PURDUE PHARMA PLAINTIFFS TAKE ON OPIOID CRISIS
STAMFORD — Cities and states that have sued OxyContin maker Purdue Pharma have committed to solely using any settlement funds to tackle the opioid crisis, according to the mediators in the negotiations in the company’s bankruptcy case.
Many local and state governments, including Connecticut, that have sued Stamford-based Purdue have said they would use settlement proceeds to tackle the epidemic of opioid abuse. But to mediators Kenneth Feinberg and Layn Phillips’ knowledge, this is the first time states, territories, Native American tribes and local governments have agreed to be bound by such a commitment,” they wrote in a report submitted last week to the federal bankruptcy court handling Purdue’s case.
Purdue said in a statement that “we are pleased with the progress of the mediation to date, and specifically with the growing support for using the vast majority of settlement proceeds to abate the opioid crisis.”
Connecticut Attorney General William Tong said he was encouraged by the mediators’ update.
“I am pleased that I was able to achieve my goal of ensuring that virtually all proceeds to the state will go to abatement of the problem created by Purdue and the Sacklers (who own Purdue),” Tong said. “I am likewise thankful that my sister states and municipalities have agreed to do the same with whatever share they get. While it can never be enough to undo the harm caused, it will be a meaningful start to attack the problem of opioid addiction.”
Agreement among the parties about the use of the settlement funds likely reflects their study of other landmark corporate cases.
The $246 billion settlement in 1998 between tobacco companies and U.S. states has faces criticism through the years over the use of some of those funds to cover governments’ budget shortfalls.
U.S. Sen. Richard Blumenthal,
who was Connecticut’s attorney general at the time of the tobacco settlement, said earlier this year that those funds “came back essentially in a way, constitutionally, that we could not limit the use of it for certain purposes. Structuring (the Purdue settlement funds) as restitution and regress for consumer harm would enable more of it to be used for that (opioid crisisrelated) purpose.”
Despite the consensus about how to generally use any settlement funds, a final agreement does not appear imminent.
About two dozen states have accepted the company’s offer, which it values at more than $10 billion. But Purdue’s proposed terms has been rejected by 24 “non-consenting states,” including Connecticut.
Any settlement would also allot a to-be-determined amount to the more to private citizens who have filed approximately 122,000 per
sonal-injury claims.
While Purdue has offered to settle, it has rejected the lawsuits’ allegations that it fueled the opioid crisis with deceptive marketing of its opioids including OxyContin.
To help negotiate the shares of the settlement that would be respectively allocated to the groups of public and private claims, Purdue earlier this year appointed Feinberg and Phillips as mediators.
As reference points for the Purdue proceedings, the bankruptcy’s presiding judge has cited settlements involving victims of the Vietnam War herbicide Agent Orange, the Sept. 11, 2001 attacks and the 2010 BP oil spill in the Gulf of Mexico. Each of those cases was resolved with funds overseen by Feinberg.
Among other roles, Feinberg was hired by Purdue from 2005 to 2015 as a consultant and negotiator to help resolve litigation and
other disputes with generic-drug manufacturers, wholesalers, distributors and purchasers of OxyContin.
Feinberg said he has not worked for the company since 2015 and that he has never been hired by the Sacklers who own Purdue.
Phillips is a former U.S. attorney and a former U.S. district judge who now works in private practice. He served as the neutral mediator in Oklahoma’s lawsuit against Purdue. That litigation that was resolved last year with a $270 million settlement.
Purdue has said in earlier filings that it would pay Feinberg and Phillips $500,000 each per month. The company is also covering a total of $250,000 for the duo to hire specialists or consultants in areas such as finance and public health.