Purdue Pharma LP filed for Chapter 11 bankruptcy Monday in a first step toward reorganizing as a new company designed to benefit plaintiffs in multidistrict litigation (MDL) and the American public in general.
In announcing the filing, Purdue said it has reached an agreement in principle on a framework to settle more than 2,000 opioid-related lawsuits filed by U.S. cities and counties, and more than two dozen states and territories. So far, 24 state attorneys general (AGs) have accepted the agreement, according to Purdue, along with officials from five U.S. territories, and the plaintiffs' executive committee and co-lead counsel in the MDL. (See BioWorld, Sept. 13, 2019.)
But the settlement falls short of resolving all the litigation against the private company. Responding to the news, Connecticut AG William Tong tweeted, "The majority of states reject this settlement. We will be a unified and effective voice arguing in bankruptcy court that this deal is unacceptable and insufficient."
The holdouts are saying the agreement doesn't go far enough to hold the Stamford, Conn.-based company, and the family behind it, accountable for the aggressive marketing of Oxycontin (oxycodone) that the states claim led to the current opioid crisis.
The agreement, which Purdue valued at more than $10 billion, calls for all the company's assets to be put in a trust or other entity established for the benefit of claimants and the American people. "This court-supervised process is intended to . . . facilitate an orderly and equitable resolution of all claims against Purdue, while preserving the value of Purdue's assets for the benefit of those impacted by the opioid crisis," according to Purdue.
As part of the agreement, the new company that emerges from Chapter 11 will:
• be governed by a board selected by claimants and approved by the bankruptcy court;
• potentially contribute tens of millions of doses of opioid overdose reversal and addiction treatment drugs at no or low cost;
• agree to be bound permanently by injunctive relief, including marketing restrictions on the sale and promotion of opioids.
In addition to giving up 100% of Purdue, the Sackler family, which has controlled the company since its founding in the 19th century, is to contribute at least $3 billion, with the potential for further contributions from the sales of its pharmaceutical businesses in other countries.
That's not enough, according to Tong and other state AGs who say the Sacklers should pay more, given the wealth the family has gained through Purdue and the marketing of Oxycontin. "Purdue & the Sacklers cannot cry poverty while stashing billions overseas," Tong tweeted Monday. "At every turn, we will fight their craven strategy to use bankruptcy to shield their wealth & to evade our claims to secure billions of dollars for addiction science & treatment."
Iowa AG Tom Miller tweeted similar sentiments. "My concern centers on the amount of money to be paid by the Sackler family," he said. "I believe they have the ability and responsibility to pay more than they guaranteed to pay under the agreement."
The agreement also is missing an apology, Washington AG Ben Ferguson pointed out. "My goal has always been to hold Purdue and the Sacklers accountable and make them pay for the damage they caused," he tweeted. "Importantly, Purdue's valuation of the reported settlement does not come close to matching ours. In addition, this purported settlement does not include an apology to the families and communities devastated by Purdue and the Sacklers' conduct. In short, the purported settlement does not provide accountability or adequate relief to address the opioid epidemic in Washington state."
Connecticut, Iowa and Washington are among several states with lawsuits pending against Purdue. The Iowa suit alleges that Richard Sackler played a key role in developing and disseminating Purdue's "deceptions and misrepresentations about Oxycontin's risk of abuse and addition," according to Miller. Richard Sackler served as Purdue president from 1999 through 2003 and then was board chairman until his retirement last year.