In a move that could spell the end of Purdue Pharma, the company has filed a bankruptcy plan calling for the family that owns the infamous drug maker to relinquish control and pay nearly $4.3 billion to reimburse states, cities, and tribes for the costs associated with the long-running opioid crisis in the U.S.
The plan, which was filed late Monday night in a federal bankruptcy court in New York, is designed to end nearly 3,000 lawsuits that blamed Purdue for helping to spark a wave of prescription abuse, addictions, and deaths over the past two decades. The litigation accused the company of downplaying the addiction risks of its OxyContin painkiller and improperly encouraging overprescribing by physicians.
For the most part, the plan is similar to one that was filed in 2019, although at the time, some members of the Sackler family who control Purdue had agreed to pay $3 billion. Nearly two dozen states had objected to the previous restructuring plan, in part, because they demanded that certain Sackler family members should contribute more money to resolve the disputes.
If the restructuring plan is approved by a majority of creditors, the money will be largely earmarked for abating the opioid crisis and distributed by two specially created trusts. In addition, a new private company with an independent board selected by state and local governments will focus on developing and distributing medicines to address opioid addiction and overdoses, but also sell other types of drugs, according to the 324-page plan.
“Purdue has delivered a historic plan that can have a profoundly positive impact on public health by directing critically-needed resources to communities and individuals nationwide who have been affected by the opioid crisis,” Purdue chairman Steve Miller said in a statement in which he maintained there is “broad and strong support” for the plan from many creditors.
“The company has worked closely with a broad and diverse group of stakeholders to guarantee that billions of dollars will be used exclusively for abatement purposes and not diverted elsewhere.… With drug overdoses still at record levels, it is past time to put Purdue’s assets to work addressing the crisis. We are confident this plan achieves that critical goal.”
As part of the settlement with the federal government, some family members agreed to pay $225 million in civil penalties, an amount that is included in the $4.5 billion payment proposed in the restructuring plan.
Members of the families of the late Mortimer Sackler and late Raymond Sackler issued a statement saying “today marks an important step toward providing help to those who suffer from addiction, and we hope this proposed resolution will signal the beginning of a far-reaching effort to deliver assistance where it is needed.”
Whether a majority of shareholders approves the plan remains to be seen. For now, the nearly two dozen states that opposed the previous plan signaled they have concerns about the latest version. Massachusetts Attorney General Maura Healey, who was the first to sue individual members of the Sackler family, noted they will be allowed to make payments in small amounts over nine years, but can use investment returns during that time.
“The Sacklers became billionaires by causing a national tragedy,” Healey said in a statement. “They shouldn’t be allowed to get away with it by paying a fraction of their investment returns over the next nine years and walking away richer than they are today. We’re going to keep fighting for the accountability that families all across this country deserve.”
And the 23 states that opposed the plan expressed disappointment with the latest version, demanding a “prompt and orderly wind-down of the company that does not excessively entangle it with states and other creditors.” They also want certain Sackler family members to pay “additional value” to creditors, including the states, as well as transparency in the form of “robust document disclosures so the public understands the extent of Purdue’s and the Sacklers’ misconduct to make sure it never happens again.”
Nonetheless, the restructuring plan is a turning point in a long-running national saga that has seen nearly 400,000 deaths attributed to the opioid crisis, including both prescription opioids and illicit drugs. And Purdue has figured prominently. In 2007, a Purdue holding company and a few top executives paid $634.5 million to settle criminal charges related to OxyContin marketing practices.
Last fall, Purdue pleaded guilty to three felony criminal charges as part of an $8.3 billion settlement with the U.S. Department of Justice that also resolved civil charges against the company. However, critics complained the deal did not include criminal charges against Purdue executives or Sackler family members. Federal prosecutors indicated a criminal investigation was ongoing.