The Register Citizen (Torrington, CT)
Senators call on Barr to block Purdue plan
STAMFORD — U.S. Sen. Richard Blumenthal and more than a dozen other Democratic senators Tuesday called on Attorney General William Barr to block a widely criticized plan to turn bankrupt OxyContin maker Purdue Pharma into a “public-benefit company,” arguing that the proposal would put local and state governments in a position of running a business that they accused of fueling the opioid crisis.
Such a transformation of Stamford-based Purdue Pharma has been proposed by company officials and the Sackler family members who own the firm since it filed for bankruptcy in September 2019. The restructuring was also required in the $8 billion settlement agreement announced last month by Purdue Pharma and the U.S. Justice Department, a deal that also entails the company pleading guilty to three criminal charges.
To be enacted, the settlement still needs to be approved by the federal bankruptcy court managing the company’s Chapter 11 case.
“This is not justice for the families that have lost loved ones (to opioids). We therefore ask that you defer court approval of the proposed agreement until the appropriate stakeholders have addressed these public policy concerns,” the senators said in a letter to Barr. “Such an arrangement — requiring states to own and operate a felonious company they are currently suing — is a misuse of federal authority.”
Purdue said in a statement that the new company would be established to benefit those with claims against the company and “the American people.”
“The settlement agreement with DOJ does not anticipate or require that state and local governments would own or operate the new company,” the statement said. “The new company would be subject to the same regulatory oversight as any other pharmaceutical company and would not receive any special governmental protection.”
Justice Department officials declined to comment on the letter. A message left for the Sacklers was not immediately returned.
In addition to Blumenthal, D-Conn., the letter was also signed by Sens. Tammy Baldwin of Wisconsin, Sheldon Whitehouse of Rhode Island, Maggie Hassan of New Hampshire, Elizabeth Warren of Massachusetts, Chuck Schumer of New York, Jeanne Shaheen of New Hampshire, Dianne Feinstein of California, Dick Durbin of Illinois, Ed Markey of Massachusetts, Mazie Hirono of Hawaii, Amy Klobuchar of Minnesota, Bernie Sanders of Vermont, Tina Smith of Minnesota and Jeff Merkley of Oregon.
All are Democrats except Sanders, an Independent who ran as a Democratic candidate for president in 2016 and 2020.
Aweek before the Justice Department’s Oct. 21 announcement of the settlement, Connecticut Attorney General William Tong and 23 other state attorneys general sent their own letter to Barr opposing the deal, with the public-benefit proposal figuring among their complaints.
Debate about future of the company
In the bankruptcy proceedings, Purdue is trying to reach a comprehensive settlement of several thousand lawsuits filed by local and state governments, including complaints filed by the state of Connecticut and severaldozen cities and towns in Connecticut. Those suits allege the company stoked the opioid crisis with deceptive opioid marketing, while Purdue denies the allegations.
The company values its settlement of the lawsuits at more than $10 billion, with the Sacklers contributing at least $3 billion to the total. The “overwhelming majority” of those funds would go toward efforts to tackle the opioid crisis, while providing “millions of doses of lifesaving opioid-addiction treatment and overdose-reversal medicines,” according to the company’s statement.
In addition, the Sacklers have agreed to relinquish control of the company.
Connecticut and 23 other states have rejected that plan.
The senators’ letter said that in light of the company’s criminal misconduct — the firm pleaded guilty to one count of defrauding the government and two counts related to kickback violations — that they doubted Purdue could be transformed into an operation focused on public interests.
They also questioned whether a public-benefit company could deliver the full value of Purdue’s proposed settlement of the civil litigation because they said it would depend on uncertain future profits.
“At a minimum, the (public benefit company) also creates the appearance of a conflict of interest, as citizens may wonder whether their government will effectively regulate a company in which it has a financial interest,” the letter said. “In a worst case, aligning the financial interests of states with the increasing sale of opioids, which is the very reason the lawsuit was brought against Purdue in the first place, could significantly and negatively impact public health.”
Purdue said in its statement that the new company “would provide state, local and tribal governments access to billions of dollars of opioid-crisis abatement funds and other resources that communities desperately need while imposing upon itself unprecedented controls restricting the promotion of opioid products to health care professionals.”
Senators and attorneys general who opposed creating a public-benefit company instead want Purdue to be sold. The senators’ letter cited another bankrupt pharmaceutical firm, Insys Therapeutics, which gained court approval last year to sell off assets including its fentanyl spray.
In an Oct. 27 opinion piece published in The Washington Post, Purdue board Chairman Steve Miller said the company had “carefully considered,” but ultimately ruled out, scenarios such as a sale to a private buyer.
“This option — which would be nothing more than a fire sale in bankruptcy — would materially diminish value that otherwise could be dedicated to abatement,” Miller said. “It would also put at risk the new entity’s ability to supply critically important medicines and develop and provide free lifesaving opioid addiction treatment and overdose reversal medicines. No private buyer would share those goals.”