Purdue Pharma announced that it has filed for Chapter 11 bankruptcy as part of a tentative deal to settle opioid litigation with 24 states in the US. Purdue noted that the settlement will provide more than $10 billion to address the opioid crisis, while the company's owners, the Sackler family, will contribute a minimum of $3 billion.
"This unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public," remarked Steve Miller, chairman of Purdue's board, adding "the alternative is to not settle, but instead to resume the litigation." Miller suggested that the deal "avoids wasting hundreds of millions of dollars and years on protracted litigation," while continuing with the lawsuits "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." Miller indicated that Purdue has not admitted wrongdoing and does not intend to.
Along with 24 state attorneys general, the agreement in principle has been agreed with officials from five US territories, the plaintiffs' executive committee in the multidistrict litigation (MDL) and co-lead counsel in the MDL. "We will continue to work with state attorneys general and other plaintiff representatives to finalise and implement this agreement as quickly as possible," Miller said.
Last week, sources suggested that Purdue had reached tentative agreements to settle thousands of opioid lawsuits in the US through a planned bankruptcy restructuring. At the time, the people indicated that the company had secured backing from 23 states and three US territories, as well as lawyers representing some of the cities and counties with lawsuits pending in federal court. However, some states, including Connecticut, Massachusetts and New York, have come out against the settlement and called for the Sackler family to increase its penalty to at least $4.5 billion.
Commenting on the settlement on Monday, the Sackler family said "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." Purdue noted that under the deal, the Sackler family may make "substantial further monetary contributions" as it raises funds from the sale of Mundipharma.
Under the agreed settlement, Purdue will contribute all of its assets to a new company that will be governed by a new board selected by claimants and approved by the bankruptcy court. The new entity will contribute "tens of millions of doses of opioid overdose reversal and addiction treatment medications at no or low cost," including nalmefene and naloxone. Purdue added that the new company will "be bound permanently by injunctive relief, including marketing restrictions on the sale and promotion of opioids."
In its Chapter 11 filing, the company listed as much as $10 billion in assets, including $1.2 billion in cash and $1 billion in debts. Purdue officials have said the cost of fighting the opioid lawsuits made a bankruptcy filing inevitable, while the company estimated that it will spend about $263 million on legal and related professional costs in 2019. Insys Therapeutics filed for bankruptcy protection in June, marking the first drugmaker driven to such a move due to its legal costs tied to the opioid crisis.
To read more Top Story articles, click here.