Purdue Pharma has filed for bankruptcy in a bid to shield itself from more than 2,600 lawsuits accusing the OxyContin maker of fueling the opioid crisis, The New York Times reports.
The company’s move is expected to be contested by state attorneys general who have refused to enter into settlement agreements with Purdue and are seeking to hold the company’s owners, the Sackler family, accountable.
Purdue reached a settlement agreement last week with thousands of cities and counties that sued the company over its role in fueling the opioid epidemic. The settlement was accepted by 24 states, five territories, and hundreds of local governments. The settlement would require Purdue to pay out $10 billion.
Purdue’s board of directors voted to approve the settlement on Sunday.
“This unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public,” Purdue board of directors chairman Steve Miller said in a statement. “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 bankruptcy will end lawsuits:
“Purdue hopes to restructure completely, with an expectation that the Chapter 11 bankruptcy will prompt an automatic stay of current civil litigation against the company over the opioid epidemic,” The Times reported.
Under the settlement, the Sackler family would have to give up ownership of the company and pay $3 billion over seven years. The company would also have to sell its British drug company and use the proceeds to pay plaintiffs.
“Purdue would be restructured into an entity known as a public benefit trust. Profits from its production of OxyContin and other drugs would pay the plaintiffs’ claims, and also support research and development of medicines to treat addiction and overdoses, which would be donated to the public,” The Times reported.
Some states oppose Purdue deal:
States that oppose the settlement, like Massachusetts and New York, have taken issue with Purdue’s claim that it is worth $10 billion and have objected to the deal because it allows the company to continue to manufacture drugs until it sells its British drug company.
The attorneys general have argued that the settlement would be paid in part from ongoing OxyContin sales rather than from the Sackler family themselves.
Along with New York and Massachusetts, the attorneys general of New Jersey, Connecticut, Pennsylvania, California, Illinois, Virginia, Delaware, and North Carolina have come out against the deal. All of those states have sued the Sacklers in addition to Purdue.
“The filing itself comes scarcely 48 hours after an announcement late Friday afternoon by the New York attorney general, Letitia James, that her office had uncovered almost a billion dollars in previously undisclosed wire transfers from Purdue to private accounts held by one of the Sacklers,” The Times reported.