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Opioid Drugs

25 AGs Unsatisfied with Purdue’s Proposed Settlement Draft Letter

— October 28, 2020

Not all attorneys general are on board with Purdue Pharma’s proposed deal.

As a deal between the federal government and Purdue Pharma is being negotiated, numerous state attorneys general are fighting back, penning a letter specifying their intentions.  The settlement agreement would resolve all alleged opioid-related criminal and civil charges against the company, and the main point of contention involves the company’s plans to reinvent itself as a public benefit trust run on behalf of communities impacted by the crisis.  The Department of Justice (DOJ) is considering this move as part of a larger settlement that could be announced this month.

The deal is set to include “more than $8 billion in criminal fines, criminal forfeiture, and civil penalties,” according to the DOJ’s report.  Yet, the funds to be paid out would likely be added to Purdue’s bankruptcy filing, and the attorneys general are asking U.S. Attorney General William Barr to reject this plan.

At the time of Purdue’s bankruptcy filing, the deal was supported by nearly half the states suing the company and the lead plaintiffs’ attorneys submitted a statement suggesting, “The bankruptcy filing will not prevent us from finalizing an agreement with Purdue to bring opioid recovery resources into the communities we represent.”

25 AGs Unsatisfied with Purdue's Proposed Settlement Draft Letter
Photo by Kelly Sikkema on Unsplash

However, over two dozen AG’s continued to oppose court proceedings and the 25 states wrote to Barr in a letter, “A business that killed thousands of Americans should not be associated with government.  Instead, the business should be sold to private owners, so the government can enforce the law against it with the same impartiality as for any other company.  The public deserves assurance that no opioid business is given the special protection of being placed under a public umbrella. Although it may take time to find a private sector buyer, the public should be confident that public officials are seeking to avoid having special ties to an opioid company, conflicts of interest, or mixed motives in an industry that caused a national crisis.”

They noted that “the assets of Insys Therapeutics,” another opioid maker that went bankrupt over opioid-related lawsuits, “were sold to a private buyer, an approach that may also deliver more upfront money that cities and states can use to abate the opioid epidemic.”  The AGs even allude to the fact that there is a potential buyer looking to bid.

Another point of contention is the fact that the proposed public benefit move would prevent members of the Sackler family from being held accountable.  The AGs wrote the transformation would “raise questions about whether billionaires bought special treatment in this case, while working families across the country suffered.”  As part of the deal, members of the family would contribute $3 billion, but the attorneys general argue they should have to contribute more.

If the DOJ continues moving forward with the proposal, the AGs indicate in the letter they would object in bankruptcy court.  Should they continue to assert opposition, this has the potential to result in additional legal fees that would significantly compromise Purdue’s bankruptcy estate.


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