Just hours after the company’s board signed off on a proposed settlement with more than 2,000 litigants, including dozens of US states, the embattled US drugmaker Purdue Pharma filed for Chapter 11 bankruptcy protection, a long-anticipated move aimed at shielding the company and its owners, the Sackler family, from financial ruin as they shoulder the brunt of the blame for igniting the opioid crisis with their aggressive marketing tactics of OxyContin.
At a time when some 130 Americans are dying every day from opioid-related overdoses, Purdue is hoping that its settlement will placate most of these plaintiffs, allowing the company to restructure and emerge from bankruptcy, likely under new ownership. Though many litigants agreed to the company’s settlement proposal last week, a number of holdouts, including two dozen states, refused, insisting on more onerous terms for Purdue, the New York Times reports.
The company was the first to introduce fast-acting OxyContin to market in the 1990s, the drug that more than any other pharmaceutical has been blamed for jump-starting the opioid crisis.
Purdue faces lawsuits from nearly every state, as well as some 2,600 cities, counties, Native American tribes, hospitals and other entities seeking compensation for the costs of the opioid epidemic, according to the Wall Street Journal.
But last week, the Attorney General of New York uncovered wire transfers from Purdue to Swiss bank accounts controlled by the Sacklers, which revived critics’ anger at the Sacklers, who have maintained that they did nothing wrong in the marketing of OxyContin.
According to a series of leaks, terms of the proposal include: The Sacklers surrendering ownership of the company and paying $3 billion in cash to the plaintiffs over seven years, and selling their UK-based drug company, Mundipharma. The proceeds from that sale would add “substantial further monetary contributions” to the settlement pot.
Purdue has assessed the value of the settlement at $10 billion, while the 26 states that are opposing the settlement insist that Purdue’s numbers are bogus, and rely on overly optimistic projections.
Rumors of a bankruptcy filing have been circulating since the summer of 2018, when Purdue named restructuring specialist Steve Miller as chairman and hired law firm Davis, Polk & Wardwell.