Purdue Bankruptcy Could Be ‘Imminent’ as Opioid Settlement Negotiations Break Down
Over the weekend, the Associated Press reported that Purdue’s first family, the Sacklers, have rejected a demand that they personally give up about $4.5 billion as part of the settlement agreement. With that rejection, attorney generals from multiple states are preparing for the OxyContin maker to file for bankruptcy “imminently.” It has been speculated that Purdue could seek bankruptcy protection as a way to mitigate any potential losses from a significant opioid trial that is expected to begin next month in Ohio. That trial has consolidated approximately 2,000 opioid lawsuits and involves multiple companies, including Purdue, Johnson & Johnson, Teva and more. Purdue had been in negotiations to reach a settlement ahead of the trial, which was rumored to be between $10 and $12 billion. The negotiations that include the potential $12 billion settlement include a restructuring of the company that includes the Sackler family ceding control of Purdue. Over the weekend it appears those settlement attempts have failed.
The AP reported that an email sent by the attorneys general of Tennessee and North Carolina revealed that the Sackler family had rejected the settlement offers and also pointed out that the family did not offer any counterproposals.
“As a result, the negotiations are at an impasse, and we expect Purdue to file for bankruptcy protection imminently,” Tennessee Attorney General Herbert Slatery and North Carolina Attorney General Josh Stein wrote in their message, according to the report.
A spokesperson for Purdue said the company would not comment on the settlement negotiations. Last week, Purdue hinted to BioSpace that it was interested in the settlement. In a statement, the company said it sees “little good coming from years of wasteful litigation and appeals.” Purdue said it is looking for a “constructive global resolution” and is working with plaintiffs to achieve the goal.
If the pharma company files for bankruptcy protection, it will change the dynamics of legal actions taken against the company over the opioid crisis that has claimed the lives of nearly half-a-million people in the U.S. With its aggressive marketing of OxyContin, Purdue became the poster-company of the crisis. If the company does file for bankruptcy, that means the plaintiffs in the lawsuits, thousands of state and local governments, will have to file claims against the company’s assets in bankruptcy court.
The Sackler family faces additional lawsuits, the AP said. However, the family, which for years kept its name separate from the sale of OxyContin, gained a reputation for philanthropy. The family used some of the billions of dollars they earned from Purdue to support museums, university programs and more. The lawsuits that are specifically against the family face a hurdle, the AP said, because it is believed that much of the Sackler wealth is kept offshore.
Purdue has settled at least one claim. In March, the company reached a $270 million settlement with the state of Oklahoma.
While Purdue failed to reach a settlement in the Ohio case, another opioid drugmaker was able to do so. On Sunday, Mallinckrodt agreed to a $30 million settlement, which will allow that company to avoid litigation in the October Ohio trial. That settlement came days after the company was reported to be eying a restructuring as a means to mitigate any potential legal liabilities from the trial. A recent report showed that the debt-laden 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.