Pur­due CEO: Bank­ruptcy is an ‘op­tion’

OxyCon­tin maker weigh­ing le­gal steps amid on­slaught of law­suits

Stamford Advocate - - Front Page - By Paul Schott

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 con­sol­i­dated 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 “fast-track” 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.

Jes­sica Hill / As­so­ci­ated Press

Pro­test­ers demon­strate out­side Pur­due Pharma head­quar­ters in Stam­ford in Au­gust.

Hearst Con­necti­cut Me­dia file photo

Pro­test­ers demon­strate out­side Pur­due Pharma head­quar­ters at 201 Tresser Boule­vard in down­town Stam­ford in Au­gust.

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