Purdue Pharma filed a bankruptcy plan on Monday to restructure the company into a new entity with revenue directed toward combating the opioid crisis. The plan also requires the company’s family owners to pay an additional $4.275 billion to resolve thousands of civil claims.
Purdue Pharma, which makes OxyContin, filed for bankruptcy protection in September 2019 after thousands of lawsuits were filed against the company for its role in the deadly opioid epidemic. The proposed plan outlines the steps that Purdue will take to emerge from bankruptcy. It constitutes a formal offer to settle the numerous lawsuits from state and local governments, Native American tribes, hospitals, and other entities.
The plan, which Purdue values at more than $10 billion, would create a new company that is “run by independent managers selected by the states and local governments that sued Purdue.” The tribal and governmental claimants would take control of the company and ensure that revenue went exclusively to opioid abatement programs. The Sackler family, who own the company, also promised that additional installments adding to roughly $4.2 billion would be made to claimants over the next decade. These payments would settle opioid-related claims brought by private entities and individuals, such as hospitals, insurance carriers and families.
A majority of Purdue’s creditors and the federal bankruptcy court must approve the plan for it to take effect. If approved, payments will be distributed to compensate those who have been devastated by the costs of the drug epidemic, including individual plaintiffs, tribes, and state and local governments. Steve Miller, chairman of Purdue’s board of directors, stated, “Purdue has delivered a historic plan that can have a profoundly positive impact on public health by directing critically-needed resources to communities and individuals nationwide who have been affected by the opioid crisis.”
In a joint statement, 23 attorneys general across the country immediately rejected the settlement plan. They stated that the plan does not adequately hold Purdue Pharma accountable and called the company a”criminal enterprise.” Additionally, the attorneys general demanded that the company amend its plan to contribute additional money and disclose information “so the public understands the extent of Purdue’s and the Sacklers’ misconduct.”
