Some Opioid Drugmakers Could Use Purdue's Bankruptcy As a Way to Avoid Litigation


Following Purdue Pharma’s Chapter 11 filing last month, other opioid makers are exploring ways to settle their own litigation problems by participating in the OxyContin drugmaker’s bankruptcy proceedings.

First reported by The Wall Street Journal, companies like Endo, Johnson & Johnson, Teva Pharmaceutical, Allergan and Mallinckrodt are “looking to enact a global settlement of the litigation that would be implemented through Purdue’s Chapter 11 case,” the Journal said, as reported by Reuters. Essentially, the other opioid drugmakers who all face multiple lawsuits over their own roles in the opioid crisis would be allowed to contribute money to a trust fund established by Purdue’s bankruptcy filing. The financial contributions would be in exchange for a release from liability, the Journal said.

Last month, OxyContin-maker Purdue filed Chapter 11 bankruptcy and agreed to pay between $10 and $12 billion to settle its involvement in the health care crisis. Among the terms of the bankruptcy, Purdue is expected to contribute all of its assets to a trust established for the benefit of the claimants. The new company will be governed by a board selected by the claimants and approved by the bankruptcy court. When the new company is formed, it will contribute “tens of millions of doses” of opioid overdose reversal medications and treatments aimed at opioid addiction at little or no cost, such as nalmefene and naloxone, BioSpace reported at the time. Earlier this year, ahead of the bankruptcy filing, Purdue reached a $270 million settlement with the state of Oklahoma for its role in the opioid crisis in that state.

While the Journal’s article cited an unnamed individual “familiar with the matter,” Mallinckrodt told Reuters that a suggestion it was looking at the Purdue bankruptcy proceedings as a way to avoid litigation was “completely unfounded.”

“We have made no decisions around how a potential settlement or separation would be effectuated,” the company told Reuters.

Like other opioid makers, Mallinckrodt is facing numerous lawsuits regarding the marketing of its opioid medications. On Monday, the company reached a settlement with two Ohio counties ahead of a watershed trial set for later this month. The agreement fully resolves the Track 1 Cases against all named Mallinckrodt entities, Mallinckrodt said. Under terms of the agreement, Mallinckrodt will pay $24 million in cash and provide $6 million in generic products, including addiction treatment products. It also will provide a $500,000 payment in two years in recognition of the counties' time and expenses, the company announced.

That settlement agreement came on the heels of company was eying a restructuring as a means to mitigate any potential legal liabilities from that Ohio opioid trial. A recent report showed that Mallinckrodt was among the companies with the highest output of oxycodone and hydrocodone pills during a six-year period. In 2017, the company paid $35 million to the U.S. government to settle allegations that it failed to report suspiciously large amounts of drug orders for its opioid pills.

Teva, Endo, Allergan and J&J did not respond to Reuters’ request for comment. Earlier this year though, Teva reached an $85 million agreement with the state of Oklahoma to settle litigation in that state.

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