Crime and Courts

Purdue Pharma Director Grilled on Proposed Opioid Settlement

Purdue Pharma appeared before a Bankruptcy Court judge on Thursday to settle thousands of lawsuits

What to Know

  • Purdue Pharma's quest to settle thousands of lawsuits over OxyContin's toll has entered its final phase with the grudging acceptance of most of those who have claims against the company
  • A confirmation hearing opened in U.S. Bankruptcy Court on Thursday for a deal that removes control of the company from members of the wealthy Sackler family and requires them to contribute $4.5 billion to opioid abatement
  • While most states have come to support the plan, a lawyer representing Connecticut grilled a company board member over whether states should be able to pursue lawsuits against the Sacklers instead

Purdue Pharma's quest to settle thousands of lawsuits over the toll of OxyContin and its other prescription opioid painkillers entered its final phase Thursday with the grudging support of many of those who have claims against the company.

But the lingering opposition from some state attorneys general took center stage in the first day of a confirmation hearing in U.S. Bankruptcy Court about the company’s reorganization plan.

Questions from a lawyer representing Connecticut voiced the concern that states are being forced to accept the deal with both Purdue and members of the wealthy Sackler family who own the company.

The attorney, Irve Goldman, essentially asked John Dubel, a corporate turnaround expert who was installed as a member of Purdue’s board of directors two years ago, why states should not go to trial.

“Is it a reasonable view for a creditor or sovereign state to want their claims resolved through an adversarial process so their view of justice should be served?” Goldman asked.

Dubel said he understood that states have that complaint, but added: “We have 95-plus percent support from all of our creditors” and that the Sacklers’ planned contribution to the settlement is “fair and equitable.”

The confirmation hearing, which could stretch out over two weeks, comes nearly two years after Purdue filed for bankruptcy as a way to settle about 3,000 legal claims filed against it by state and local governments, Native American tribes and others.

In addition to cash from the Sacklers, the company is asking a judge to approve the company being remade into an entity that's no longer owned by the family, with its profits dedicated to abating the opioid crisis.

As Dubel noted, most of the groups with claims against Purdue are on board with the settlement plan after years of negotiations.

Those with claims against Purdue were given a vote on the settlement, though U.S. Bankruptcy Court Judge Robert Drain is not bound by the results. Well over 90% of most groups of creditors said they approved, according to court filings.

On Thursday, an official with the company that counted the votes acknowledged that the support reflects only those who cast ballots. The majority of the more than 600,000 people and entities who were eligible to vote did not.

A group of Democratic state attorneys general were among the last to get on board. Until July, top state government lawyers were divided nearly evenly on whether to accept the deal.

Several of the opponents signed on after Purdue agreed to make many company records public and Sackler family members agreed to accelerate payments and increase payments. They've now agreed to provide a total of $4.5 billion in the form of cash and control of a charitable fund.

In response to questions, Dubel also said that the possibility that the settlement would fall apart is why the company has not shared with the court communications from its lawyers about the legal risks faced by the Sacklers.

“We are still not certain that this plan will be confirmed,” he testified, “and we don’t have full certainty that the payments will be made over the next nine years.”

An analysis commissioned by a group of state attorneys general before changes in the agreement found the estimated wealth of the Sackler family could rise from $10.7 billion in 2020 to $14.6 billion by 2030 because of investment returns and interest.

David Sackler, a grandson of one of the three brothers who nearly 70 years ago bought the company that became Purdue, made a written declaration in court supporting the settlement and could be called to testify on it in the coming days.

Activist groups held a rally Monday outside the White Plains, New York, courthouse where Drain is based, urging him not to approve the deal.

“They are opioid profiteers who have caused mass death and they sit pretty in this court,” one of the activists, Megan Kapler, said at the protest. “And it's not right.”

The Purdue case is the highest-profile part of a vast landscape of litigation over an opioid epidemic that has been linked to more than 500,000 U.S. deaths since 2000, including those from prescription drugs such as OxyContin and generic painkillers, along with illicit drugs including heroin and illegally produced fentanyl.

In recent months, claims against other companies in the drug industry have gone to trial in California, New York and West Virginia, with more on tap in coming months. Some other firms are also settling. Drugmaker Johnson & Johnson and distribution companies AmerisourceBergen, Cardinal Health and McKesson are seeking state and local government acceptance of a deal worth $26 billion. Purdue's case was separated from the others when the company filed for the bankruptcy protection.

The company says its plan could be worth $10 billion over time. Profits and money already in the company's coffers would be used to abate the opioid crisis, funding treatment programs and education campaigns.

The value of the deal also includes the value of drugs Purdue is developing to reverse overdoses and inhibit addiction.

A portion of the money would also go to individual victims and their families. Payouts are expected to range from about $3,500 to $48,000.

Ed Neiger, a lawyer representing victims, said ahead of the hearing that he would tell Drain that it’s better to approve the settlement plan than to have years more of court battles with Purdue and the Sacklers.

“The plan must be analyzed in light of the alternative, not a comparison to the ideal,” Neiger said in an interview. “Five hundred thousand people have died as result of the opioid crisis thus far. If we go the all-out litigation route, another 500,000 might die before we see a penny from the Sacklers.”

Copyright AP - Associated Press
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