Purdue Pharma, the drug company that makes the controversial pain medication OxyContin, filed for bankruptcy protection late Sunday night. The bankruptcy filing will temporarily halt thousands of lawsuits against Purdue alleging that it made billions of dollars while helping to create America’s opioid epidemic which has killed over 400,000 people since 1999.
The bankruptcy news, first reported by the Wall Street Journal, comes after the Sackler family, the private owners of Purdue, reached a tentative settlement with some of the roughly 2,000 local governments that are suing the company. That agreement would involve forfeiting roughly $10 billion over the span of seven years, with about $3 billion of that from the Sackler family’s personal fortune, which is believed to top $13 billion. Prosecutors want the Sacklers to turn over $4.5 billion in personal wealth, something that the family has rejected.
Neither Purdue Pharma nor the Sacklers have admitted any wrongdoing as part of the settlement talks and the family is unlikely to face any jail time for their alleged crimes. Purdue’s board approved the Chapter 11 settlement yesterday, according to NPR, and bankruptcy was all part of the drug company’s proposed settlement plan.
“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,” Steve Miller, chairman of Purdue’s board of directors, told NPR overnight.
Under the current plan, Purdue Pharma would be handed over to a board of trustees and a new company would be created to continue selling OxyContin, a powerful pain medication that’s highly addictive. And while doctors are now prescribing fewer opioids than they were a few years ago, there’s a real danger that people with severe pain could not get the relief they need as society overcorrects.
The bankruptcy news follows a report that the Sacklers were hiding at least $1 billion from prosecutors in Swiss and other foreign bank accounts, according to the New York Attorney General, and some local governments believe that the $10 billion proposed settlement isn’t enough in light of this revelation.
Purdue pleaded guilty in 2007 to “misbranding” OxyContin and downplaying addiction risks, but the company has been more combative in the past decade, spending a lot of money to improve public relations. The Sacklers have contributed millions to philanthropic organizations over the years but nonprofits have started to reassess money from the family as their name becomes toxic. The Tate museums in London, the National Portrait Gallery in the UK, and the Guggenheim in New York announced earlier this year that they would no longer accept money from the Sacklers.
U.S. Bankruptcy Judge Robert Drain is overseeing the bankruptcy proceedings in upstate New York and Purdue simply wants the lawsuits to stop. The company is characterizing any continued litigation as hopeless in the wake of bankruptcy.
“The resumption of litigation would rapidly diminish all the resources of the company and would be lose-lose-lose all the way around,” Purdue Chairman Miller told NPR. “Whatever people might wish for is not on the table now.”