Purdue Pharma has filed for Chapter 11 bankruptcy.
This is the latest but far from the final update in the pursuit of litigation against opioid companies for their role in contributing to the opioid crisis.
Questions remain as to what the settlement will mean for the Sackler family who owned Purdue; the 24 states and more than 2,000 local governments that have agreed to the settlement which is valued at $10-12 billion with a $3 billion guarantee; and the 26 governments that have not agreed to the deal.
The Washington Post reports:
The Chapter 11 filing is expected to lead to the ultimate demise of a company that sold a fraction of the opioid prescriptions in the United States but nonetheless is most closely identified with the epidemic because of its pioneering role in the sale of narcotic pain pills. The company used aggressive, allegedly misleading, sales tactics to push physicians to prescribe millions of doses of its dangerously addictive pills.
The company’s move to seek financial shelter, part of a tentative settlement with thousands of litigants, will shift the focus to new wrangling over how potential proceeds will be divvied up by communities reeling under the burden of addiction and overdose deaths.
An article in The New York Times reports on additional details of the settlement process and restructuring of the organization:
The details of the settlement proposal have been reported in recent weeks: the Sacklers would give up ownership of the company and pay $3 billion cash to the plaintiffs over seven years. They would also have to sell their Britain-based drug company, Mundipharma. The proceeds from that sale could add “substantial further monetary contributions” to the settlement pot, according to a company statement released Sunday night.
Purdue would be restructured into an entity known as a public benefit trust. Profits from its production of OxyContin and other drugs would pay the plaintiffs’ claims, and also support research and development of medicines to treat addiction and overdoses, which would be donated to the public. The new company would abide by restrictions on the marketing and sales of opioids.
As these articles note, the 24 states and more than 2,000 local governments that have agreed to this settlement are generally satisfied with the guarantee of monetary compensation from the bankruptcy and would like to see the litigation come to an end.
Of the 26 states that have not signed onto the settlement, a fair number have outright objected to the deal on the grounds that the monetary amounts are speculative or inflated. Many are also pursuing claims directly against the Sacklers, not just Purdue, and do not see the settlement as sufficient justice for the wrongdoings.
A separate article in The New York Times answers some lingering questions regarding whether Purdue filing bankruptcy would protect the Sacklers and what is likely up next for the states that have agreed to settle and for those states that have not.
The bottom line is to stay tuned because on the issue of opioid crisis litigation there is more to come.
For more information:
Purdue Pharma, drugmaker accused of fueling the opioid epidemic, files for bankruptcy (The Washington Post)
Purdue Pharma, Maker of OxyContin, Files for Bankruptcy (The New York Times)
Would a Purdue Bankruptcy Protect the Sacklers? Good Question. (The New York Times)
Related coverage from Conduit Street:
Opioid Litigation Takes a Turn with Potential Purdue Settlement
Purdue Pharma Settles Opioid Lawsuit with Oklahoma Attorney General
Drug Companies Are Settling With States. How Will The Money Be Spent?