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Purdue Pharma, the company that has sold billions of dollars of the OxyContin painkiller, filed for bankruptcy in White Plains, NY, just days after entering into a tentative agreement with many state governments and local governments pursuing him for the price of opioids.
The deposit was expected before and after the conclusion of the agreement in principle, which could be worth up to $ 12 billion over time.
"This settlement framework avoids wasting hundreds of millions of dollars and years of protracted litigation," said Steve Miller, chairman of Purdue's board of directors, "in a statement it will provide billions of dollars and critical resources to communities trying to cope with the opioid crisis. We will continue to work with state attorneys general and other plaintiff representatives to finalize and implement this agreement as soon as possible. "
But legal battles are still waiting for Purdue, a Stamford, Connecticut-based company that spends millions of dollars on litigation while defending itself in lawsuits filed by 2,600 governments and other entities. About half of the states did not adhere to the proposal. And many of them intend to oppose the settlement in a bankruptcy court and sue the other courts against members of the Sackler family, to which the company belongs. The family agreed to pay at least $ 3 billion for settlement, in addition to contributing to the company itself, which needs to be reformed and whose future profits will go to the company's creditors.
In a statement, the company's owner Mortimer and Raymond Sackler's families said they "feel deep compassion for the victims of the opioid crisis" and believe the settlement framework "is a historic step toward the provision of essential resources to deal with a tragic situation in public health. "
Objections have been raised about the size of the deal, which some say will not hit $ 12 billion, and because that means the company will not be held accountable by a jury or judge.
Purdue's president, Miller, said the company did not admit a fault and did not intend to do so. "The alternative is not to settle the dispute but to resume the dispute," he said during a conference call with reporters. "The resumption of litigation would quickly diminish all the resources of society and would be a loser, loser, loser. All that people might want is not on the table now. "
Because many states have hesitated before the settlement, this could complicate the bankruptcy process. The members of the Sackler family said they were still trying to get more states to join.
"We hope that over time, the parties that do not yet support will focus on the essential resources that the regulation provides to the people and the problems that need it," they said.
Key questions that could be decided include whether the lawsuits against the Sacklers in state courts will be able to move forward and what will happen to society itself. Under the interim settlement agreement, it would continue to operate, but the profits would be used to pay the settlement. Another option might be that a judge orders the sale.
The Court's records state that Purdue paid more than $ 4 billion to Sackler family members from 2007 to 2018. Much of the family's fortune would be held outside the United States, which could complicate prosecutions against opioids.
A case filed by the New York Attorney General's office on Friday said the Sackler family had used Swiss accounts and other hidden accounts to transfer $ 1 billion to them. The discovery of these transfers reinforces the claims of several states that family members have worked to protect their wealth because of growing legal threats to them and Purdue.
The Sacklers donated money to cultural institutions around the world, including the Smithsonian Institution, the Metropolitan Museum of Art in New York, and Tate Modern in London.
The lawsuits claim that the company aggressively sold OxyContin as a low-risk drug, even though it knew it was not true.
Since the introduction of OxyContin, an extended-release opioid, in 1996, addiction and overdoses have increased. According to US Centers for Disease Control and Prevention, opioids have been implicated in more than 47,000 deaths in 2017 and 2018.
In recent years, there have been more deaths related to illicit opioids, including heroin and fentanyl, than prescription drug forms. This change took place as the public became more and more aware of the dangers of prescription opioids and as prescribers became more cautious.
Purdue's medications are just a slice of the prescribed opioids, but critics are largely blaming it on the company, which has developed both the drug and an aggressive marketing strategy.
According to a lawsuit filed by the Massachusetts Attorney General, the company pushed big sales of OxyContin early on. This meant persuading doctors who had hesitated to prescribe painkillers as powerful as this one was safe.
A court case says that Richard Sackler, then executive vice president responsible for sales of the company, told the sales force at a drug launch party: "The launch of the OxyContin tablets will be followed by the launch of the OxyContin tablets. a blizzard of ordinances that will bury the competition. The prescription blizzard will be so deep, dense and white.
Along with other professionals in the industry, Purdue paid for doctors who proved the safety of the drug and became a major funder for advocacy groups of patients suffering from pain who campaigned for opioids to be prescribed.
The Associated Press and the Center for Public Integrity found that the sector and its funded groups were also politically active, spending more than $ 880 million nationally on lobbying activities and campaigns running from 2006. by 2015. These expenses have allowed the industry to combat restrictions on the prescription of powerful painkillers.
All of these issues are part of the lawsuits that the drug industry is currently facing. Governments suing for drugs want reimbursement for the costs associated with the opioid crisis, as well as funding for addiction treatment and drug prevention programs.
Purdue pointed out in court that its products had been approved by federal regulatory authorities and prescribed by doctors.
A federal judge who oversaw nearly 2,000 cases pushed the parties to reach a major deal that would make a difference in the opioid crisis. Judge Dan Polster, based in Cleveland, has scheduled a lawsuit for claims filed by Ohio's Cuyahoga and Summit counties in October.
A lawyer suing Purdue on behalf of clients, including the city of Albuquerque, New Mexico, and the state of Utah, which signed the agreement in principle, said that it was long based on the fact that Purdue could not afford to pay huge sums. to be sought in the trials.
"I do not think this company has enough money to pay the damages claimed," said Jonathan Novak.
This is one of the reasons other defendants are involved in most opioid lawsuits, including members of the Sackler family and huge drug distribution companies such as McKesson Corp. and Cardinal Health. State and local governments also fought over how national regulations would be distributed.
Organizations facing big lawsuits have a long history of bankruptcy claims.
Dozens of asbestos companies have done so since the 1980s. Last year, USA Gymnastics sought the protection of its team doctor, Larry Nassar, for doing the job. subject to prosecution.
Earlier this year, Pacific Gas & Electric Corp. had filed for bankruptcy protection, as it risked billions of dollars in damages for catastrophic fires in California.
And in June, another opioid-producing company, Insys Therapeutics, filed for bankruptcy just days after entering into a $ 225-million settlement with the federal government following a bribery scheme. Now, a bankruptcy judge will have to determine how much of that money will be paid.
Vincent Buccola, a lawyer and a professor of business ethics, said Purdue may be trying to avoid suing the courts in states that are seriously affected by the opioid epidemic.
"It's not the jury you want to face," said Buccola, who teaches at the University of Pennsylvania. "So you can try to end this litigation and consolidate it before a bankruptcy judge who, you hope, will be more supportive."
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