The bottom may be falling out for Purdue Pharma, the drug company most synonymous with the opioid crisis. Sources reportedly told Reuters that Purdue is considering filing for Chapter 11 bankruptcy, a decision that would help the company better take on a growing swarm of lawsuits filed against it for deceiving the public about its highly addictive painkillers, particularly OxyContin.
Purdue’s role in the opioid crisis is hardly in question. The annual rate of fatal opioid overdoses in the U.S. started climbing in the mid-1990s, right when the company’s blockbuster drug, OxyContin, began flooding the market. And it’s now known Purdue dismissed warnings from doctors that OxyContin was more addictive than it advertised, even before its FDA approval.
In 2007, as part of a federal settlement, the company pled guilty to charges of misbranding OxyContin; it was also forced to pay out more than $600 million in fines. But states and counties have continued to sue Purdue and other opioid makers in the years since, alleging they and others never stopped misleading the public and doctors about the risks of their drugs. (It was only last year that Purdue stopped its direct marketing of their products to doctors.) The majority of these cases, more than a thousand, have been been bundled together as one giant case in an Ohio federal court.
The Chapter 11 bankruptcy would restructure the company’s finances, which have worsened in recent years amid the bad publicity, and cushion it against the potential fallout that would come from losing these lawsuits. The declaration would force the parties to hash out their case with the supervision of a U.S. bankruptcy judge, Reuters reported. That involvement could also reduce the amount of money provided in any settlements reached with the company.
Though the company told Reuters that it wouldn’t comment on the speculation, a decision to file for bankruptcy wouldn’t be out of left field. Last August, Reuters also reported, Purdue sought out the legal advice of Davis Polk & Wardwell LLP, a firm known for helping companies restructure their finances; a month before that, it appointed 76-year-old Steve Miller, a man known for nursing companies through bankruptcy, as its new board chairman.
The public perception of Purdue and its billionaire owners—the Sackler family—has taken an especially brutal hit as of late. Recently unsealed documents from litigation brought against the company have seemingly revealed the extent to which many of the Sacklers, most prominently Richard Sackler, knew about OxyContin’s risks but encouraged or directed efforts by the company to pretend otherwise.