OxyCon­tin maker ten­ta­tively set­tles

Pur­due Pharma deal might be worth up to $12B, sources say

The Morning Call - - FRONT PAGE - By Aaron Davis, Lenny Bern­stein, Joel Achen­bach and Scott Higham

Pur­due Pharma, man­u­fac­turer of block­buster painkiller OxyCon­tin, has reached a ten­ta­tive set­tle­ment with 22 state at­tor­neys gen­eral and more than 2,000 cities and coun­ties that sued the com­pany over its role in the opi­oid cri­sis of the past two decades, peo­ple close to the deal said Wed­nes­day.

The ex­ec­u­tive com­mit­tee of lawyers rep­re­sent­ing the cities, coun­ties and other groups in a con­sol­i­dated fed­eral lawsuit against Pur­due and other drug com­pa­nies is rec­om­mend­ing the deal be ac­cepted. But some at­tor­neys gen­eral, who sued Pur­due and its con­trol­ling fam­ily, the Sack­lers, in state courts are op­posed to a deal.

Un­der terms of a plan that has

been un­der dis­cus­sion for months, the Sack­lers would re­lin­quish con­trol of their com­pany, Stam­ford, Con­necti­cut­based Pur­due Pharma. Pur­due would de­clare bank­ruptcy and be res­ur­rected as a trust whose main pur­pose would be to com­bat the opi­oid epi­demic.

The deal was said to be worth $10 bil­lion to $12 bil­lion, in­clud­ing a $3 bil­lion pay­ment from the Sack­lers’ per­sonal funds. It also would in­clude at least $1.5 bil­lion from the sale of the fam­ily’s in­ter­na­tional drug con­glom­er­ate, Mundipharm­a, ac­cord­ing to the doc­u­ments and peo­ple close to the talks.

The fed­eral plain­tiffs and many at­tor­neys gen­eral ap­par­ently felt the pro­posal was good enough. Those lawyers “agreed to rec­om­mend the MDL claimants move for­ward in sup­port of the cur­rent pro­posal sub­ject to sat­is­fac­tory doc­u­men­ta­tion of the es­sen­tial terms and fi­nal doc­u­ments,” they said in a state­ment. “We feel good progress has and will con­tinue to be made.”

But some states ob­jected the Sack­lers were not con­tribut­ing enough cash from their per­sonal for­tunes, built al­most en­tirely on the sale of OxyCon­tin and taken out of the com­pany in re­cent years.

Con­necti­cut At­tor­ney Gen­eral Wil­liam Tong said he re­mained op­posed to any deal.

“I can­not speak to other states ... or di­vulge con­fi­den­tial

“The scope and scale of the pain, death and de­struc­tion that Pur­due and the Sack­lers have caused far ex­ceeds any­thing that has been of­fered thus far.”

— Con­necti­cut At­tor­ney Gen­eral Wil­liam Tong

ne­go­ti­a­tions, but Con­necti­cut has not agreed to any set­tle­ment,” he said. “The scope and scale of the pain, death and de­struc­tion that Pur­due and the Sack­lers have caused far ex­ceeds any­thing that has been of­fered thus far.”

It was not clear Wed­nes­day whether the Sack­lers had agreed to in­crease their per­sonal con­tri­bu­tion to the set­tle­ment or whether other terms had changed.

“There’s an in­cred­i­ble in­cen­tive to make a deal be­fore bank­ruptcy, be­cause that would make the process much less ex­pen­sive for the states and cities,” said Adam Zim­mer­man, a pro­fes­sor of law at Loy­ola Law School in Los An­ge­les. If Pur­due sought bank­ruptcy pro­tec­tion with­out a set­tle­ment, “we might see any kind of arrangemen­t tied up in bank­ruptcy court for a very long time.” It could be years,” he said.

The enor­mous con­sol­i­dated fed­eral trial is sched­uled to be­gin in mid-Oc­to­ber with two test cases, Cuya­hoga and Sum­mit coun­ties, as the first plain­tiffs to make their case against an ar­ray of drug com­pa­nies in court. Mean­while, more than 40 law­suits against drug com­pa­nies are wend­ing their way through state courts. A grow­ing num­ber of states also have sued the Sack­ler fam­ily per­son­ally.

Ohio At­tor­ney Gen­eral Dave Yost, who also op­poses the deal, has asked a fed­eral ap­peals court to de­lay or halt the fed­eral trial, claim­ing the smaller ju­ris­dic­tions are usurp­ing the au­thor­ity of states. An­other 13 states and the District of Columbia have filed briefs in sup­port of that ef­fort, ac­cord­ing to Yost’s of­fice.

“I think the main mo­ti­va­tion (for Yost) has to do with who holds the bal­ance of power with re­spect to ne­go­ti­at­ing a global set­tle­ment,” Zim­mer­man said. “This is kind of a Hail Mary.”

The pre­scrip­tion drug epi­demic has taken more than 200,000 lives via over­doses since 1999, ac­cord­ing to fed­eral sta­tis­tics.

An­other 200,000 deaths are blamed on over­doses from heroin and il­le­gal fen­tanyl smug­gled into the coun­try from China and Mex­ico.

The tri­als tar­get drug man­u­fac­tur­ers, dis­trib­u­tors and re­tail­ers, and there are di­vi­sions among the de­fen­dants as well as among the states. Man­u­fac­tur­ers, for ex­am­ple, have raised dif­fer­ent le­gal ar­gu­ments than dis­trib­u­tors.

JES­SICA HILL/AP 2018

The Sack­lers, the con­trol­ling fam­ily of Stam­ford, Conn.-based Pur­due Pharma, would give up con­trol of the firm, un­der terms of a plan that has been un­der dis­cus­sion for months.

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