OxyContin maker negotiating settlement worth a reported $12B
Columbus, Ohio – Purdue Pharma would devote its profits to cleaning up the devastation wrought by opioids, and the controlling Sackler family would be out, under a $10 billion to $12 billion nationwide settlement taking shape at the negotiating table, according to published reports Wednesday.
The agreement, if it comes to pass, would resolve more than 2,000 lawsuits brought against the maker of OxyContin by state and local governments.
Under the proposal on the table, Purdue Pharma would file for Chapter 11 bankruptcy and transform itself into a “public benefit trust corporation,” with all profits from drug sales and other proceeds going to the plaintiffs, news reports said, citing a document outlining the tentative agreement.
The Wall Street Journal said the arrangement would stay in place for seven to 10 years and would be overseen by trustees named by the bankruptcy court. Details of the proposed settlement were also reported by NBC and The New York Times.
The Sacklers would give up ownership of Purdue Pharma and contribute $3 billion of their own money toward the total, the reports said. They would also sell another pharmaceutical company, Mundipharma, which would add $1.5 billion to the settlement.
In addition, Purdue Pharma would supply its addiction treatment drugs free to the public.
It was not immediately clear whether the reconstituted company would continue to sell opioids. Purdue Pharma also makes laxatives, antiseptics and dietary supplements.
In a statement, the Stamford, Connecticut-based company did not confirm any of the details but said it sees little good in years of “wasteful litigation and appeals.”
“Purdue believes a constructive global resolution is the best path forward, and the company is actively working with the state attorneys general and other plaintiffs to achieve this outcome,” it said.
Paul Farrell Jr., a lead plaintiffs’ lawyer representing local governments in the negotiations going on in Cleveland, said all sides remain under a gag order: “All we can confirm is that we are in active settlement discussions with Purdue.”
Attorneys general representing several states also confirmed the accelerated negotiations.
“Our mission here has always been clear – make Purdue Pharma and the other manufacturers and distributors pay for what they did to Pennsylvania and its people, and put the Sackler family out of the opioid business for good,” said Jacklin Rhoads, a spokeswoman for Pennsylvania’s attorney general.
While the U.S. has many “public benefit corporations,” creating one to settle a civil action would be a novel approach, said John Coffee, a law professor and director of the Center on Corporate Governance at Columbia Law School.
In general, public benefit corporations have charters that dictate that they operate not to maximize profits for shareholders but to benefit some other purpose, such as a charity or research, he said. Coffee said that he has never heard specifically of a “public benefit corporation trust” and that it sounded like a hybrid – a business run by trustees.
The opioid overdose epidemic has killed more than 400,000 people in the U.S. since 2000 and torn apart communities. Purdue Pharma and other players in the industry have been barraged with lawsuits, with the first federal trial scheduled to start in Cleveland in two months.
Purdue has been cast by attorneys and addiction experts as a chief villain in the crisis. While its painkillers represent a very small piece of the opioid market, the lawsuits accuse it of playing a central role in creating demand for the drugs by downplaying OxyContin’s addiction risks and pushing doctors hard to prescribe it.
New York Attorney General Letitia James said in a statement that the Sackler family “started a national fire” and has “made billions profiting from death and destruction.”
The Sacklers were ranked America’s 19th-richest family by Forbes magazine in 2016, with a net worth estimated at $13 billion.
In March, Purdue and the Sackler family reached a $270 million settlement with Oklahoma over the opioid scourge.
On Monday, an Oklahoma judge found Johnson & Johnson responsible for fueling the state’s opioid crisis and ordered the maker of such familiar household products as Band-Aids and baby powder to pay $572 million to help clean up the problem.
It was the first opioid lawsuit brought against the industry by a state to go to trial, and activists expressed hope the verdict would turn up the pressure on other companies to settle.
Members of the Sackler family are major philanthropists who have given money to cultural institutions around the world, including the Smithsonian Institution, New York City’s Metropolitan Museum of Art and London’s Tate Modern. But in recent months, institutions have come under pressure to sever ties to the Sacklers and take the family name off their walls.
Sell reported from Portland, Oregon. Associated Press writers Mike Sisak in New York; Geoff Mulvihill in Cherry Hill, New Jersey; and Marc Levy in Harrisburg, Pennsylvania, contributed to this report.