Admitting no guilt, Purdue Pharma, the maker of OxyContin, and its owners, the Sackler family, are in discussions to settle the more than 2,000 lawsuits against the company for $10 billion to $12 billion. The possible deal was part of confidential conversations discussed by Purdue’s lawyers at a meeting in Cleveland last Tuesday, Aug. 20, according to two people familiar with the mediation.
The lawsuits are brought by cities, counties, and states, some of which have been combined into one massive case. They allege the company and the Sackler family are responsible for starting – and sustaining – the opioid crisis.
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According to NBC News, at least ten state attorneys general and the plaintiffs’ attorneys gathered in Cleveland, where David Sackler, who was a board member of Purdue and has been the de facto family spokesperson lately, represented the Sackler family.
The lawsuits that the Sacklers and Purdue hope to settle allege that their company’s sales practices were deceitful, and at least partly responsible for the opioid crisis. According to the CDC, more than 400,000 lives were lost from 1999 to 2017 due to opioids. Several of the lawsuits also allege that after 2007, the Sackler family emptied the company of money to enrich themselves.
In May, when his state joined others in suing the Sackler family and their company, New Jersey Attorney General Gurbir Grewal said:
“The Sackler family built a multibillion-dollar drug empire based on addiction.”1
Massachusetts Attorney General Maura Healey was the first to name family members in her suit in January.
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Purdue Pharma, manufacturers of the opioid painkiller OxyContin, and the Sackler family have refuted the allegations laid out in the lawsuits. In a statement to NBC News, the company said:
“While Purdue Pharma is prepared to defend itself vigorously in the opioid litigation, the company has made clear that it sees little good coming from years of wasteful litigation and appeals.”1
“The people and communities affected by the opioid crisis need help now. Purdue believes a constructive global resolution is the best path forward, and the company is actively working with the state attorneys general and other plaintiffs to achieve this outcome.”1
A representative for the Sackler family did not respond to a request for comment.
Purdue presented a plan at the Cleveland meeting to declare Chapter 11 bankruptcy and then restructure itself into a for-profit “public benefit trust,” according to information provided to NBC News.
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Lawyers for Purdue claim the value of the trust to plaintiffs would include more than $4 billion in drugs to be provided to cities, counties, and states. Some of the drugs would be used to safeguard people from drug overdoses. The in-kind drugs, combined with proceeds from the sale of other drugs, would add up to a total Purdue settlement varying from $7 billion to $8 billion, according to NBC News.
The trust would exist for at least ten years. A bankruptcy court would separately appoint three “well-recognized expert” trustees, according to the terms of the potential deal. Those trustees would then select a board of directors to run the trust, according to the term sheet. NBC News states further details of the potential settlement:
All profits from the sale of Purdue’s drugs such as OxyContin or Nalmefene (a drug that has been fast-tracked by the FDA and would be used for emergency treatment of opioid overdoses) would go to the cities, counties and states, if they agree to the settlement.
The Sackler family would give up ownership of the company and would no longer be involved, according to two people familiar with the matter.
For their part, the Sackler family, which has faced an increasingly hostile activist movement, would pay at least $3 billion. Forbes ranks the family as the 19th richest in America, with a fortune of at least $13 billion shared by an estimated 20 family members.
The Sackler money would be obtained by the family selling off Mundipharma, a separate global pharmaceutical company they own, according to a person briefed on the potential settlement deal. An additional $1.5 billion may be tacked onto the $3 billion if the sale of Mundipharma exceeds $3 billion.
Mundipharma describes itself on its website as a privately owned network of “independent associated companies” with “a presence in over 120 countries.” Mundipharma is controlled by the Sackler family. A 2016 Los Angeles Times investigation of Mundipharma described how the global venture offered a new international pipeline for Purdue’s opioids.1
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People familiar with the matter said that Purdue Pharma’s legal team informed the assembled plaintiffs’ attorneys that if they did not take the potential settlement, the company would go ahead and declare bankruptcy.
According to documents read to NBC News, the company’s lawyers claim the value of a fully liquidated Purdue in a standard bankruptcy would be significantly lower than the current settlement offer amount.
Purdue Pharma is just one of the opioid companies being sued by more than 2,000 cities and counties for “grossly” misrepresenting “the risks of long-term use of those drugs for persons with chronic pain,” according to court documents.1
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U.S. District Judge Dan Aaron Polster of Northern Ohio, who attended the meeting last week, is overseeing the cases against a variety of opioid companies, according to NBC.
The states have brought their cases independently. However, the Purdue settlement deal was presented as a global deal for all plaintiffs, including the states, according to people familiar with the potential deal.1
According to a 2017 report by the White House Council of Economic Advisors, the opioid crisis has cost the United States more than $504 billion. And Purdue Pharma has profited more than $35 billion from the sale of OxyContin.
On Monday, an Oklahoma judge ordered Johnson & Johnson to pay $572.1 million to the state for deceptively marketing addictive painkillers following the first trial related to the addiction crisis.
Purdue reached a settlement in March for $270 million to resolve a similar lawsuit by the state of Oklahoma.
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