Oxycontin-maker Purdue Pharma submitted its bankruptcy restructuring plan late on Monday night in which members of the Sackler family, its billionaire owners, have pledged $4.275 billion from their personal fortune to help resolve several lawsuits the drug maker faces for its role in fueling the opioid epidemic.
In a filing submitted to a federal bankruptcy court in New York just minutes before the court-imposed deadline at midnight, the drugmaker outlined plans to get itself out of Chapter 11 bankruptcy which it had filed for in 2019.
The new settlement plan put forth by the Sacklers is $1.3 billion higher than their original offer and if approved it will be used to reimburse states, local governments, Native American tribes and other plaintiffs who have successfully sued Purdue for its role in fueling the opioid crisis.
As part of the proposal, the $4.28 billion from the Sacklers will be paid in installments over a decade and additionally the company would pay around $500 million in cash up front.
The proposal also requires members of the Sackler family to relinquish all control of Purdue which will be reorganized under a new, independent board.
The restructured company will exclusively focus on addressing the opioid crisis and developing and distributing antidotes for overdoses and medicines that treat opioid addiction.
If accepted, the proposal will release both the Sacklers and Purdue Pharma from any further civil litigation.
What To Watch For
The new plan is likely to face opposition from various plaintiffs including several U.S. states and territories. Even if it is approved, the plan can be challenged in court by individuals who have been impacted by opioids and state attorneys general who have not accepted the deal. Massachusetts Attorney General Maura Healey, along with 23 other attorneys general voiced opposition to the new plan on Monday and called for more transparency and a larger upfront payment from the Sacklers, the Wall Street Journal reported.
Purdue filed for bankruptcy in 2019 as it attempted to resolve thousands of lawsuits filed by states and local governments who accuse the company of fueling the opioid crisis by aggressively marketing its painkiller OxyContin. In October last year the company agreed to an $8 billion settlement and pleaded guilty to three federal charges to resolve criminal and civil investigations into how the drugmaker marketed its painkillers. The settlement number though was largely seen as symbolic since the company’s existing assets fell well short of that value. The company instead is expected to only pay $225 million to the federal government while the Sackler family members will separately pay $225 million to resolve civil claims. The Sackler’s $225 million payment is separate from the $4.275 they have offered to pay as part of the new settlement plan. Since 1999, nearly 450,000 people in the U.S. have died from overdoses of prescription and illegal opioids according to data released by the U.S. Centers for Disease Control and Prevention (CDC).