Purdue starts bankruptcy proceedings while in settlement talks.
Purdue Pharma officially filed for bankruptcy after reaching an outline of a deal with states and local governments. The opioid maker has been accused of contributing to a public health crisis by engaging in irresponsible and deceptive marketing practices to push for sales of OxyContin. The settlement would require the Sackler family to hand over ownership of Purdue to a trust controlled by the plaintiffs. The Sacklers, who estimate the settlement to be $10 billion, would sell their non-U.S. pharmaceutical businesses and personally fund $3 billion.
Responding to prior complaints that the Sacklers are protecting their assests, attorney Marshall Huebner, who represents Purdue Pharma, stated, “Purdue is not shielding itself from these claimants. It is giving itself to these claimants without them even having to prevail in the litigation.”
David Nachman, lead counsel for New York’s opioid litigation, said, however, the “proposed deal did not address how settlement funds will be allocated among governments.” He added, “settling states did not appear as interested in conducting thorough investigations of Purdue…We have different views and different experiences in terms of our aggressive pursuit of some issues, including payments to the Sacklers.”
Massachusetts’ Attorney General, Maura Healey, wrote for The Washington Post, “The Sacklers would like us to believe that as part of the settlement they’re cutting a check for billions of dollars. They’re not. After ravaging communities across the country and making billions off OxyContin sales, their proposed settlement likely wouldn’t require the Sacklers to pay back a dime of the money they made from Oxycontin sales over the past few decades.” She also noted, “Our case against Purdue and the Sacklers is based on years of investigation, sworn testimony, death certificates, prescription records and thousands of internal company documents that Purdue kept secret until we brought them to light. We uncovered a scheme designed to get more patients on opioids, at higher doses, for longer periods of time. That scheme put patients and families at risk so that the Sacklers could pocket billions of dollars.”
Just recently, New York Attorney General Letitia James said she discovered an estimated $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.”
Purdue Pharma responded to these allegations stating that the transactions were “legal and appropriate.” Yet, Huebner acknowledged that Purdue still faces several challenges, saying, “I remain hopeful that parties may be more willing to settle as they learn more about facts and numbers they didn’t previously know.”
In filing for Chapter 11, the company indicated, “Absent [bankruptcy] protection, this case will fail because the fundamental goal of this and any bankruptcy will have been thwarted.”
But, Bruce Markell, a bankruptcy professor at Northwestern Pritzker School of Law and former bankruptcy judge, said, “I don’t think it’s a slam dunk either way. The powers of state attorneys general at this level are very broad and not that well-understood.”
Purdue Pharma follows Insys Therapeutics in filing for bankruptcy amid the opioid litigation. Insys, also accused of deceptively marketing its powerful fentanyl spray, Subsys, filed in June of this year.