Facing thousands of lawsuits alleging that it helped spark the opioid addiction crisis, privately held Purdue Pharma announced late Sunday that it had filed for bankruptcy, marking the collapse of a company that reaped billions of dollars from the sale of its opioid painkiller OxyContin and other drugs.
The bankruptcy is part of a tentative agreement with 24 states and thousands of cities and counties that sought to recover damages incurred by responding to overdoses, fighting drug-related crime, and expanding social services to handle the widespread impact of opioid addiction.
Purdue said funds from the bankruptcy would go to addressing those needs.
“This unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public,” Steve Miller, chairman of the company’s board of directors, said in a statement. “This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis.”
Despite that agreement, many states and scores of other plaintiffs have declined to accept the deal.
Their lawsuits against Purdue will be frozen and their claims likely shifted into bankruptcy court. In cases like this, a bankruptcy judge typically works to hash out a deal that ensures all the plaintiffs suing a company get some amount of the company’s assets proportionate to their claims. Given the refusal of many states to accept a settlement, the fight over the terms of the bankruptcy is likely to be fierce.
In March, the Wall Street Journal reported that Purdue’s assets were limited, in part because the Sackler family, which owns the company, had taken most of its profits. But many of the lawsuits also named individual members of the Sackler family and company executives as defendants, and plaintiffs have said they intend to recover damages from the individuals as well as the company.
Purdue and the Sacklers have denied the allegations in the lawsuits. On a conference call with reporters Sunday night, Miller argued settlement was the best option for all parties.
“The alternative is to not settle but instead to resume the litigation,” he said. “The resumption of litigation would rapidly diminish all the resources of the company and would be lose-lose-lose all the way around. Whatever people might wish for is not on the table now.”
The history of the modern Purdue dates back to the 1950s, but its stature grew with the approval of OxyContin in the mid-1990s, which earned the company billions.
Within a few years of OxyContin’s arrival on the market, however, authorities became concerned about its potential for misuse and diversion. The company and three executives pleaded guilty in federal court to fraudulently marketing OxyContin and agreed to pay $600 million. By February 2018, Purdue stopped actively marketing opioids.
Overdoses involving opioids, including prescription medications and illicit opioids like heroin, killed more than 47,000 people in 2017, according to federal health data.