Purdue Pharma Reorganization Gains Support from 15 States
Citing a filing in U.S. bankruptcy court, The Guardian reported the change of heart came after weeks of intense negotiations. Purdue has been soliciting support for the reorganization following its bankruptcy due to litigation settlements for its role in the opioid crisis. The move by the 15 states attorneys general comes about a month ahead of a court hearing set for Aug. 5.
Purdue filed for Chapter 11 bankruptcy in September 2019 after reaching a provisional $12 billion settlement agreement with various state governments. The deal aims to settle the company’s involvement in the opioid health care crisis.
Under the reorganization plan, Purdue, which made billions of dollars from sales of its powerful opioid OxyContin, will shift a majority of its proceeds to be used to abate the ongoing opioid crisis in the United States.
According to the U.S. Centers for Disease Control and Prevention, there were 66,813 overdoses caused by opioids from Sept. 2019 to Sept. 2020. When Purdue reorganizes, it’s expected that the new entity will have a valuation of about $10 billion. The new company is expected to provide millions of doses of opioid addiction treatment and reversal medications at cost. The new company will ultimately be owned by a new National Opioid Abatement Trust established to benefit the American people.
Last year, Purdue Pharma reached a combined $8.4 billion criminal and civil settlement with the U.S. Department of Justice. The company accepted responsibility for its actions and agreed to a settlement that includes a criminal fine of $3.544 billion and an additional $2 billion in criminal forfeiture.
The Sackler family, who owned a controlling interest in Purdue and was involved in the aggressive marketing decisions for OxyContin, will have no role in the new Purdue. Under terms of the settlement plan, the Sackler families have agreed to pay $4.275 billion, in addition to the $225 million previously paid to the United States to resolve civil claims, for a total settlement of $4.5 billion.
The states attorneys general, who now supports the reorganization plan, said in an online conference that the newer settlement terms under negotiation would provide higher amounts of relief to states to combat the opioid crisis faster. N.C. Attorney General Josh Stein said his state will gain an additional $1.5 billion in opioid relief.
Several state leaders are still withholding support from the plan due to a belief that the Sackler family is not required to provide higher levels of financial compensation and will also be shielded from future legal charges.
“This settlement plan allows the Sacklers to walk away as billionaires with a legal shield for life,” Bob Ferguson, attorney general for the state of Washington, said.