The Register Citizen (Torrington, CT)
States oppose proposed settlement with Purdue
Concerns over OxyContin maker being turned into a public trust after bankruptcy
STAMFORD — Connecticut and 23 other states oppose the prospective terms of a settlement that OxyContin maker Purdue Pharma is reportedly close to reaching with the U.S. Department of Justice, their attorneys general said in a letter to U.S. Attorney General William Barr.
The letter responds to reports last week that the company was nearing an agreement in which it would plead guilty to criminal charges and pay out billions of dollars to help resolve DOJ investigations of its role in allegedly fueling the national opioid crisis. But Connecticut Attorney General William Tong and his counterparts expressed concerns about the impact of such a deal, particularly the possibility of the company becoming a public trust after it exits bankruptcy.
“A business that killed thousands of Americans should not be associated with government,” the Wednesday letter said in part. “Instead, the business should be sold to private owners, so the government can enforce the law against it with the same impartiality as for any other company.”
A message left Thursday for the Department of Justice was not immediately returned.
Purdue officials declined to comment on the letter.
In a statement last week, Purdue said it “is cooperating with the U.S. Department of Justice’s investigations of the company. We are engaged in ongoing discussions with the DOJ regarding a potential resolution of these investigations.”
The company has declined to comment on the specifics of the talks.
Debate about company’s future
At the same time, Purdue is trying to negotiate in federal bankruptcy court a comprehensive settlement of several thousand lawsuits filed by cities and states, including Connecticut, that accuse the company of exacerbating the opioid epidemic with deceptive marketing. The Department of Justice is participating in those proceedings through a U.S. trustee representative.
Purdue and the Sackler family members who own the company have denied the lawsuits’ allegations, but they have offered a settlement of the complaints that they value at more than $10 billion. As part of their plan, the Sacklers would relinquish control of the firm so it could be converted into a trust or similar entity.
A message left Thursday for representatives of the Sacklers seeking comment was not immediately returned.
But the 24 “non-consenting” attorneys general who sent the letter have rejected that proposal, arguing that it is an insufficient and unrealistic plan for tackling the crisis.
Reiterating their principal criticisms of Purdue’s proposal, they expressed concerns in the letter about the DOJ’s purported intent to sign agreements that might prohibit the sale of Purdue’s businesses to private owners and require that Purdue be preserved as a public-benefit company that would sell OxyContin on behalf of local and state governments.
“The public deserves assurance that no opioid business is given the special protection of being placed under a public umbrella,” the attorneys general said. “Although it may take time to find a private-sector buyer, the public should be confident that public officials are seeking to avoid having special ties to an opioid company, conflicts of interest or mixed motives in an industry that caused a national crisis.”
In addition, selling the business to a private owner could deliver more upfront money that cities and states could use to respond to the opioid epidemic, the attorneys general said.
At least one potential buyer has made a bid for Purdue’s drug businesses, according to the letter.
“Any continued corporate existence of Purdue past bankruptcy is dangerous to public health and welfare — especially one that sells opioids under the special protections afforded to a public-benefit corporation,” Tong said in a statement Thursday. “I expect current management to try to remain in control of the corporation. This would be even more outrageous.”
In addition to Connecticut, other non-consenting states include nearby New York, New Jersey and Massachusetts and others including California, Illinois, Pennsylvania and North Carolina.
Other concerns about potential settlement
Penalties in Purdue’s prospective agreement with DOJ could total more than $8 billion, including a $3.5 billion criminal fine, $2 billion criminal forfeiture and $2.8 billion civil penalty, according to Reuters. Alongside the criminal case, federal prosecutors are negotiating a settlement of civil claims, Reuters said.
The Sacklers who own Purdue would not be criminally charged as part of the under-discussion agreement, but it would not resolve any future criminal liability that the Sacklers might face, according to Reuters.
Some family members, however, are in talks to pay a $225 million civil penalty related to allegedly false claims about Purdue drugs being filed with government health care programs, Reuters said.
U.S. Sen. Richard Blumenthal, DConn., a Judiciary Committee member who sued Purdue when he previously served as Connecticut’s attorney general, said last week he was concerned the company would not be held fully accountable for “egregious actions” in an agreement with the DOJ.
Prosecutors have investigated the company for many years.
In 2007, a Justice Department-led investigation of Purdue produced the firm’s largest-ever punishment. In that case, it pleaded guilty in federal court to misbranding OxyContin, resulting in $635 million in company and individual penalties. But none of the three executives who pleaded guilty served any time in prison.