OxyContin maker Purdue Pharma agrees to $6bn bankruptcy deal
20:15, 3 March 2022
The contentious battle over a founding family’s responsibility for thousands of opioid addictions may conclude next week.
A US bankruptcy court judge in New York will consider on 9 March whether to approve a proposed $6bn (£4.5bn) bankruptcy settlement between OxyContin maker Purdue Pharma, its founding Sackler family, and eight states and the District of Columbia.
“We’re pleased with the settlement achieved in mediation, under which all of the additional settlement funds will be used for opioid abatement programmes, overdose rescue medicines, and victims,” Purdue said in an emailed statement to Capital.com.
Second try
A US district court judge in December tossed out a previously agreed $4.5bn settlement that provided millions of dollars to opioid abatement trusts while shielding Purdue’s founding Sackler family from civil liability from damages caused by addiction.
The revised agreement adds an additional $1.175bn in guaranteed payments and up to $500m in additional contingent payments, a court document said.
States including California, Maryland, and Washington were among those that contested the original plan because it would bar further legal actions against the Sacklers. They appealed the court order that would allow Purdue to exit bankruptcy with the settlement in hand.
The new agreement removes this protection. Instead, it lets the states decide whether to release the Sacklers from possible criminal wrongdoing, tweeted University of North Carolina law professor Melissa Jacoby. The bankruptcy law expert noted the deal is silent on the treatment of personal injury claims.
A question of apology
Connecticut Attorney General William Tong praised the agreement because it includes an apology and a provision allowing institutions to remove the Sackler name from buildings and scholarships.
“After years of lies and denial, the Sackler family must now directly apologise for the pain they have caused. They must reckon face-to-face with the survivors of their reckless greed at a public hearing,” Tong said.
Jacoby told Capital.com that she doesn’t read the settlement terms as an apology.
The agreement requires a spokesperson for the Sacklers to issue a statement that reads in part, “While the families have acted lawfully in all respects, they sincerely regret that OxyContin, a prescription medicine that continues to help people suffering from chronic pain, unexpectedly became part of an opioid crisis that has brought grief and loss to far too many families and communities.”
The term sheet said the statement was not an admission of any wrongdoing or liability.
However, California attorney general Rob Bonta said the deal’s mediator is urging the bankruptcy court to require the Sacklers to participate in a public hearing where victims and their survivors would be given an opportunity to directly address the family.
The Sacklers will pay the settlement over 18 years, with larger payments frontloaded, allowing the states to receive more faster than in the original plan, Tong said.
Opioid trusts
Purdue’s bankruptcy plan would transfer substantially all company assets to a new entity with a public-minded mission. The new company, called Knoa Pharma, would develop and distribute millions of doses of opioid addiction treatment and overdose reversal medicines.
The new company will be owned mostly by the National Opioid Abatement Trust (NOAT) as well as a trust established to benefit Native American tribes. Proceeds will also flow to opioid abatement trusts established for the benefit of other creditors such as hospitals, schools and children.
“With this mediation result… we hope to swiftly deliver these resources,” Purdue said today.
The Sacklers have no role in the new company.
Bankruptcy filing
Purdue Pharma and 23 affiliated debtors filed for Chapter 11 bankruptcy in September 2019 in the US Bankruptcy Court for the Southern District of New York.
The company filed for bankruptcy after reaching an agreement in principle on a framework for settling US opioid litigation with 24 state attorneys general, analogous officials from five US territories and others.
Purdue had been the target of more than 2,900 civil actions generally alleging the company falsely and deceptively marketed OxyContin and other opioid pain medications.
The settlement is conditioned upon approval by the bankruptcy court, on the Second Circuit’s reversal of the District Court’s order, and consummation of the bankruptcy plan.