Earlier this week, Purdue Pharma, the maker of Oxycontin, filed for bankruptcy. The same day the company also negotiated a multi-billion dollar settlement to resolve thousands of lawsuits – mostly involving their role in the opioid crisis.
While this may sound like positive news for those who have followed along in the Purdue Pharma saga, it’s not as great as it seems.
The company initially stated that they planned to provide $10-$12 billion to help reimburse state and local governments and clean up the damage done by prescription painkillers and opioids. However, today, Purdue not only asked U.S. Bankruptcy Judge Robert Drain to pause for nine months more than 2,600 lawsuits against the company, but additionally asked him to shield the founders of Purdue Pharma from related opioid lawsuits they face.
Transferring $1 Billion
A lawsuit filed by the state of Massachusetts claims the Sacklers transferred more than $4 billion from the company to personal accounts between 2008 and 2016. The state of Oregon included the family may have taken as much as $10 billion out of the company.
With the protection from the judge, the Sackler family may back out of contributing to a settlement agreement Purdue reached with multiple states.
The proposal angered multiple state attorney generals who say the wealthy family should be doing more to address the opioid crisis. “If the Sacklers want special protection from the bankruptcy court, they should be forced to give a detailed accounting of their wealth,” said North Carolina’s attorney general, Josh Stein, who sued eight members of the family individually earlier in the week.
Last week, Letitia James, New York’s attorney general, said in a court filing from her office had found wire transfers of nearly $1 billion by the Sackler family that suggested attempts to shield their money from litigation.
Connecticut Attorney General William Tong said in April: “We will not allow Purdue Pharma to cry poverty after illegally transferring hundreds of millions of dollars to members of the Sackler family — unearned funds these individuals reaped as Connecticut families suffered.”
In the court filing, Purdue stated that a Chapter 11 filing and halting the litigation process would preserve money drained through prolonged legal proceedings. The company is currently spending more than $5 million a week in legal and professional fees, and other related expenses.
Massachusetts Attorney General Maura Healey, who sued both the company and family members, said she would oppose Purdue’s request.
“This filing isn’t a surprise. It’s yet another effort by Purdue to avoid accountability and shield the Sackler family fortune,” Healey said in a statement. In addition, the New York attorney general Letitia James also stated that she would oppose Purdue’s request.
While the filing will halt the lawsuit immediately, some states are preparing to argue that their lawsuits cannot be halted by filing a Chapter 11 because their legal actions were brought to enforce public health and safety laws.
With this in mind, Purdue has continued to ask the judge for a separate ruling to stop the litigation with the aim of allowing the company to continue to resolve their of lawsuits.
Though, with the current lawsuits by multiple states, over two dozen states remain unsatisfied and have opposed Purdue’s proposed settlement. Some have said they want more information about the Sacklers’ finances and additionally a larger contribution from the family. Several filed new cases against the Sacklers before Purdue’s bankruptcy filing.
Purdue, The Sacklers, And The Opioid Crisis
Purdue has been accused of contributing to a public health crisis that has been marked by nearly 400,000 overdose deaths between 1999 and 2017, according to the latest U.S. data for their patent on the opioid Oxycontin. In June, the Massachusetts attorney-general filed a lawsuit against Dr. Sackler and seven other members of the Sackler family, which accused them of engaging in a “deadly, deceptive scheme to sell opioids”.
The Sackler family, which has several branches and is descended from brothers who started the company in the 1950s, has agreed to put $3 billion in cash into the a settlement over seven years. Though Forbes has estimated the Sackler family’s net worth at $13.5 billion, which the magazine said makes the Sacklers one of the wealthiest families in the United States.
Over the years, many have accused the Sackler family as opioid kingpins that have largely contributed to the nations drug crisis. Purdue and the Sacklers have denied they are liable for the opioid epidemic.