Why OxyContin Maker Purdue Pharma Filed for Bankruptcy
Purdue Pharma, the manufacturer of OxyContin, filed for bankruptcy late Sunday. The announcement came just days after the company reached a tentative settlement valued at $12 billion in a massive lawsuit over Purdue's role in fueling the opioid crisis, which is currently killing an average of 130 people each day, according to the National Institute on Drug Abuse.
The settlement could potentially provide needed support for communities struggling to cope with the epidemic. It's also a boon for Purdue, since as a condition of the settlement, the company admits to no wrongdoing. A recent ruling out of Oklahoma found Johnson & Johnson's business practices were integral in driving the opioid crisis in that state. If the suits against the company actually went to court, the outcome for Purdue could be much more bleak. In a statement, Steve Miller, chairman of Purdue’s board of directors, said, "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. We will continue to work with state attorneys general and other plaintiff representatives to finalize and implement this agreement as quickly as possible." According to The New York Times, the company expects that bankruptcy and restructuring will automatically shut down the civil cases it's facing.
The Sacklers, Purdue's owners, are one of the wealthiest families in the U.S. An investigation by Patrick Radden Keefe in The New Yorker detailed how the family made billions off the profits from OxyContin, which the company aggressively marketed while downplaying or masking its addictive qualities. As part of the settlement, the Sacklers will relinquish control of the company and pay $3 billion to plaintiffs. The Sacklers are also facing accusations that they're trying to hide their assets. Last Friday, the New York Attorney General's office announced that it had found at least $1 billion in wire transfers by members of the family.
Unfortunately for Purdue, that settlement's not set in stone. The corporation is currently being sued by 2,600 different entities—including states, territories, counties, cities, and Native American tribes—and the attorneys general of 24 states and territories have agreed to the current deal. According to NPR, the AGs of 26 other states and territories say that the value of the payout is unlikely to actually reach the $12 billion, since that number is a speculative estimate based on optimistic numbers—many are planning to sue the Sackler family directly in state courts across the country if the settlement with Purdue goes through. The split is largely partisan: As ABC News reports, states with Democratic attorneys general are more likely to reject the deal with Purdue, while Republican ones have largely accepted it.
A federal trial on the opioid epidemic is scheduled to start in October in Cleveland. Purdue's settlement means the company will likely be removed as a defendant, but other major drug companies and distributors, like Johnson & Johnson and Walgreens, can still be held responsible.
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Originally Appeared on GQ
