Purdue Files for Bankruptcy Over Opioid Crisis Suits, With Many States Objecting
MONDAY, Sept. 16, 2019 -- OxyContin maker Purdue Pharma has filed for Chapter 11 bankruptcy, touching off what could be a fierce battle by dozens of states hoping to recoup billions spent fighting the opioid crisis.
As reported by The New York Times, there are over 2,600 pending federal and state lawsuits lodged against Purdue, and the pharmaceutical giant has proposed a resolution to most of them as part of its bankruptcy filing. The move was approved Sunday night by Purdue's board of directors.
However, one group of 26 states has refused to settle with Purdue under the proposed arrangement. That sets the stage for lengthy legal battles between the states, Purdue Pharma and the wealthy Sackler family that owns the company, the Times said.
The first legal fight could occur as early as this week in White Plains, N.Y., the newspaper added.
In a statement, Purdue Chairman Steve Miller said the company's proposed settlement "will dedicate all of the assets and resources of Purdue for the benefit of the American public. This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis."
Purdue hopes to restructure following bankruptcy, and in the process trigger an automatic halt to civil litigation against it over the opioid epidemic, the Times said.
The settlement requires the dissolution of Purdue Pharma and the formation of a new "public benefit trust" that would continue to sell OxyContin, the firm's blockbuster opioid.
Proceeds from the new company would be used to pay the plaintiffs in the lawsuit and combat the opioid epidemic through research and the development of new medicines to treat addiction. Purdue also would donate drugs under development for addiction treatment and overdose reversal.
In its filing, Purdue claims the company is valued at $10 billion. However, states opposed to the plan say that number is speculative and could take years to realize. And they add that the Sacklers still plan to run another pharmaceutical business, a British company called Mundipharma, until it is sold off. Finally, the states contend that settling the lawsuits through the continued sale of Oxycontin helps the Sackler family itself avoid any monetary penalty.
In a statement, the Sackler family said it had "deep compassion for the victims of the opioid crisis," the Times reported. "We are hopeful that in time, those parties who are not yet supportive will ultimately shift their focus to the critical resources that the settlement provides to people and problems that need them."
The Chapter 11 filing comes just one day after New York Attorney General Letitia James announced evidence of almost a billion dollars in previously undisclosed wire transfers from Purdue to private accounts held by Sackler family members.
In a statement released earlier this month about the proposed bankruptcy settlement, Connecticut Attorney General William Tong said that, "I cannot speak to other states or divulge confidential negotiations, but Connecticut has not agreed to any settlement. 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."
More than 200,000 people have died from prescription opioid overdoses since 1999, according to federal statistics. Another 200,000 have died due to overdoses from illicit opioids such as heroin and fentanyl.
The U.S. Centers for Disease Control and Prevention have more about the opioid epidemic.
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Posted: September 2019