Purdue Pharma exit plan gains steam with OK from more states
By Kathi on Jul 08, 2021 | 05:38 AM IST
OxyContin maker Purdue Pharma’s plan to reorganize into a
new entity that helps combat the U.S. opioid epidemic got a big boost as 15
states that had previously opposed the new business model now support it.
The agreement from multiple state attorneys general,
including those who had most aggressively opposed Purdue’s original settlement
proposal, was disclosed late Wednesday night in a filing in U.S. Bankruptcy
Court in White Plains, N.Y. It followed weeks of intense mediations that
resulted in changes to Purdue’s original exit plan.
The new settlement terms call for Purdue to make tens of
millions of internal documents public, a step several attorneys general,
including those for Massachusetts and New York, had demanded as a way to hold
the company accountable.
Attorneys general for both states were among those who
agreed to the new plan, joining about half the states that had previously
approved it.
In a statement Thursday, New York Attorney General Letitia
James said the deal is not perfect but will help deal with the crisis. “We’ll
be able to more quickly invest these funds in prevention, education, and
treatment programs, and put an end to the delays and legal maneuvering that
could possibly continue for years and across multiple continents,” she said.
North Carolina Attorney General Josh Stein noted Thursday
that the deal includes about $1.5 billion more than it initially did.
In a statement, members of the Sackler family called the
support of more states “an important step toward providing substantial
resources for people and communities in need.”
Still, nine states and the District of Columbia did not
sign on.
Purdue said in a statement that it will try to build “even
greater consensus” for its plan.
Purdue sought bankruptcy protection in 2019 as a way to
settle about 3,000 lawsuits it faced from state and local governments and other
entities. They claimed the company’s continued marketing of its powerful
prescription painkiller contributed to a crisis that has been linked to nearly
500,000 deaths in the U.S. over the last two decades.
The court filing came from a mediator appointed by the
bankruptcy court and shows that members of the wealthy Sackler family who own
Purdue agreed to increase their cash contribution to the settlement by $50
million. They also will allow $175 million held in Sackler family charities to
go toward abating the crisis.
In all, Sackler family members are contributing $4.5
billion in cash and assets in the charitable funds toward the settlement. They
are not admitting any wrongdoing and no court has found any by a family member.
The agreement also prohibits the Sackler family from
obtaining naming rights related to their charitable donations until they have
paid all the money owed under the settlement and have given up all business
interests related to the manufacturing or sale of opioids.
Massachusetts Attorney General Maura Healey, who had been
the first attorney general to sue members of the Sackler family, praised the
modified deal in a statement early Thursday. She pointed to the $90 million her
state would receive and the way the company could waive attorney-client
privilege to release hundreds of thousands of confidential communications with
lawyers about its tactics for selling opioids and other matters.
“While I know this resolution does not bring back loved
ones or undo the evil of what the Sacklers did, forcing them to turn over their
secrets by providing all the documents, forcing them to repay billions, forcing
the Sacklers out of the opioid business, and shutting down Purdue will help
stop anything like this from ever happening again,” Healey said.
Purdue’s plan also calls for members of the Sackler family
to give up ownership of the Connecticut-based company as part of a sweeping
deal it says could be worth $10 billion over time. That includes the value of
overdose-reversal drugs the company is planning to produce.
Money from the deal is to go to government entities, which
have agreed to use it to address the opioid crisis, along with individual
victims and their families.
Most groups representing various creditors, including
victims and local governments, had grudgingly supported the plan. But state attorneys
general until now were deeply divided, with about half of them supporting the
plan and half fighting against it.
The attorneys general who had opposed the plan said they
didn’t like the idea of having to rely on profits from the continued sale of
prescription painkillers to combat the opioid epidemic. The revised deal lets
state and local governments opt out of receiving those funds. Attorneys general
also said the deal didn’t do enough to hold Sackler family members accountable
or to make public documents that could help explain the company’s role in the
crisis.
Last month, Massachusetts’ Healey told The Associated Press,
“The Sacklers are not offering to pay anything near what they should for the
harm and devastation caused to families and communities around this country.”
The support from additional states comes less than two
weeks before the deadline to object formally to Purdue’s reorganization plan
and about a month before a hearing on whether it should be accepted.
With just nine states and the District of Columbia
remaining opposed to the plan, it makes it more likely the federal bankruptcy
judge will confirm the deal.
Activists also dislike it, and two Democratic members of
Congress have asked the U.S. Department of Justice to oppose it. Reps. Carolyn
Maloney of New York and Mark DeSaulnier of California said the deal would
wrongly grant protection from civil lawsuits to members of the Sackler family.
The Justice Department has not weighed in.
Last year, the company pleaded guilty to federal criminal
charges and agreed to pay $225 million to the federal government.
In a separate civil settlement announced at the same time,
Sackler family members agreed to pay the federal government $225 million, while
admitting no wrongdoing.
The opioid crisis includes overdoses involving prescription
drugs as well as illegal ones such as heroin and fentanyl. Purdue’s bankruptcy
case is the highest-profile piece of complicated nationwide litigation against
drugmakers, distribution companies and pharmacies.
Trials against other companies in the industry are playing
out in California, New York and West Virginia, and negotiations are continuing
to settle many of the claims.