OxyContin manufacturer Purdue Pharma has declared itself bankrupt
US drug-maker Purdue Pharma has filed for bankruptcy and announced a $10bn (£8bn) plan to settle thousands of lawsuits that accuse the company’s prescription painkiller, OxyContin, of fuelling the deadly opioids crisis.
The company, owned by the billionaire Sackler family, faces more than 2,000 lawsuits, including actions from nearly all US states and many local governments, which allege Purdue falsely promoted OxyContin by downplaying the risk of addiction. The public health crisis claimed the lives of nearly 400,000 people between 1999 and 2017, according to the latest US data.
The chapter 11 bankruptcy filing, made on Sunday night in White Plains, New York, is designed to halt the lawsuits. Under the proposed settlement, which is backed by about half the states and thousands of local governments that are suing Purdue, the Sacklers will hand the firm’s assets over to a trust. It will operate a reformed company, whose board will be selected by the claimants and approved by the bankruptcy court. Money generated by the new firm could be used for drug treatment.
The settlement is worth less than the $12bn originally envisaged. The company listed assets of up to $10bn and debts of $1bn in its chapter 11 filing. The bankruptcy court will decide how the money is allocated among the states, cities and counties.
The Sacklers have agreed to contribute at least $3bn as part of the settlement, from funds generated by selling Purdue’s UK-based subsidiary Mundipharma. Their contribution became a sticking point during the discussions.
Steve Miller, the chairman of Purdue’s board of directors, which met on Sunday night to approve the long-expected bankruptcy filing, said: “This unique framework for a comprehensive resolution 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. We will continue to work with state attorneys general and other plaintiff representatives to finalise and implement this agreement as quickly as possible.”
Purdue said the deal was backed by 24 states and five US territories, as well as lead lawyers for more than 2,000 cities, counties and other plaintiffs.
However, two dozen states remain opposed or uncommitted to the proposed settlement. Opposing states, including Massachusetts, New York and Connecticut, want the Sacklers to contribute more of their own money towards the settlement. Their opposition could complicate the bankruptcy process.
Members of the Sackler family also face lawsuits, seeking billions of dollars in damages, that claim the company and family aggressively marketed prescription painkillers while misleading doctors and patients about their addiction and overdose risks.
Purdue and the Sacklers have denied the allegations.
The Delaware attorney general Kathy Jennings said in a statement: “Irrespective of Purdue’s actions or evasion, we will continue to pursue justice on behalf of those harmed by the Sacklers’ greed, callousness and fraud.”
Members of the Sackler family said they hoped those opposing the current settlement offer would change their minds. “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.”
Miller said the company had not admitted wrongdoing and does not intend to. “The alternative is to not settle but instead to resume the litigation,” he told reporters. “The resumption of litigation would rapidly diminish all the resources of the company and would be lose-lose-lose all the way around. Whatever people might wish for is not on the table now.”