Purdue CEO: Bankruptcy an ‘option’
STAMFORD — Purdue Pharma CEO and President Craig Landau confirmed the company is considering bankruptcy, as it faces hundreds of lawsuits that allege it fueled the opioid crisis through deceptive marketing of pain drugs such as OxyContin.
Landau’s announcement — made in a rare interview, with The Washington Post — comes amid reports in the past two weeks that the Stamford-based company has been preparing to file for bankruptcy as it faces settlements or jury decisions that could amount to tens of billions of dollars.
“It is an option,” Landau told The Post. “We are considering it, but we’ve really made no decisions on what course of actions to pursue. A lot depends on what unfolds in the weeks and months ahead.”
More than 1,000 cities, counties and states, including Connecticut’s attorney general, have sued Purdue. The company has denied the allegations and said it wants to work with public officials to combat the epidemic of opioid abuse.
A prospective bankruptcy could halt the pending litigation against Purdue. Any subsequent moves, such as settlements, would then have to be approved by the bankruptcy court handling the case.
Significant creditor support would be needed to implement a Chapter 11 bankruptcy plan. In Purdue’s case, the stakeholders would include the local and state governments that have sued. Banks and other organizations that might be financing the company would also participate in the proceedings.
“The litigants have to consider how serious is Purdue’s interest in possibly filing for bankruptcy,” said Robert Bird, a professor of business law at the University of Connecticut. “If you settle too early, before a bankruptcy, you might not get enough. If you settle too late, after a bankruptcy, you may end up being one of many creditors.”
In contrast with a Chapter 7 filing, Chapter 11 proceedings would not liquidate the company.
“Essentially, what you would be trying to show is that the company is worth more to creditors alive than dead,” said Jeff Hellman, a New Haven-based attorney, whose
practice concentrates on commercial litigation and bankruptcy. “There are many examples of companies doing well after coming out of Chapter 11.”
Attorneys general press ahead
At the same time, attorneys general across the country press ahead with their cases.
In Oklahoma, the trial for the state’s lawsuit against Purdue and several other pharmaceutical companies is scheduled to start May 28. Purdue filed an unsuccessful motion to delay the start after it said it would need more time to respond to the state producing 165,000 documents last month.
Meanwhile, about 1,500 municipal and county lawsuits against Purdue and other pharmaceutical firms have been con-
solidated in “multidistrict litigation” federal court in Cleveland, Ohio. The first trial linked to those cases is scheduled to start in October.
Paul Hanly, co-lead counsel for the MDL plaintiffs, has declined to comment on the possibility of a Purdue bankruptcy. In an interview last year, he expressed his desire for Purdue to keep operating.
“We don’t want any of these companies to go out of business; this is not an act of vengeance,” Hanly said in October. “This is litigation to recover money that these government entities have spent and lost as a consequence of the defendants.”
Purdue has engaged in settlement talks, but it has also sought to throw out many complaints. Earlier this month, it filed a motion to dismiss Massachusetts’ lawsuit.
The company asserts that Massachusetts Attorney General
Maura Healey’s litigation creates a misleading narrative that mischaracterizes internal company emails and documents. Many of those records involve members of the Sackler family who own Purdue.
Healey’s office opposes the motion.
Other developments
On Wednesday, Purdue announced it had gained a “fasttrack” designation from the U.S. Food and Drug Administration to speed up the review and development of its “nalmefene hydrochloride” injection to treat known or suspected opioid overdoses.
The drug would focus on combatting adverse reactions to synthetic opioids such as fentanyl. In 2018, fentanyl was involved in 760 deaths in Connecticut, according to the state Office of the Chief Medical Examiner. It contributed to 75 percent of drug-related fatalities in the state last year.
“We believe we have a responsibility as a pharmaceutical company to do what we can, and we’re leaning forward with what we believe could be a very meaningful solution and a very meaningful contribution to the public health,” Landau told The Post.
Purdue said in a statement that it would not profit from nalmefene hydrochloride’s sale, if it were to go on the market. There is “no guarantee” that the treatment would complete clinical development or gain FDA approval, the company said.
In January, FDA Commissioner Scott Gottlieb confirmed the agency’s support for the development of an over-the-counter version of naloxone, a nasal spray widely used to treat opioid overdoses.