OxyContin Lawsuits court Purdue pharma bankruptcy, who own stock

Purdue Pharma Proposes a Proposal to End Sackler Regulation and the Growing Number of Lawsuits

In bankruptcy court, the OxyContin manufacturer filed its long-awaited restructuring plan. The new company's revenues will be used primarily to tackle the opioid crisis.

Purdue Pharma filed its bankruptcy restructuring plan shortly before midnight on Monday, marking the start of the end for the country's most infamous producer of prescription opioids. The strategy calls for members of the billionaire Sackler family to relinquish ownership of the business and restructure it as a new company with revenue devoted solely to fighting the opioid abuse crisis that its flagship painkiller, OxyContin, worsened.

The plan is more than 300 pages long and contains a commitment by the Sacklers to pay $4.275 billion from their personal wealth — $1.3 billion more than their initial offer — to compensate governments, counties, tribes, and other claimants for expenses associated with the outbreak.

Steve Miller, the chairman of Purdue Pharma, is portrayed in a court drawing (top row, second from right). During a virtual court hearing in November, he entered a guilty plea on behalf of the group.
Steve Miller, the chairman of Purdue Pharma, is portrayed in a court drawing (top row, second from right). During a virtual court hearing in November, he entered a guilty plea on behalf of the group.

Payments will begin pouring into three buckets if the plan is approved by a majority of the company's creditors and Judge Robert D. Drain of federal bankruptcy court in White Plains, N.Y.: one for individual plaintiffs, such as families whose relatives overdosed or guardians of infants born with neonatal abstinence syndrome, as well as hospitals and insurers; another for tribes; and the third for the company.

In a statement, Steve Miller, chairman of Purdue's board of directors, said, "With opioid overdoses still at record levels, it is past time to put Purdue's assets to work resolving the crisis." “We are optimistic that this strategy will fulfill that crucial purpose. ”

If the proposal will be approved remains to be seen. Since the corporation filed for Chapter 11 bankruptcy in 2019, 24 states and the District of Columbia have condemned it, claiming that it would prevent them from pursuing civil action against individual Sackler family members whose donations are deemed inadequate.

Purdue officials said the Sacklers would not be released from criminal proceedings that could be brought by a number of states for breaching consumer protection laws, despite the fact that certain aspects of the settlement terms are still being worked out. However, the plan exempts them from further civil action.

During a House Oversight Committee hearing in December, David Sackler, a member of the Purdue Pharma family, testified via video.
During a House Oversight Committee hearing in December, David Sackler, a member of the Purdue Pharma family, testified via video.

Purdue's latest filing, which came only minutes before a court deadline, is a watershed moment in the company's long and tumultuous history as a manufacturer and marketer of OxyContin, the opioid painkiller that turned out to be addictive for hundreds of thousands of citizens. Purdue's marketing methods were attempted to be curtailed by federal and state authorities for years. Purdue and top executives were fined $634.5 million by the Justice Department in 2007 for criminal charges relating to their marketing activities.

Suits brought by towns, counties, states, tribes, families, hospitals, and insurers began engulfing drug dealers, dispensing pharmacies, and manufacturers in 2015, as the opioid crisis raged across the country, with Purdue at the forefront. Almost all of the lawsuits allege that OxyContin aided in the development of the prescription and illicit drug abuse crisis that culminated in the deaths of over 400,000 people over a 20-year span.

Purdue filed for bankruptcy protection in 2019 to stop the mounting civil lawsuits, which was costing the corporation $2 million a week in legal fees.

The federal court case against other businesses is also ongoing.

The biggest difference between Purdue's previous plans and this new initiative is the Sacklers' payment rise of $1.3 billion and the extension of two years to their payment schedule (from seven to nine).

At the same hearing, Kathe Sackler, a former vice president and member of Purdue Pharma's board of directors, testified.
At the same hearing, Kathe Sackler, a former vice president and member of Purdue Pharma's board of directors, testified.

Management of the new business is another noteworthy move. The original plan from 2019 stated that it will be overseen by officials appointed by the state. Purdue is now defined in the restructuring plan as a private entity managed by independent managers chosen by the states and local governments that sued the company. The corporation is owned by the biggest plaintiffs — tribes and the government — and proceeds will go solely to services aimed at resolving the crisis.

By 2024, the company's executives could sell to private investors, but those investors would be subject to the same code of ethics and revenue distribution.

Purdue pleaded guilty to federal criminal charges in November for defrauding health agencies and violating anti-kickback rules when managing the bankruptcy process.

Individual members of the Sackler family decided to pay $225 million in civil fines to the federal government, but said in a statement that they "acted ethically and lawfully." Despite the fact that the Sacklers were not prosecuted criminally, the Justice Department reserved the right to do so later.

One of the main goals of the new Purdue initiative is to put in place safeguards to ensure that the settlement funds are used to combat the epidemic rather than being used to cover state budget shortfalls. The 1998 settlement that ended a sprawling lawsuit against the major tobacco firms, to which the opioid litigation is often contrasted, was criticized heavily for such disbursements.

Due to pressure from creditors during the bankruptcy proceedings, the organization proposed in its proposal that the disbursements be made in accordance with recent public health standards signed by at least two dozen major medical, drug policy, and academic institutions, which include drug prevention, youth education, social equality, and accountability.

Purdue Pharma’s headquarters in Stamford.
Purdue Pharma’s headquarters in Stamford.

Tens of thousands of parties will vote on the proposal. Hearings for confirmation will follow, with a result anticipated in a few months. Members of a large group of counties, as well as 24 states, have expressed their solidarity since the bankruptcy proceedings began 18 months ago.

Many tribes, including the Navajo Nation, are on board, according to Lloyd B. Miller, who represents them.

“More opioid treatment funding needs to flow into tribal communities, particularly given the extraordinary destruction tribes have endured during the Covid pandemic,” he said.

However, after Purdue's bankruptcy filing in 2019, 24 other states — some run by Democrats, others by Republicans — and the District of Columbia have spoken out against the move, claiming that Purdue has continued to benefit from its OxyContin sales.

The Massachusetts attorney general, Maura Healey, who was the first to prosecute individual members of the Sackler family, argued that the Sackler payments would come from investment gains rather than principal under this scheme.

Ms. Healey said in a statement that the Sacklers became billionaires by triggering a national disaster. “We shouldn't be able to get away with it by paying a fraction of their investment returns for the next nine years and walking away wealthier than they are now.”

Despite the fact that the initiative was an improvement over previous plans, attorneys general for the opposing states said it was disappointing for many reasons. They said the plan should be changed to provide “a timely and orderly wind-down of the business that does not unnecessarily entangle it with states and other creditors,” among other things.

“Today marks a significant step toward providing support to those who suffer from addiction, and we hope this proposed resolution will represent the beginning of a far-reaching initiative to provide assistance where it is needed,” two branches of the Sackler family — descendants of two of the brothers who formed the business — said.

The Massachusetts attorney general, Maura Healey, was the first to sue members of the Sackler family personally.
The Massachusetts attorney general, Maura Healey, was the first to sue members of the Sackler family personally.

Dr. Arthur Sackler, the eldest child, sold his shares before OxyContin was launched, and his relatives are not involved in the lawsuit.

Purdue conducted a forensic analysis of the Sacklers' accounts as part of the bankruptcy investigations, which revealed that the family received more than $10 billion from the corporation from 2008 to 2017. The entire sum was not liquid, according to the family's lawyers: more than half went to taxes and investments in companies that would be sold as part of the bankruptcy agreement.

Despite the fact that states and other creditors have been vocally opposing aspects of the agreement for the past 18 months, several considerations seem to support approval: the length of the proceedings, the exorbitant cost to both parties, the urgency of the escalating opioid crisis, and the overall shortage of public health services caused by the coronavirus pandemic.

The new company will start selling OxyContin, a painkiller that is still licensed by the Food and Drug Administration under some conditions. It will, however, diversify its offerings to include generics and a medication to treat attention deficit hyperactivity disorder, as well as set aside experimental medications to reverse overdoses and treat addiction as a public health initiative.

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