Purdue Pharma Files for Bankruptcy

OxyContin manufacturer Purdue Pharma has filed for bankruptcy as part of what will be the first settlement related to the opioid crisis. Under this agreement, Purdue’s owners, the Sackler family, would turn the company over to a “public benefit trust” which would produce opioids, addiction treatment drugs, and overdose antidotes.

Purdue collected billions of dollars in profit for opioid sales over two decades, making its founders one of the richest families in the U.S. In this settlement – one of many lawsuits related to assigning blame for the opioid epidemic – the Sacklers have agreed to pay $3 billion from their personal fortune, as well as up to $1.5 billion from the sale of their non-U.S. pharmaceutical companies.

“This is a highly unusual case in that the debtors have pledged to turn over their business to the claimants. All of the claimants, in essence, have the same interest in maximizing the value of the business and avoiding immediate and irreparable harm,” U.S. Bankruptcy Judge Robert Drain said.

The business will continue to operate as usual while it pursues Chapter 11 bankruptcy protection to settle more than 2,600 lawsuits filed by states, cities, counties, individuals, and institutions. Twenty-four U.S. states oppose the tentative deal and several plan to continue taking legal action against Purdue and the Sacklers.

Some critics argue that allowing Purdue to pay for the settlement with funds from selling opioids is tantamount to paying for the crisis with “blood money.” “The settlement agreement basically requires the settlement payments to be made based on the future sales and profits of opioids. That doesn’t really feel to me like the right way to do this,” said Massachusetts Governor Charlie Baker.

Sources: The Washington Post, September 11, 2019; The New York Times, September 15, 2019; NPR, September 9, 2019; AP News, September 17, 2019; AP News, September 17, 2019.