Purdue to Pay States’ Legal Fees to Expedite Release of Emergency Funds

Court Money

Purdue Pharma will pay about $20 million in legal fees to state and local governments as the privately-owned opioid drugmaker moves forward with its $10 billion bankruptcy. But the funds will be paid on condition that the local governments agree to release funds set aside for opioid addiction assistance.

On Tuesday, the bankruptcy court gave approval to the reimbursement of legal fees for states and local governments involved in the opioid lawsuit settlements, but with the understanding that would allow $200 million in emergency funds to flow to treatment programs, Reuters reported late Tuesday. The agreement, overseen by Bankruptcy Judge Robert Drain, was arranged in order to expedite the release of $200 million in funds meant to support addiction treatment. Those funds were set aside to support the local governments that are still spending their own money on support programs.

Purdue proposed the massive emergency fund last month, Reuters said, that could be spent on treatment while the bankruptcy settlement moves forward. In September, Purdue Pharmaceuticals filed Chapter 11 bankruptcy and agreed to pay between $10 and $12 billion to settle its involvement in the health care crisis. Part of the agreed-upon settlement includes Purdue contributing its assets to a trust established for the benefit of the claimants. A new company will be formed and will then contribute millions of doses of opioid overdose reversal medications and treatments aimed at opioid addiction at little or no cost, such as nalmefene and naloxone.

The $200 million fund has not been released due to disagreements among the local governments over how to spend the funds, Purdue told the court, according to the report.

As the company moves forward with this bankruptcy plan, the company is still facing opposition from the attorneys general of several states that did not agree to the settlement deal, such as New York and Massachusetts. Those attorneys generals believe the Sackler family, the family that controls Purdue Pharma LP, should forfeit a significant amount of the wealth they made off of Purdue’s lead opioid, OxyContin. New York and Massachusetts are still embroiled in a legal battle with the company. The ongoing lawsuit in Boston has resulted in the revelation of the company’s tactics regarding the marketing of OxyContin.

Under the terms of the settlement, the family will pay about $3 billion. They will also cede control of the business. When the settlement was announced in September, the Sackler family, which had been divided before on settlements, issued its own statement supporting the settlement. The Sacklers called the agreement “an historic step towards providing critical resources” to address the opioid crisis.

In addition to the agreement to pay the legal fees of the governments in the settlement agreement, The Wall Street Journal reported that Purdue has also been successful in winning a temporary reprieve in other opioid-related lawsuits it faces. The Journal said 24 states and the District of Columbia will comply with an injunction issued by the bankruptcy court temporarily halting those other lawsuits against Purdue and the Sackler family. The injunction will provide Purdue more time to conclude settlement talks, the Journal said.

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