An earlier version of this story was originally published on March 4, 2019. It has been updated to reflect Purdue’s Chapter 11 bankruptcy filing.

Purdue Pharma on Sunday filed for Chapter 11 bankruptcy, part of a deal to settle thousands of lawsuits alleging the company misled doctors and the public as it promoted its opioid painkillers, including its blockbuster OxyContin, and helped ignite the opioid epidemic.

So what happens now?

advertisement

A bankruptcy filing should freeze the lawsuits against the drug maker and likely result in the claims being shifted into bankruptcy court, according to legal experts. Such a process is meant to ensure that a company that declares bankruptcy can preserve its value while it gets more time to negotiate with every entity to which it owes money. It’s also meant to ensure that all those creditors — as plaintiffs awarded money are known in bankruptcy proceedings — get some piece of the company’s assets.

But some state attorneys general — who are among those who have sued the company — oppose the deal. They’ve stressed they will continue to seek additional damages from the company and members of the Sackler family, who control Purdue and who have reaped billions from the sale of opioid painkillers. Some of the lawsuits have named individual Sacklers as defendants.

The lawsuits from state attorneys general are in various state courts, while the majority of the more than 2,000 cases from local governments, tribes, and others have been consolidated together in a federal case in Ohio in a so-called multidistrict litigation, or MDL. The bankruptcy deal is supported by roughly half the states suing the company and the lead plaintiffs attorneys in the MDL, who said in a statement Monday that “the bankruptcy filing will not prevent us from finalizing an agreement with Purdue to bring opioid recovery resources into the communities we represent.”

The bankruptcy deal should remove Purdue from test trials scheduled for next month meant to gauge the plaintiffs’ allegations. Aside from Purdue, defendants in the MDL include other opioid manufacturers, drug distributors, and pharmacies. Purdue, the Sacklers, and the other defendants have generally denied the allegations.

Legal experts previously outlined to STAT how a Purdue bankruptcy might play out. They cautioned that these proceedings can vary, particularly in complicated cases.

With that in mind, here is what could happen:

The freeze in litigation against a company that files for bankruptcy is called an automatic stay. Once plaintiffs’ claims are moved to bankruptcy court, they can negotiate or litigate over the amount they are meant to be paid.

(In certain cases, lawsuits against companies that have filed bankruptcy are allowed to proceed if they are close to being resolved or are serving as test cases — establishing, for example, how much one plaintiff’s claim might be worth.)

The litigation against opioid makers is complicated by the fact that Purdue is just one of the defendants in the MDL. While a bankruptcy judge could put the MDL as a whole on hold, it’s possible that the claims against Purdue would be segmented off in bankruptcy court, as the rest of the MDL continues.

Once a company files for bankruptcy, it has to detail for the court all of its assets and debts. The first creditors to get paid are the so-called secured creditors: a bank, for example, that provided a loan to a drug company so that it could start a manufacturing facility.

“Only assets that are leftover from that can go to everybody else,” explained Lindsey Simon, an assistant professor at the University of Georgia School of Law.

Typically, plaintiffs in lawsuits become what are known as unsecured creditors, which could also include vendors that sell a drug company chemicals, service providers like plumbers, and employees who are owed payment. The bankruptcy judge or an appointee generally decides how much each of those creditors is owed, and then all of those claims are tallied. The company’s remaining assets are divided up among them proportionately.

If, for example, a judge decides a particular creditor is owed $10, but the whole pot of unsecured creditors’ claims amounts to $100 and the debtor only has assets of $10, that creditor is going to get $1.

The idea is to produce a resolution in a faster, more focused manner than would be the case in civil court. And even if plaintiffs only receive a fraction of what they are owed, the aim is to get everyone a piece of the pie.

Otherwise, different plaintiffs might try to accelerate their own efforts so they can take the full amount owed to them, leaving little for other plaintiffs.

“If [a company] has to pay cases as they were finalized, the plaintiff that had reached a resolution in its case earlier might get paid in full, but there would be nothing left for anyone else,” said Jesse Fried, a professor at Harvard Law School.

States that have opposed the bankruptcy deal have said that it would not extract enough from members of the Sackler family.

They’ve argued that Purdue’s assets are limited because the family has absorbed the bulk of the company’s profits, and so should be on the hook for more than the deal outlines. On Friday, the New York attorney general’s office said it had uncovered $1 billion in wire transfers by the Sacklers, alleging the family was trying to hide its assets.

In 2007, Purdue and company executives agreed to pay $634.5 million to settle federal allegations that the company had misbranded OxyContin. The company and three executives also pleaded guilty to criminal charges.

In March, Purdue and the Sacklers agreed to pay $270 million to settle a case brought by the state of Oklahoma.

Plaintiffs’ attorneys have likened the ongoing case to the one against the tobacco industry that culminated in a $246 billion settlement two decades ago.

Leave a Comment

Please enter your name.
Please enter a comment.

  • So, is Purdue still paying big bonuses to management, or does bankruptcy stop that?
    Why do I get the feeling that there will still be big payoffs to the well-connected?

  • Oxycontin was best oral pain med I’ve ever taken and to learn Purdue Pharma is being sued is a travesty for those people who are in chronic pain and NEED & USE the drug as prescribed. The lawsuits are outrageous and just wrong on so many levels. Just one person’s opinion who would like to thank Purdue Pharma for introducing and offering this great pain reliever. Why do the addicts who are suing the company get into a rehab program, get clean and leave pharmaceutical companies alone to continue what they do best….which is discover pain meds that help those in chronic severe pain? I don’t understand. I realize addiction is a disease but one must take responsibility for one’s actions & not look for “quick” and/or”easy” money from a lawsuit.

    • You sound JUST like an addict in denial. Unless you are on your death bed you should NOT be perscribed oxytocin in the amounts they persxribed. Noone ( who isn’t dying) should be given daily doses of this for months as they have. I hope you realize that before it’s too late. Not all addicts started as addicts. Many took as perscribed and became physically dependent.

  • There is evidence from emails etc that Purdue and the Sacklers down-played the addictive power of their product, and silenced many in the know. Those are criminal acts. Many who were prescribed OxyContin and other Purdue opioids have become addicted. Many users are not addicted but need the drugs to live a half-decent life. Those 2 categories should not be thrown in a blender. And he opioid crisis is a totally different item: this is street-use for the highs, not for pain treatment.
    The Sacklers are criminals, have hidden billions, and of course the size of the lawsuits lead to them filing for bankruptcy – another criminal act that is however unfortunately a legalized escape route. Drug companies that are ethical won’t be negatively affected, but the un-ethical have this escape door. Shame on them – but let them forcibly declare ALL their assets, and then pluck them clean – including “personal” property. People have been jailed for lesser criminal acts, and the Sacklers ought to be sacked accordingly.

    • I think there’s a special place in Hell, reserved for these low lifes. I so agree, with your statement!

  • Boo hoo to people who are mad because the government is cracking down on prescription opioid use. Opioids are a class 1 drug thus, are a dangerous drug. I have seen far too many serious accidents caused by prescription opioid users who think that they can take opioids and drive. There are many sound choices available to reduce pain- tens units, meditation, aspirins; thus, denying such choices and simply popping an opioid to reduce pain is a cope out. I live with pain and utilize methods other than opioids to control my pain. I chose to not use opioids because I want to drive my car and ride my bike. I refuse to be put in a position to end up in jail due to driving while taking opioids. The day will arrive when prescription opioids are limited to those in hospitals or hospices. So wake up and find another way to reduce pain. –I have had both hips replaced, my neck fused, my shoulder replaced and live with fibromyalgia as of today. So don’t tell me I don’t live with pain!!!

    • Kris, GOOD for YOU!! I am GLAD that your pain levels are not SO high, that you “need” opiates to lead a quality life. I’ve known too many people who are NOT so lucky. Degenerative problems, nerve damage, fire victims… it goes on and on. Where your “New Age” “meditation” simply is NOT an option. It may AUGMENT, but it is definitely NOT going to give them ANY quality of life. Hips being replaced, broken bones (I’ve even had a broken rib. Hurt for a year, but I took nothing more than a Tylenol… which helped to kill my kidney off but we don’t talk about that, now do we… Then there’s the OTHER side, Ibuprofen and the liver… but again, we won’t talk about that. But we’ll get to this later) torn ligaments… these are ALL a different kind of pain than those listed above. The “broken” department is altogether a different kind of beast. One that goes away… Those people suffering a lifelong ailments, who can’t go to “sleep” (meditate) to make their pain go away or diminish, find these medications a God-send. Yes! God! BIG “G”!!! Those who take their medication(s) responsibly and as prescribed, tend to live a much better and productive life. Is there a “problem” in America?? I’m personally NOT seeing one. I AM, however seeing alphabet-soup agencies BRINGING ILLEGAL drugs in (Fentanyl, Heroine, etc.) IS a topic that needs to be addressed. NOT people who are taking PRESCRIBED MEDS, AS INSTRUCTED!!! And unfortunately these people are NOT the “problem”. But they are suddenly thrown-in to a mix of propaganda (anyone who does even 15 minutes of research would find and those doing 30 would be MASTERS of this topic, that the numbers are skewed) and are in a position that they should NOT be in. This is the 21st Century. There should be NO “pain” whatsoever. Or science SHOULD be caught-up to this by now. But in the interim, these medications that are being prescribed, are the ONLY source of relief that these people can find. I am sorry to hear that you went through all of that mess… glad that you didn’t need any pain medication. But again, we are talking DIFFERENT kinds of pains. Trust me, I know, I’ve had “operations” too, and like I said above, a broken rib, wrist… but getting too “personal” now… but these are MUCH different kinds of pain. MUCH!!! Thank you!! : ) -EB

  • This is really concerning to me because it directly impacts my life. For years I suffered chronic pain and it was poorly managed because of insurance regulations. I was originally prescribed Oxycontin ER with another opioid to act as the break through pain supplement. I had to switch to Morphine ER because my insurance was making my doctor jump through so many hoops to prescribe it (Prior authorizations) so for years I had to take a medicine that did not work nearly as well, and I have taken the same dose for 8 years. This past year my insurance again added Prior Authorizations to Morphine so I requested to go back to Oxycontin since the same hoops had to be jumped through for both. Since then I have finally started to be able to get through the day without this immense pain and now because of unlawful abusers the Government is yet again trying to interfere with what my DOCTOR thinks is best for me. Oxycontin has NOT been the choice for addicts since the reformulation because the abuse deterrent has made it impossible to use it recreationally.

    Furthermore the truth is ALL chronic pain patients and even people who were prescribed it during the height of this so called epidemic were all informed from their doctor that opiates are habit forming, and can lead to withdrawal or dependency issues. I do not believe for one second that the wool was pulled over ANY doctors eyes with claims of “non addictive” because the base drug is still an opiate which has had the addictive nature documented for decades.

    This is a cop out, with an attempt to blame on drug maker for the current Fentanyl epidemic that is being fueled by Mexican cartels and Chinese manufacturers.

    Seriously, poll 100 current opiate addicts who buy drugs on the street if they abuse Oxycontin and I promise you that you won’t find any. It can’t be smoked, snorted or injected and that is the market for people unlawfully addicted to opiates.

    • I was put on oxycontin in 02 to 05 I had a really bad car wreck in 02 my Dr put me on oxycontin & loritab 10 for break through pain I hear to inform you that the oxycontin had me to a point of no return it was a very addictive it had me doing things for money that I’m not very proud of let’s just say just so i wouldn’t be sick loritab wouldn’t even help wasn’t strong enough by it’s self my husband Dr also put him on oxycontin & loritab 10 for break through pain as well he to got addicted to the oxycontin & without it he couldn’t even work it’s been a long addicted 16 yrs now I’m 52 yrs old & in a methadone clinic wich cost me $100.00 a week I’ve been in the methadone clinic for a little over 10 yrs you can add up the money I’ve spent just to feel normal again so yes oxycontin is & was addictive my Dr never told me anything about it being addictive js Thanks for letting me speak

    • Maybe addicts don’t chose OxyContin to abuse it. But I know for a fact if they get a script for it they will trade them for their drug of choice.

    • Rhonda It really sucks that that happened, but if you were doing “things for money your’e not proud of” and the doctor put your husband on the exact same medicine in the exact same dosage then I am guessing you went to one of the famous pill mills that were handing out scripts like candy, and were charging cash with the meds having to be bought from said doctors office.

      You are not alone, as a lot of addicts went that route before they finally cracked down on it. Best of luck with your recovery.

      Kris: I again can say as someone who has been a long term chronic pain patient that what your saying, is simply not true. Doctor’s by and large don’t prescribe opiates and even more won’t prescribe Oxycontin because of this uproar. Patients don’t get to “chose” what they are prescribed. I requested to be put BACK on it after being prescribed it first, and switching to a different med because of insurance red tape. My doctor is a great lady, who I have been seeing for years and really understands what works for me and what doesn’t, and listens to concerns.

      But to give some insight to how an actual pain management doctor works for those who don’t know, its not easy at all to “fool” or “game the system”. First before a doctor will even see you, you have to go to a specialist who does a full examination including MRI’s, Xrays and CT scans or currently be treated for a known condition (cancer etc). After that you get put on a combination of meds, physical therapy or stuff like tens units depending on what the case is.

      When you are taking prescribed meds, the doctor will do stuff like random pill counts (they call you in to the office randomly and count your meds), mandatory urine testing to make sure you are not taking illegal drugs but ALSO to make sure that you have the correct dosage in your urine. That eliminates people who sell medication because you show up without it in your piss, and your no longer a patient. But they also kick people out for consistantly having too LITTLE in their system (ie they start taking it a day before a test so it shows up). The urine test can tell if you are taking other kinds of opiates, like say your Prescribed Oxycontin but you pop for morphine, and can tell if your using heroin as well.

      So while some people may game the system once, they won’t be a patient long and the rate of deferral (people selling their prescriptions) is very low for chronic pain patients)

      I understand the desire to punish a company for misdeeds. But in this case, there are still thousands or even millions of people who legitimately benefit from this medication.

      As far as people not being informed, the legitimate doctors almost always inform a patient of the risks of long term use of opiates, and the dependency that they cause. But the personal responsibility is also on the patient to either read the two page information packet that is put in EVERY prescription which clearly states the dangers, or simply read the prescription bottle as it ALSO lists the dangers.

      They might have pushed the product, but doctors ultimately prescribed it and even first year med students understand the risks associated with narcotic pain meds.

      If these states really wanted to make a difference, policing the bad actors who were over prescribing and running pill mills is the place to start.

    • The Opiod Crisis is a political platform for the government to tell everyone look we are doing something we are winning this war. It’s utterly dumbfounding that all of you are accepting this as true. Watch a few episodes of Drugs Inc. on Nat Geo and see tractor trailer loads of Fentanyl, Meth and Cocaine coming across every border we have. The lawsuit against Purdue Pharma is a smokescreen to take your attention off the massive amounts of drugs coming into our country. This is a joke and appalling to take these people down. The cartel controls everything that’s why you don’t hear anything about them. Weapons of Mass Destruction, watch a few episodes of Drugs Inc. on Nat Geo there’s your Opiod Crisis it’s been here for decades and it didn’t start with OxyContin. I can’t believe you are all falling for this.

  • Reviewing the comments and the law suite, so it is the intent by all to put Purdue’s out of business and take all the assets and then take the family fortune and assets and put the family in popper state. WOW! So, what happen to individual responsibility and common since, if this continues, who in the hell would want to be in business to research medicine for medical issues. Next thing you know, only the government will have to step in and establish this industry. Because, the private sector will phase out! So, who gets hurt at the end, the people!

    • That’s an excellent point, regarding personal responsibility; however, I can also view this disaster from the patient’s point of view… He or she, unfortunately, trusted a medical professional to prescribe this particular painkiller, believing that the M.D. knew what was best. Such a terrible, massive mess…
      truly pandemic!

  • Its not the drug makers fault.Its the people who abuse it and take it the wrong way.Now we have to suffer in.pain cause of those who abuse it.Its making it harder on chronic pain people who suffer like me.where do we go from here if we cannot get the drug anymore

    • Correct. It is not the drug makers fault. Wrong. It is not the fault of people who abuse it. It is solely the fault of the prescribers who were not responsible enough to quit ordering it improperly and excessively, despite knowing better and even being questioned by thousands of us pharmacists. The claim being thrown out there that prescribers did not know of the addictive liability of these drugs is BS. They received the same info we did as pharmacists and it clearly defines all the info a reasonable thinker would need to know the potency, addictiveness, and proper restraints in prescribing for these drugs.
      The lawsuits brought against these drug manufacturers are knee-jerk reactions centered on wrongly placed blame and based in ignorance.

  • I for one am glad steps are being taken against these companies to insure opioids are prescribed such that their addictive nature is well addressed to patients and other alternatives are explored . My husband was injured at work in 2000 and the worker’s compensation doctor-Dr Sony Haro (pain Med physician) in Austin prescribed opioids to him. He told me my husband couldn’t become addicted to opioids because he had chronic pain. I questioned that thought and I was assured addiction couldn’t occur. As time went on the longer he took various opioids, the more his brain adapted to having them available. As soon as he developed a tolerance to one brand / type of opioid he was introduced to another. Finally my husband’s heart just gave out and I now live every day regretting the day he was prescribed opioids. My husband never “abused” his opioids – never. The opioids abused him. His doctor let him down. The FDA let him down. The opioid manufactures let him down. Dr Haro sealed my husband ‘s medical records telling me my husband had filled out information that requested his medical file be kept from me. I know that was a lie because I filled out all of his paperwork because he developed hand cramps after beginning treatment for chronic pain. I drove him to all of his appointments and I went into the examination room with my husband. A month prior to my husband dying the thoughts regarding the non addictive nature for chronic pain suffers who injested opioids began to be questioned , but it was far late for my husband.

    • I really have no ideal as to Fault ! I did read all comments left of course we are all entitled to our opinions,2009 I fell outside work on ice my primary care prescribed me 10 mg Percocet and was sent to a pain management Dr who gave the steroid shots to me in my back.2010 my primary Dr said I needed to find a pain management Dr who will give me shots and medication.I found a Dr who did both I was explained about a contract I needed to read and sign.PmDr then told me he was going to start me on OxyContin (long last) and roxicodone (fast acting) I really had no idea what they were ,so I asked Dr what are they he explained to me this medication will help manage my pain better I then asked Dr if they were addictive Dr told me as long as I took them for pain I would not get addicted.Dr did not know what was causing pain,had all MRI,Cat scan, X-ray . Nothing appeared so I was sent to a surgeon he looked at all reports.Surgeon tells me a had a few old bulging discs,with a lot of arthritis and was suggested to get a laminectomy,Dr ordered X-Ray’s prior to laminectomy.Dr called asked me to come see him,then Dr said my back was broken I now needed to have a fusion and laminectomy. The break didn’t show on prior reports because I was lying down it was seen when bent over.Surprise so all Dr’s now understand why I was in constant pain.
      My question is to anyone? Have you ever heard of a person being on 3 – 80 mgs+ 4 – 15 mgs with intermediate pain release of 30mgs oxyfast (monthly)
      Total mgs a day 300 plus 30 mgs as needed for pain. Fast forward 10 years Iam now considered disabled with a lot more wrong,unable to work on disability. Pain Management Dr was very supportive,understanding etc so 10 years I am on still 300 mgs OxyContin n Roxicodone!! Well we all now what happened next. I was told it was not going to effect people with chronic pain I was wrong for 10 plus years I never abused or sold my meds I never had a bad urine,Demeanor of PM Dr did however change towards me,I fell n was in pain he told me 9:30am be in office, was sent down for x- ray. Dr made me sit till 11:45am he told me there was nothing wrong,few days later I saw Primary Dr ,and surprise I broke a vertebrae,it showed
      on x-ray that pain management said there was nothing wrong!! Funny 😆 next appt with PM Dr he now is telling yes I do have a broken vertebrae it’s old,So he now tells me Iam going to be lowered off OxyContin,confused now, I ask PMDr why?I had wrote to the Governor and Senator if people with chronic pain were effected by the (Opiates Crisis) they both responded no.Big mistake I made,two days later,He wanted in office before 12:00pm,PMDr now asks me why would I have trace cocaine in urine? Not !! Well do you remember that contact you signed ten years ago! I am done no more medication! Well that’s what happened to me I just started taken Methdone 30 mgs , my question is has anyone received that high of dosage of OxyContin & roxicodone,oyxfast ? 300 mgs total a day?

A roundup of STAT’s top stories of the day in science and medicine

Privacy Policy