OxyContin maker Purdue Pharma files for bankruptcy

Purdue Pharma, a drug manufacturer accused of fueling America’s epidemic of opioid addiction through its sale of the profitable but highly addictive painkiller OxyContin, filed for bankruptcy Sunday.

The Chapter 11 filing is expected to trigger the demise of a company that sold a fraction of the opioid prescriptions in the United States but is most closely identified with the epidemic because of its pioneering role in narcotic pain pill sales. 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 how potential proceeds will be divvied up by communities reeling under the burden of addiction and overdose deaths.

The bankruptcy will also raise the stakes on legal sparring over how much of the personal fortunes of the billionaire Sackler family, which owns Purdue, will be available to compensate plaintiffs. States that have rejected the proposed settlement have accused the family of improperly stripping billions of dollars out of the company’s coffers in the past decade to protect the cash from expected court judgments.

Under the settlement announced last week, more than 2,000 small-government plaintiffs and 24 states have agreed to the dissolution of the company and a contribution from the Sacklers, valued at $10 billion to $12 billion. But the settlement valuation is in dispute, and a number of states have balked at those terms.

The settlement, which does not include admission of wrongdoing, would reorganize Purdue during the bankruptcy into a nonprofit trust that would continue to produce OxyContin as well as overdose “rescue” drugs that would be distributed at no cost to communities across the country.

More than 200,000 people have died of prescription opioid overdoses since 1999.