Purdue Pharma Files for Bankruptcy as Part of Settlement Deal
Purdue Pharma, the maker of the prescription painkiller OxyContin, filed for Chapter 11 bankruptcy on September 16. The announcement comes just days after the company reached a tentative settlement with local and state governments suing it over the massive toll that the opioid crisis has taken on the US population.
The filing was expected even before the tentative deal was made. It means that Purdue will likely be removed from the first federal opioid trial, which is scheduled to start on October 21 in Cleveland.
“This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation,” said Steve Miller, chairman of Purdue’s board of directors, “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 finalize and implement this agreement as quickly as possible.”
Miller said the company has not admitted any wrongdoing and does not intend to. “The alternative is to not settle but instead to resume the litigation,” he said. “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.”
The settlement is predicted to be valued at more than $12 billion, but it does not represent the end of Purdue’s legal battles. The Stamford, Connecticut-based drug maker will still have to defend itself in court as just about half of the 2,600 different government and city entities have not signed onto this proposal.
Twenty-six of the states that have refused to settle with Purdue have vowed to pursue the company’s owners, the Sackler family, considered one of the wealthiest families in the US. New York state Attorney General Letitia James recently called the deal “an insult” and accused the Sacklers of using Swiss bank accounts to transfer $1 billion from the company to themselves.
"While the Sacklers continue to lowball victims and skirt a responsible settlement, we refuse to allow the family to misuse the courts in an effort to shield their financial misconduct," James said in a statement. "Records from one financial institution alone have shown approximately $1 billion in wire transfers between the Sacklers, entities they control, and different financial institutions, including those that have funneled funds into Swiss bank accounts."
"This apparent settlement is a slap in the face to everyone who has had to bury a loved one due to this family's destruction and greed. It allows the Sackler family to walk away billionaires and admit no wrongdoing," said Pennsylvania Attorney General Josh Shapiro, adding that he considers the case “far from over.”
In a statement, members of the Sackler family said they are trying to get more states to sign on to the settlement while expressing “deep compassion for the victims of the opioid crisis.”
“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,” they added.
Since OxyContin was introduced in 1996, opioid addiction and overdoses have surged. In both 2017 and 2018, these drugs were involved in more than 47,000 American deaths per year, according to the US Centers for Disease Control and Prevention.
Vincent Buccola, a lawyer and professor of business ethics, said that the Sackler-owned company may be trying to avoid going to court in states that have been hit particularly hard by the opioid crisis.
“That’s not the jury you want to face,” said Buccola. “So you might try to stop that litigation from happening and consolidate it in front of a bankruptcy judge who you hope will be more favorable.”
I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.
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