OxyContin maker Purdue Pharma has filed for Chapter 11 bankruptcy in order to settle massive U.S. opioid lawsuits, while providing more than $10 billion to address the current opioid crises.
Purdue Pharma’s board approved the long-expected bankruptcy filing to resolve more than 2,600 lawsuits with 24 states and five U.S. territories, in addition to those involving more than 2,000 cities, counties, and other plaintiffs.
The Sackler family, Purdue’s controlling shareholders, have denied the allegations.
However, in addition to contributing the entire company to the settlement, the Sackler family plans to contribute a minimum $3 billion, with the potential for an additional $1.5 billion or more from the eventual sale of pharmaceutical company Mundipharma.
The lawsuits, seeking billions of dollars in damages, claim that Purdue Pharma and the Sackler family aggressively marketed prescription painkillers while misleading doctors and patients around the nation about their addiction and risks of overdose.
While the settlement process is underway, two dozen states remain either opposed, or uncommitted to the proposed settlement, which could lead to massive legal battles over what has been called a major public health crisis.
The announcement said that the court-supervised bankruptcy 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.
Under the terms of the settlement, the Sackler family is establishing a new company, (“NewCo”) that is being governed by a new board selected by the claimants and approved by the federal bankruptcy court in White Plains, New York.
NewCo will potentially be contributing tens of millions of doses of opioid overdose reversal and addiction treatment medications at no or low cost and will be bound permanently by injunctive relief, including marketing restrictions on the sale and promotion of opioids.
Under the agreement, Purdue’s “unique technical know-how and deep experiences in developing medicines” will be used for the benefit of the American public.
The filing said that the settlement framework contemplates that NewCo could provide to states and local communities, at no or low close, life-saving opioid overdose reversal medications such as Nalmefene and Naloxone.
The opposing states want the Sackler family to guarantee that more of the family’s money will go toward a settlement and question Purdue’s calculations in valuing the settlement at $10 billion.
In a statement, the Sackler family said it hoped those parties opposing the settlement offer would change their minds. “It is our hope the bankruptcy reorganization process that is now underway will end our ownership of Purdue and ensure its assets are dedicated for the public benefit.”
The reorganization and settlement will ultimately need to be approved by a U.S. bankruptcy judge.