Purdue Pharma moved to carry out a more-than-$10 billion settlement with plaintiffs that include 24 U.S. states, more than 2,000 cities and counties, and five U.S. territories over claims that it illegally promoted its OxyContin opioid drug, contributing to the U.S. opioid epidemic by filing last night for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
The company said it reached an agreement in principle with the plaintiffs on a proposed settlement that would preclude them from pursuing a trial against Purdue that was set to start on October 21—and is intended to resolve more than 2,000 lawsuits filed against the company and its owners, the Sackler family. At $10 billion, the proposed settlement falls $2 billion short of the settlement that had been sought by the 24 states and five territories.
Under the proposed settlement, which is subject to Bankruptcy Court approval, Purdue’s owners would contribute all assets to a trust “or other entity established for the benefit of claimants and the American people,” Purdue said in a statement.
The new company or “NewCo” would potentially contribute tens of millions of doses of opioid overdose reversal and addiction treatment medications at no or unspecified “low” cost. Purdue cited nalmefene and naloxone as examples of such medications, noting that it had received FDA fast-track designation for nalmefene hydrochloride, designed to reverse overdoses from powerful synthetic opioids such as fentanyl.
“NewCo could also continue supporting the development of an over-the-counter (OTC) nasal naloxone product, and provide millions of doses of these medicines at no or low cost to communities around the country. It is hoped that this will dramatically increase access to this life-saving opioid overdose reversal medication,” Purdue added.
NewCo would be governed by a new board selected by claimants and approved by the Bankruptcy Court, and would agree to be bound permanently by marketing restrictions on the sale and promotion of opioids, according to Purdue.
“This unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public,” Steve Miller, chairman of Purdue’s Board of Directors, said in the statement. “This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis. We will continue to work with state attorneys general and other plaintiff representatives to finalize and implement this agreement as quickly as possible.”
In a separate statement, the Sackler family expressed “deep compassion for the victims of the opioid crisis,” in which more than 700,000 people from 1999–2017 have died from a drug overdose, according to the U.S. Centers for Disease Control and Prevention (CDC). In 2017, the CDC said, about 68% of the more than 70,200 drug overdose deaths involved an opioid—six times more than in 1999.
President Donald Trump has declared the nation’s opioid epidemic a “public health emergency,” and on September 4 the CDC’s parent agency, the U.S. Department of Health and Human Services, announced more than $1.8 billion in funding to states toward opioid-fighting efforts.
The Sackler family also expressed hope that the bankruptcy reorganization “will end our ownership of Purdue and ensure its assets are dedicated for the public benefit.
“This process will also bring the thousands of claims into a single, efficient forum where the settlement can be finalized, reviewed by the bankruptcy court to ensure it is fair and just and then implemented,” the Sacklers stated. “We are hopeful that in time, those parties who are not yet supportive will ultimately shift their focus to the critical resources that the settlement provides to people and problems that need them. We intend to work constructively with all parties as we try to implement this settlement.”
Also under the settlement, the Sackler family has offered to pay a minimum of $3 billion toward settling the claims, with the potential for “substantial further” payment upon the sale of their ex-U.S. pharmaceutical businesses.
The Sacklers’ $3 billion offer is opposed by 25 U.S. states including New York and Massachusetts, where officials have sought instead for the family to shell out at least $4.5 billion. The 25 states are expected to raise objections to the Chapter 11 reorganization plan.
“While our country continues to recover from the carnage left by the Sacklers’ greed, this family is now attempting to evade responsibility and lowball the millions of victims of the opioid crisis,” New York Attorney General Letitia James said Wednesday in a statement. James’ office late last week alleged that the family had sought to shield its assets through approximately $1 billion in wire transfers to themselves, including through Swiss bank accounts.
“Continue to seek justice”
“A deal that doesn’t account for the depth of pain and destruction caused by Purdue and the Sacklers is an insult, plain and simple,” James added. “As attorney general, I will continue to seek justice for victims and fight to hold bad actors accountable, no matter how powerful they may be.”
In response, an entity for Sackler family member Mortimer D.A. Sackler, a former Purdue board member, told The New York Times in a statement: “This is a cynical attempt by a hostile A.G.’s office to generate defamatory headlines to try to torpedo a mutually beneficial settlement that is supported by so many other states and would result in billions of dollars going to communities and individuals across the country that need help.”
Purdue said it seeks to finalize and implement the settlement agreement through its Chapter 11 reorganization filing (No. 19-23649) in U.S. Bankruptcy Court for the Southern District of New York in White Plains, NY.
In the filing, Purdue listed between $500,000,001 and $1 billion in estimated liabilities, and estimated assets of between $1,000,000,001 and $10 billion. Among creditors with the 50 largest unsecured claims, CVS Caremark had the largest quantified claim at 519,281,161—with the claim of the Pension Benefit Guaranty Corp., the federally-chartered corporation created to guarantee continued payment of pension benefits, listed as “undetermined.”