In a filing that signals the beginning of the end of the nation’s best-known prescription opioids, Purdue Pharma presented its bankruptcy reorganization plan before midnight on Monday. The blueprint requires members of the billionaire Sackler family to relinquish control of the company and transform it into a new corporation with profits directed specifically towards ending the drug epidemic that is its signature painkiller , OxyCopt, helped create.
The plan, more than 300 pages long, is the company’s formal bid to end thousands of lawsuits and includes a pledge from Sacklers to pay $ 4.275 billion from his personal fortune – $ 1.3 billion more than his original offer – states. , For reimbursement of municipalities, tribes. And other plaintiffs for epidemic-related costs.
If the plan was called the company’s creditors and Judge Robert D. If approved by the majority of the Drain of Federal Bankruptcy Court of White Plains, NY, the payment will begin to fall into three buckets: to compensate the individual plaintiff, such as families whose relatives have purchased or guardians of guardians. Infants born with neonatal abortion syndrome as well as hospitals and insurers; Another for the tribes; And the third – and the biggest – For state and local governments, who are devastated by the cost of A drug epidemic that has only worsened during the Kovid-19 epidemic.
“With drug overdoses still at record levels, it is time to put Purdue’s assets in jeopardy,” Purdue’s chairman of the board of directors, Steve Miller, said in a statement. “We believe that this plan achieves that important goal. “
Whether the plan will be accepted or not remains to be seen. Ever since the company filed for Chapter 11 bankruptcy in 2019, 24 states and the District of Columbia have argued that the process would boost their ability to pursue legal action directly against individual Sackler family members, They are insufficient to contribute. .
While some details of the terms of the settlement are still being worked out, Purdue officials said Sacklers will not be exempt from criminal investigations that could be brought by some states for violating consumer protection laws. However, the plan exempts them from further civil litigation.
The new filing, made minutes before the court-imposed deadline, is Purdue’s long, disturbing history as a producer and marketer of Oxycopt, a prescription painkiller for hundreds of thousands of people Has become addictive. For years, federal and state officials tried to curb Purdue’s marketing strategy. In 2007, the Justice Department signed a $ 634.5 million settlement with Purdue and top officials to resolve criminal charges related to its marketing practices.
Started in 2015, as the opioid epidemic was tearing through the country, lawsuits brought by cities, counties, states, tribes, families, hospitals and insurers were engaging drug distributors, distributing to pharmacies and manufacturers, Purdue was prominent among them. The cases are almost equally alleged that OxyCopt helped form the basis for the epidemic of prescription and illicit drug addiction that resulted in the deaths of more than 400,000 people in 20 years.
To curb rising civil litigation, which related legal fees, the company cost Purdue $ 2 million a week Filed for bankruptcy protection in 2019.
Litigation continues in federal court against other companies.
The biggest difference between Purdue’s earlier proposals and this latest plan included a $ 1.3 billion payment increase from Sacklers and their payment schedule in addition to two more years (from seven to nine).
Another notable change involves control of the new company. The initial proposal for 2019 states that it will be inspected by state-appointed officials. The restructuring plan now describes it as a private corporation run by independent managers selected by states and local government creditors. The largest groups of claimants – tribes and government – own the company and will ensure that revenue went exclusively to programs dedicated to ending the crisis.
By 2024, the company’s managers could sell to private owners, but those owners would also be bound by the same rules of conduct and revenue direction.
While Purdue was doing its work through bankruptcy proceedings, it Pleaded guilty to federal criminal charges In November for defrauding health agencies and violating anti-kickback laws.
Individual members of the Sackler family agreed to pay $ 225 million in civil penalties to the federal government, but said in a statement that they had “acted ethically and legally.” Although Sacklers was not criminally charged, the Justice Department later reserved the right to pursue criminal charges.
A major goal of the new Purdue plan is to ensure that the settlement funds will be set towards reducing the epidemic, rather than being distributed more generally to cover the shortfall in the state budget. Such disbursement was a major criticism of the 1998 settlement that ended litigation against large tobacco companies, sometimes comparing opioid litigation.
Pushed by creditors during bankruptcy negotiations, the company suggested in its plan to follow disbursements Recent Public Health Principles It was signed by at least two dozen major medical, drug policy and educational institutions and focused on drug prevention, youth education, racial equity and transparency.
The plan will be voted on by thousands of parties. Confirmation hearing will be ensured, and a conclusion is expected in a few months. The bankruptcy proceedings began 18 months ago, leaders of a major block of municipalities As 24 states indicated their support.
Lloyd B. Miller, who represents several tribes including the Navajo Nation, said his clientele is on board.
“It is important that more opioid treatment funding is beginning to flow into tribal communities, all of which have suffered more, given the extraordinary devastation during the Kovid epidemic,” he said.
But since 2019, when Purdue filed for bankruptcy, 24 other states – some controlled by Democrats, some by Republicans – and others in the District of Columbia have opposed the move, noting that Purdue has backed out of its OxyCopt sale The benefits have continued.
The Attorney General of Massachusetts, Maur Hayley, who was the first to prosecute individual members of the Sackler family, said that under the scheme, Sackler payments would come from their investment returns rather than from the principal.
“Sacklers became billionaires due to a national tragedy,” Ms. Hayley said in a statement. “They should not be allowed to pay a fraction of their investment returns over the next nine years and move away from the wealthier they are today.”
The Attorney General for the opposing states stated that although the plan was an improvement on earlier proposals, they found it disappointing for several reasons. Among those, he said, “the company’s need to revise the plan to establish a quick and orderly wind-down that does not make it overly entangled with states and other creditors.”
Two branches of the Sackler family, The successors of the two brothers who founded the company said, “Today is an important step towards providing assistance to those who suffer from drug addiction, and we hope that this proposed proposal is the beginning of a far-reaching effort to provide assistance.” Will indicate where it is necessary. “
The eldest brother before the commencement of OxyCopt, Drs. Arthur Sackler had sold his shares and his relatives were not part of the litigation.
A forensic audit of Sacklers’ finances, commissioned by Purdue in order for the bankruptcy investigation, determined that between 2008 and 2017, the family earned more than $ 10 billion from the company. Lawyers for the family said the entire amount is not liquid: more than half went towards investing and investing in businesses that would be sold as part of the bankruptcy agreement.
Although other blocks from states and creditors have objected to the plan’s elements for 18 months, several factors favor the possibility of approval: a period of litigation, excessive costs to all parties, the urgency of a worsening opioid crisis. And the overall lack of public health resources by the epidemic.
The new company will continue the sale of Oxycopt, a painkiller that is still approved by the Federal Drug Administration under limited circumstances. But it will diversify its products to include a generic and a drug to treat ADHD, Set aside as well Addiction to new drugs to reverse overdoses and treatments that are delivered on a non-profit basis as a public health initiative.