Pudue Pharma files for bankruptcy
Boston — OxyContin maker Purdue Pharma has embarked on a multibillion-dollar plan to settle thousands of lawsuits over the nation’s deadly opioid crisis by transforming itself in bankruptcy court into a sort of hybrid between a business and a charity.
Whether the company can pull it off remains to be seen, especially with about half the states opposed to the deal.
The pharmaceutical giant filed for bankruptcy late Sunday, step one in a plan it says would provide $10 billion to $12 billion to help reimburse state and local governments and clean up the damage done by powerful prescription painkillers and illegal opioids like heroin and fentanyl, which together have been blamed for more than 400,000 deaths in the U.S. in the past two decades.
The plan calls for turning Purdue into a “public benefit trust” that would continue selling opioids but turn its profits over to those who have sued the company. The Sackler family would give up ownership of Purdue and contribute at least $3 billion toward the settlement.
It will be up to a federal bankruptcy judge to decide whether to approve or reject the settlement or seek modifications.
Two dozen states plus key lawyers who represent many of the 2,000-plus local governments suing the Stamford, Conn.-based company have signed on to the plan.
But other states have come out strongly against it, arguing that it won’t provide as much money as promised, that the Sacklers are getting off easy and that the family has extracted a fortune from the company and hidden it away in shell companies and Swiss bank accounts.
“It should not be about billionaires using the bankruptcy process as a vehicle to further shield their assets and escape accountability,” Massachusetts Attorney General Maura Healey said Monday.
Like her counterparts in such states as Connecticut, Pennsylvania, New York and North Carolina, Healey said she intends to continue a court fight against Purdue and the Sacklers.
The states in favor of the settlement include Tennessee and Texas.
Ohio Attorney General Dave Yost said in a statement that the deal is better than other possibilities.
“The settlement puts the Sacklers out of the drug business permanently — not just in the United States, but around the globe. It takes every last dime that Purdue has and billions more from the Sacklers personally,” Yost said.
“The only alternative involves years of additional litigation in the forlorn hope of getting more personal money for corporate conduct.”
In its bankruptcy filing, Purdue denied it is “seeking refuge” and said the settlement is the best way to deliver the most possible money to the public.
The company projected it will spend $263 million this year on legal expenses and other matters associated with the litigation, warning that the continuing costs will only reduce the amount of money available to the plaintiffs.