been different. Luna: Or if there had been a willingness to listen to critics. There were whistleblowers inside Purdue as early as 2000, but they were ignored or fired. Lucas: That's the thing about family businesses that succeed for generations — they often have mechanisms for self-correction. The Sacklers didn't. And now the family name is synonymous with the opioid crisis. Luna: It's a cautionary tale. But also a reminder that family ownership doesn't inherently mean ethical behavior. It's about the values and structures you put in place. Lucas: Absolutely. And as the legal battle continues, the Sackler fortune remains largely intact — but the family's legacy is destroyed. There's no museum naming rights that can fix that. Luna: So what's next? Do you think we'll ever see a final settlement? Lucas: I think eventually there will be a settlement, but it will be smaller than the original one. The Sacklers have deep pockets and good lawyers. But public opinion is overwhelmingly against them. That makes it hard for any politician to agree to a deal that gives them protection. Luna: It's one of those stories where the numbers are so huge they're hard to process. Ten billion dollars extracted. Hundreds of thousands of lives affected. Lucas: And that's the core tension in any family business that produces something with the potential for harm — the profits are private, but the costs are social. The Sackler story is a textbook example of that imbalance. Luna: Thanks, Lucas. That was a sobering but important episode. Lucas: Thanks, Luna. Next time, we'll look at a family that actually managed to turn around a crisis — the story of how the Ferrero family rebuilt after a tragedy.