Purdue settles suit with the Justice Department.
Following a hearing in bankruptcy court in White Plains, New York, Judge Robert Drain authorized the settlement between Purdue Pharma and the Department of Justice (DOJ), which is to include guilty pleas to “multiple serious felonies” including conspiracy to defraud the United States and violating anti-kickback laws.
“The DOJ settlement is a critical building block,” Judge Robert Drain said in making his decision.
The DOJ is pushing for Purdue to become a public benefit corporation governed by a trust that “has to balance its interests against those of the American public and public health,” according to the agency. So long as the company is restructured in this way, the DOJ will take $225 million.
“Today is in fact a monumental day,” Purdue Pharma’s attorney Marshall Huebner said following the decision made by Judge Drain. “Purdue Pharma will never emerge from Chapter 11. The proposed settlement with the Department of Justice should be approved because it fully resolves the United States’ criminal and civil investigations of the Debtors in a manner that is fair, equitable, and in the best interests of the estates.”
Last month, the DOJ announced an initial civil settlement with the drug maker, stating, “The civil settlement with Purdue provides the United States with an allowed, unsubordinated, general unsecured bankruptcy claim for recovery of $2.8 billion. This settlement resolves allegations that from 2010 to 2018, Purdue caused false claims to be submitted to federal health care programs, specifically Medicare, Medicaid, TRICARE, the Federal Employees Health Benefits Program, and the Indian Health Service. The government alleged that Purdue promoted its opioid drugs to health care providers it knew were prescribing opioids for uses that were unsafe, ineffective, and medically unnecessary, and that often led to abuse and diversion.”
Of the latest settlement, the agency explained, “Under a separate civil settlement, individual members of the Sackler family will pay the United States $225 million arising from the alleged conduct of Dr. Richard Sackler, David Sackler, Mortimer D.A. Sackler, Dr. Kathe Sackler, and Jonathan Sackler (the Named Sacklers). This settlement resolves allegations that, in 2012, the Named Sacklers knew that the legitimate market for Purdue’s opioids had contracted. Nevertheless, they requested that Purdue executives recapture lost sales and increase Purdue’s share of the opioid market.”
Many states and advocates for victims have voiced their concerns that the settlement is far too lenient on the members of the Sackler family who own Purdue. They have also indicated the proposed reorganization will place the federal government in the opioid business.
“The DOJ settlement mandates the preservation of the OxyContin business under the government’s protection as a Public Benefit Company. This requirement in the settlement is improper, corrosive to public faith in government, and offensive to the tens of thousands of families who have been harmed,” said a group of families at the hearing.
The DOJ, however, called the agreement “significant” since “it requires Purdue Pharma to plead guilty to three felonies and steers money to communities ravaged by opioid abuse.” And this viewpoint was shared by Purdue.
The company stated, “This milestone settlement should be approved now – not delayed, deferred, or risked. If approved, the DOJ Resolution will preserve billions of dollars of value for creditors other than the federal government and will maximize the value available to address the opioid crisis.”