Purdue Pharma logo at its offices in Stamford, Conn. Photo / AP
Purdue Pharma logo at its offices in Stamford, Conn. Photo / AP
Purdue Pharma filed for bankruptcy with a more than US$10 billion plan to settle claims that it fuelled the US opioid epidemic by illegally pushing sales of its addictive OxyContin painkiller.
The Chapter 11 filing on Sunday in White Plains, New York, is designed to short-circuit more than 2000 lawsuitsagainst Purdue and its owners, the billionaire Sackler family. The settlement calls for the Sacklers to hand over Purdue to a trust controlled by the states, cities and counties that have sued to recoup billions of dollars they spent battling opioid addictions and overdoses.
A pharmacist in San Francisco poses for photos holding a bottle of OxyContin. Photo / AP
Officials originally envisioned raising as much as US$12 billion with the plan, which is backed by more than two dozen US states and territories, along with many cities and counties that sued Purdue. In an emailed statement, Purdue officials reduced the potential settlement amount to more than US$10 billion.
The company listed as much as US$10 billion in assets and US$1 billion in debts in its Chapter 11 filing.
The Sacklers have guaranteed to pay a minimum of US$3 billion as part of the settlement, with most of the sum generated by selling Purdue's UK-based drugmaker Mundipharma.
The family has rejected calls by some state attorneys general to boost their payment to US$4.5 billion, and almost 25 states are opposing the family's settlement offer. States that aren't satisfied with Purdue's proposal will get a chance to voice their opposition before a bankruptcy judge approves its Chapter 11 plan.
The plan calls for Purdue officials to set up a trust responsible for operating the company, which would generate money that governments could use to bolster drug treatment and policing budgets. That entity, run by trustees appointed by a bankruptcy judge, also will oversee payouts to state and local governments that sued.
"This unique framework for a comprehensive resolution will dedicate all the assets and resources of Purdue for the benefit of the American public," Steven Miller, the drugmaker's board chairman, said in an emailed statement.
Opponents argue Purdue's plan isn't enough of a reckoning for the Sacklers, who made billions from the over-prescribing of OxyContin that was spurred by the company's allegedly illegal marketing. It also won't provide enough reimbursement for hundreds of thousands of overdose deaths and addiction damage inflicted on millions of US families, opponents say.
"Irrespective of Purdue's actions or evasions, we will continue to pursue justice on behalf of those harmed by the Sacklers' greed, callousness, and fraud," Delaware Attorney General Kathy Jennings said in an emailed statement.
A gate protects the entrance of the Rooksnest estate near Lambourn, England, where Theresa Sackler, widow of one of Purdue Pharma's founder lives. Photo / AP
The Sacklers and Purdue officials had hoped to persuade 35 attorneys general to back the current settlement proposal. That supermajority would have held more sway with a bankruptcy judge when it came time to win final approval of the deal. As of Sunday, the company said it had the support of as many as 29 US states and territories, according to the release.
Purdue planned to file for protection from creditors by the end of September to avoid facing a Cleveland jury that's scheduled to hear evidence starting next month in the first federal trial over the opioid epidemic.
A host of other opioid makers, such as Johnson & Johnson, and drug distributors like McKesson, will face claims that they created a public nuisance across the US with their mishandling of the medicines.
Purdue Pharma headquarters in Stamford, Conn. Photo / AP
States and municipalities say drugmakers, distributors and pharmacy chains conducted illegal marketing campaigns pushing the painkillers, didn't adequately oversee orders and ignored red flags about unusually frequent retail sales.
In March, Purdue settled claims brought by the state of Oklahoma for US$270 million, and another defendant, Teva Pharmaceutical, reached an US$85 million deal to avoid trial. J&J, which refused to settle, was ordered to pay US$572 million for creating a public nuisance in the state with its promotion of its opioid pain medicines.
The case is In Re Purdue Pharma, No. 19-23649, U.S. Bankruptcy Court for the Southern District of New York (White Plains).
