Purdue deal may set new price of drug industry settlements

Purdue Pharma may have just set the starting point for determining what it will cost dozens of pharmaceutical companies to resolve legal liability over their role in creating the U.S. opioid epidemic.

Purdue, maker of the blockbuster painkiller OxyContin, filed for Chapter 11 protection Sunday to facilitate a $10 billion settlement that would help confront the public-health crisis spawned by opioid addiction and overdoses. If approved by a judge, the deal would end more than 2,000 lawsuits against the company and its owners, the billionaire Sackler family.

The proposal has the support of 24 state attorneys general and five territories. While a host of other states oppose it, the deal may mark a new starting point in talks with other defendants, including drugmakers, distributors and pharmacies. Before the Purdue bankruptcy, some analysts expected the industry would have to pony up as much as $150 billion to resolve all the suits.

“This may be the new floor for settlement purposes,” said Richard Ausness, a University of Kentucky law professor who teaches about mass-tort cases. “These kinds of deals with a major actor like Purdue put pressure on other defendants to come up with settlement proposals.”

Negotiations with opioid makers, such as Johnson & Johnson and Teva Pharmaceutical Industries, and drug distributors like McKesson Corp. and Cardinal Health Inc., have been going on for more than a year on two separate tracks without much success.

A group of state attorneys general, led by Tennessee Attorney General Herbert Slatery, are talking with almost two dozen companies that make, handle or sell the painkillers.

At the same time, lawyers for cities and counties that have also sued opioid manufacturers and distributors also are dickering with defendants over who should pick up tab for billions in public funds spent on societal costs tied to addictions and overdoses. Governments contend their policing and treatment budgets have been ravaged by such costs.

Under the proposed Purdue deal, the drugmaker would be handed over to a trust controlled by the states, cities and counties. The company also would sell its U.K.-based drugmaking unit, Mundipharma, to raise additional cash to pay the plaintiffs.

Last week, U.S. District Judge Dan Polster approved a negotiating class that will add heft to efforts by the municipalities to come up with a global settlement.