Purdue Pharma LP has secured support from 23 states and thousands of local governments for a multibillion-dollar deal that could enable the drugmaker to resolve much of the opioid litigation it faces through a planned bankruptcy restructuring, according to people familiar with the matter.
The OxyContin maker and its owners, the Sackler family, have been fighting some 2,500 lawsuits brought by virtually every state as well as cities, counties, Native American tribes and others accusing the company of helping fuel widespread opioid addiction.
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Resolving the entirety of the litigation at once has proved challenging, and the company still faces strong opposition to its current attempts at a settlement.
The deal on the table would see the Sacklers exit the company, which would emerge from bankruptcy run by trustees tasked with paying out claims. The Sacklers would contribute $3 billion over several years and potentially another $1.5 billion or more, contingent on how much is raised from the sale of another company the family owns, Mundipharma, which sells pharmaceuticals outside the U.S.
As of Wednesday, Purdue had tentative agreements with 23 states and three U.S. territories as well as attorneys representing thousands of cities and counties with lawsuits in federal court. The company is trying to persuade the remaining states to join the deal as it prepares to file for bankruptcy as soon as Sunday, a person familiar with the matter said. The proposal could still fall apart if it doesn’t clear the approval of a bankruptcy judge, who will weigh whether it has the support of enough creditors.
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State and local governments have sued major players in the pharmaceutical industry, trying to recoup money spent addressing a nationwide opioid epidemic that has killed at least 400,000 people in the U.S. since 1999. Public-health advocates said widespread prescription drug addiction has given way to an influx of illegal opioids like heroin and fentanyl.
Purdue has valued the settlement at between $10 billion and $12 billion, though much of that relies on future sales of its signature painkiller and the development of drugs to treat opioid addiction. States that oppose the deal have questioned the settlement’s valuation.
A Purdue spokesman said Wednesday the company “continues to work with all plaintiffs on reaching a comprehensive resolution to its opioid litigation” that will include billions of dollars and overdose-rescue medicines. Representatives for the Sacklers didn’t respond to a request for comment.
The company and family have been working for several weeks to convince state attorneys general to agree to the deal and have resisted efforts to make it more lucrative for plaintiffs.
Several large states still oppose the agreement and could fight attempts by Purdue to approve the deal in a bankruptcy proceeding. The company is also negotiating separately with the U.S. Justice Department to resolve criminal and civil probes, The Wall Street Journal reported Friday.
Purdue’s board is slated to be debriefed Thursday on settlement talks, a person familiar with the matter said.
The Stamford, Conn.-based company has denied allegations that its aggressive marketing of OxyContin, beginning with its 1996 launch, contributed to the opioid crisis. The lawsuits, which began building in 2017, have put public pressure on the two branches of the billionaire Sackler family that owns Purdue and whose members have cultivated an image as global benefactors of the arts and sciences over the years.
States that oppose the deal, led by New York, have demanded in recent weeks that the Sacklers put up as much as $6 billion, according to people familiar with the requests. California, Connecticut, Maine, Massachusetts and New Hampshire are other states currently in opposition, according to the states and people familiar with the matter.
Some states, including Massachusetts, plan to challenge a bankruptcy filing should Purdue pursue one under the terms of the current proposal, the people said.
New York Attorney General Letitia James, a Democrat, called the deal an insult and said the Sackler family is “attempting to evade responsibility and lowball the millions of victims of the opioid crisis.” Connecticut Attorney General William Tong, also a Democrat, said he opposes the proposal in part because it doesn’t involve the Sacklers returning “money they took from selling opioids.” He added, “This is not the end.”
A bankruptcy filing would make it harder for those opposed to continue to pursue money from Purdue and the Sacklers because a bankruptcy judge has the power to halt existing litigation. The Sacklers, while not expected to personally file for bankruptcy protection, may have agreements with Purdue to indemnify them for company-related activity. Such agreements would likely make it more challenging to pierce the Sacklers’ personal wealth.At least 20 states have named Sackler family members personally in lawsuits, including some that filed new lawsuits against Sacklers this week. In legal filings and through representatives, they have broadly denied the lawsuits’ allegations.
States have pushed Purdue and the Sacklers for more concessions in recent weeks, including paying the money sooner, making documents public and fully liquidating the company instead of continuing to operate as a trust, people familiar with the matter said.
Separate from the states, the current deal has the support of a committee of plaintiffs’ lawyers representing thousands of local municipalities, hospitals, Native American tribes and others whose federal court cases have been consolidated in Cleveland. A leadership team for those plaintiffs said Wednesday that the proposal “will bring desperately needed recovery resources into local communities.”
The judge overseeing those cases, Dan Polster, has pushed for a settlement for more than a year, though he doesn’t have direct oversight over the lawsuit by state attorneys general and isn’t required to approve the deal.
The current outlines of the settlement don’t specify how the money from Purdue and the Sacklers would be split among the many plaintiffs, people familiar with the settlement said, setting up a potential fight among states and local municipalities on how to divvy it up.
A trial is slated to begin next month before Judge Polster in the consolidated cases, which target not only Purdue but many other drugmakers and distributors accused of contributing to widespread opioid addiction. A bankruptcy filing by Purdue in the near term would likely enable the company to avoid going to trial.
Other drugmakers, including Endo International PLC and Mallinckrodt PLC, have reached settlements to avoid the October trial, which will test the claims of two Ohio counties. No company, however, has reached a broader deal to resolve the far-reaching lawsuits.
Judge Polster on Wednesday approved a novel mechanism proposed by the plaintiffs that will allow the country’s 33,000 cities, towns and counties—even those that haven’t sued any opioid makers or distributors—to form a negotiating bloc for settlement talks. Judge Polster said the 13 main companies being sued could opt to participate but called it “a voluntary mechanism developed to address the unique circumstances of this litigation.”
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