After Bankruptcy Filing, Purdue Pharma May Not Be Off Hook

Some States, Inlcuding Virginia, Continuing Lawsuit

AP News
September 16, 2019 - 11:21 am

(AP Photo/Jeff Chiu, File)

Categories: 

By GEOFF MULVIHILL Associated Press

Eds: Updates summary, headline. New approach. Adds court appearance expected Tuesday, other detail. With BC-US--Opioid Crisis-Continuing Toll. With AP Photos, AP Video.

Purdue Pharma filed for bankruptcy in the first step in a complex, multibillion-dollar plan by the maker of OxyContin to settle thousands of lawsuits brought against it by state and local governments over the nation's deadly opioid disaster.

The company and members of the Sackler family, which owns it, expressed sympathy but not responsibility.

"Like families across America, we have deep compassion for the victims of the opioid crisis," family members said in a statement, calling the settlement plan a "historic step towards providing critical resources that address a tragic public health situation."

But the bankruptcy filing, made late Sunday, may not get either the drugmaker or the Sacklers off the legal hook.

About half the states and lawyers representing at least 1,000 local governments have agreed to the tentative settlement, which the company says could be worth $10 billion to $12 billion over time and would include at least $3 billion from the Sacklers.

Under the settlement, the family would give up control of the company, and its profits would be devoted to cleaning up the opioid mess and reimbursing state and local governments for the cost of the crisis that has killed more than 400,000 Americans in the past two decades.

But some of the states that are holding out made it clear last week that they intend to object to the deal in bankruptcy court and seek to continue their lawsuits against members of the Sackler family.

In all, the company is facing some 2,600 lawsuits, mostly from local governments.

"My office is prepared to hold the Sackers accountable, regardless of whether or not Purdue declares bankruptcy," Illinois Attorney General Kwame Raoul said last week.

It will be up to the Robert Drain, a federal bankruptcy judge in White Plains, New York, to sort out what happens now — including whether those state lawsuits against Sackler family members can continue. A first court hearing on the bankruptcy plan is expected Tuesday.

For Purdue and the Sacklers, the effort revolves around getting more states to agree to the plan, which could make the settlement's approval more likely.

"We are hopeful that in time, those parties who are not yet supportive will ultimately shift their focus to the critical resources that the settlement provides to people and problems that need them," the families of late company owners Mortimer and Raymond Sackler said in their statement. "We intend to work constructively with all parties as we try to implement this settlement."

The Sacklers were listed by Forbes magazine in 2016 as one of the 20 wealthiest families in the U.S. In a court filing last week, the New York attorney general's office contended that the family had transferred $1 billion to itself through Swiss bank accounts and other means.

As some states agreed to the deal last week, others complained that it didn't hold the family or company sufficiently accountable for their roles in the crisis.

In court filings, the family and the company have pushed back against accusations that the company played a central role in causing the crisis by overselling the benefits of its powerful prescription painkillers and downplaying the addiction risk.

The company's drugs represent a small fraction of the prescription opioids shipped over the years — and most fatal overdoses have been linked to illegal opioids such as heroin and illicitly made fentanyl.

Steve Miller, chairman of Purdue's board of directors, said on a conference call with reporters that an admission of wrongdoing is not part of the deal.

He warned that as legal battles drag on, the company's costs grow, leaving less for the plaintiffs in lawsuits.

"The resumption of litigation would rapidly diminish all the resources of the company and would be lose-lose-lose all the way around," he said.

One likely result of the company's filing is that it will be removed from the first federal trial over the toll of opioids, scheduled to start Oct. 21 in Cleveland. Johnson & Johnson and its subsidiaries along with drug distributors and one pharmacy chain, Walgreens, remain as defendants.

___

Mulvihill reported from Cherry Hill, New Jersey.