Purdue Pharma unveils $10bn opioid settlement plan to exit from bankruptcy
Purdue Pharma is proposing a $10bn plan to emerge from bankruptcy that calls for it to be transformed into a company funnelling profits into the fight against the opioid crisis.
Those efforts would include a significant boost – more than $4bn – from members of the Sackler family who own the Connecticut-based pharmaceutical giant.
The plan, filed late on Monday night in US bankruptcy court in White Plains, New York, after months of negotiations, is a formal offer to settle more than 2,900 lawsuits from state and local governments, Native American tribes, hospitals and other entities.
“Purdue has delivered a historic plan that can have a profoundly positive impact on public health by directing critically needed resources to communities and individuals nationwide who have been affected by the opioid crisis,” Steve Miller, chairman of Purdue’s board of directors, said in a statement.
Most of the parties in the case are onboard. But attorneys general representing 23 states and the District of Columbia issued a statement saying the offer “falls short of the accountability that families and survivors deserve”. They want more money from the Sackler family members and for Purdue to wind down in a way that “does not excessively entangle it with states”.
The group includes most Democratic attorneys general and Lawrence Wasden of Idaho, a Republican.
“The Sacklers became billionaires by causing a national tragedy. Now they’re trying to get away with it,” the
Massachusetts attorney general, Maura Healey, said. “We’re going to keep fighting for the accountability that families all across this country deserve.”
The true size of the family’s fortune is unclear. An earlier court filing said family members received transfers of $12bn to $13bn from Purdue over the years, though a lawyer said much of that went to taxes or was reinvested in the company. In letters to the US House oversight committee last week, the two branches of the family that own the company said the family members who were board members had net assets of far less – about $1.1bn.
Most of Purdue’s plan is similar to what the company proposed a year and a half ago when it first sought bankruptcy protection, a move that halted lawsuits against the company and Sackler family members, who would continue to be insulated from legal claims under the plan.
In its proposal, the company said family members would contribute nearly $4.3bn over a decade, the company would kick in $500m upfront, and its sales would generate another $1bn through the end of 2024, when the plan is to sell or otherwise transform the company again. It says additional money would come from insurance claims.
Purdue said it will also provide overdose antidotes and anti-addiction drugs that would have a value of more than $4bn.
The company replacing Purdue would be indirectly owned by two new trusts, one representing state and local governments’ interests and one representing Native American tribes. Future profits would go to the government entities and to pay for monitoring the health of children born in opioid withdrawal. Governments would be required to use their share for treatment, drug education and other opioid abatement programs.
Individual victims and their families would share $700m to $750m over time. With nearly 135,000 such claims, that would work out to average payments under $5,600. Personal injury payments are expected to range from $3,500 to $48,000.
Parties with claims against Purdue have until later this year to vote on whether to accept the plan, which also calls for the creation of a public repository of the company’s documents.
Purdue began selling the painkiller OxyContin 25 years ago, encouraging doctors to drop long-held reservations about opioids and focus more on easing the pain of patients. Court documents show company officials continued to push to maintain sales even as it became clear the drug was being abused.
More than 470,000 deaths in the US since 2000 have been linked to opioids, including both prescription drugs and illegal ones such as heroin and fentanyl. The US topped 50,000 opioid-related overdose deaths for the first time in 2019, and several states last year reported a record pace of overdose deaths due to all drugs.
Complicated litigation is playing out in courts across the country in efforts to hold the drug industry accountable, including in thousands of cases filed in federal court being overseen by one Cleveland-based judge. Purdue was removed from those cases and others when it filed for bankruptcy protection.
Trials in state and federal cases are scheduled to begin this year in California, New York, Ohio and West Virginia. Separately, Purdue has pleaded guilty to federal criminal charges and settled civil complaints. The company’s federal agreement is valued at more than $8bn. But the US said the company had to pay it only $225m as long as company funds are used to abate the opioid crisis. The plan filed on Monday appears to comply.
In a separate federal deal announced at the same time, Sackler family members agreed to pay $225m to the federal government but admitted no wrongdoing.