Purdue Pharma, the maker of the opioid drug OxyContin, has reached a tentative deal worth billions of dollars that would resolve thousands of lawsuits brought by municipal and state governments who sued the company for allegedly helping to fuel the opioid crisis.
The pending settlement likely means Purdue will avoid going to trial in the sprawling and complicated case involving some 2,300 local governments across 23 states.
Lawyer Paul Farrell, one of the lead attorneys representing more than 2,000 local governments that have filed suit against Purdue, said the Sackler family, which owns the privately-held drug company, will pay roughly $3 billion dollars in cash over several years and relinquish control of the company.
Details of the deal — like how the money will be divvied up — are still being worked out. The settlement, if enacted, would mean Purdue will file for bankruptcy and divest from pharmaceutical holdings worldwide.
"Which means the people who were front and center in causing this epidemic, in my view, won't be able to go out and repeat their playbook in Asia, South America or Africa," Ohio Attorney General Dave Yost, who is part of the pending deal, told NPR.
Under the terms of the proposal, future revenue from the sale of OxyContin would go into a trust designed to help communities struggling with the opioid epidemic.
The tentative deal would relaunch the Purdue company under non-Sackler ownership. The newly formed company will be managed by a group of trustees.
"That company and whether it continues in business to sell non-opioid drugs, or continues for a period of time to sell OxyContin under appropriate standards with appropriate marketing for appropriate uses is still being decided," said Joe Rice, another lead lawyer representing the municipalities. "It's a big open question."
More than a dozen other drug makers, distributors and pharmacy chains still face a federal opioid trial next month in Ohio that's considered a test case for establishing the pharmaceutical industry's liability.
Late Wednesday, in a separate ruling, the judge presiding over that case approved a dramatic expansion of the number of communities that could benefit from future class action suit leveled against drug makers.
Under U.S. District Judge Dan Polster's ruling, tens of thousands of cities, counties and other local governments across the U.S. will now automatically be included in opioid-related settlements with the pharmaceutical industry going forward, unless they opt out.
But Polster's decision does not apply to Purdue Pharma's pending settlement, where details are expected to be hammered out in the coming months in a consolidated bankruptcy proceeding.
While Purdue Pharma's tentative settlement would bring some relief to communities, a growing number of state attorneys general are lining up against the deal. They want the Sackler family to pay far more out of their personal fortune, valued by Forbes magazine at roughly $13 billion.
New York Attorney General Letitia James said the settlement shows the Sacklers' "attempting to evade responsibility and lowball millions of victims of the opioids crisis."
Others attorneys general from such states as Connecticut and North Carolina echoed this criticism. Some have promised separate lawsuits against the Sacklers in an attempt to hold them accountable and win payouts for the families of victims of the opioid crisis.
"Our position remains firm and unchanged and nothing for us has changed today," Connecticut Attorney General William Tong said in a statement.
"The scope and scale of the pain, death and destruction that Purdue and the Sacklers have caused far exceeds anything that has been offered thus far," Tong said. "Connecticut's focus is on the victims and their families, and holding Purdue and the Sacklers accountable for the crisis they have caused."
Yost of Ohio acknowledge that there is a camp of discontented attorneys general who may never be satisfied with the settlement.
"There's a proposal that a lot of folks have signed on to. I don't think we have critical mass," Yost said. "But we're working on it."
Yet Farrell, representing the more than 2,000 other entities, said the first comprehensive settlement, which is a step closer to being approved by a bankruptcy judge, is a major development in the fight to curb opioid-related deaths in America.
"To be able to take down this Goliath and to have some type of justice of putting them out of business is an indication of the consequences a lot of these companies have moving forward with this litigation," Farrell said.
Purdue has pointed out that its products were approved by the Federal Drug Administration and that doctors were prescribing them to address patient pain. But the plaintiffs in the suit say company officials aggressively marketed opioids and downplayed the addictive risks, creating what they said was the prelude of the opioid crisis.
In March, Purdue and members of the Sackler family agreed to pay $270 million settlement and to pay legal fees to Oklahoma to avoid a trial over the company's role in the opioid crisis in that state.
In a statement, Purdue Pharma said it "continues to work with all plaintiffs on reaching a comprehensive resolution to its opioid litigation that will deliver billions of dollars and vital opioid overdose rescue medicines to communities across the country impacted by the opioid crisis."
STEVE INSKEEP, HOST:
The owners of Purdue Pharma are just about ready to surrender it. The company that makes OxyContin reached a tentative deal that would settle thousands of lawsuits stemming from the opioid crisis. How's the settlement work? Let's find out from North Country Public Radio's Brian Mann, who follows opioid litigation for NPR. Brian, good morning.
BRIAN MANN, BYLINE: Hi, Steve.
INSKEEP: What are the tentative terms?
MANN: So here's what it looks like. The Sacklers would give up control of Purdue Pharma. The company would go through a structured bankruptcy.
INSKEEP: Oh, the Sacklers. That's the billionaire family that has controlled Purdue Pharma for a long time, right? Go on. Go on.
MANN: That's exactly right. So a new firm would be created. Any revenue from future sales of OxyContin would go to help communities struggling with the addiction crisis. Sacklers would also give up $3 billion in cash and contribute money from the sales of an overseas subsidiary.
Paul Hanly helped negotiate this deal on behalf of local governments around the U.S., and I asked him if this penalizes the Sackler family enough financially for their role pushing opioid sales.
PAUL HANLY: We certainly believe, based on representations made to us by their counsel, that these are numbers that represent a significant portion of what the Sacklers have available.
MANN: What's clear, though, here, Steve, is that even after this settlement, the Sacklers will remain one of the richest families in America. And there also doesn't appear to be any admission of wrongdoing.
INSKEEP: I guess that explains why New York state's attorney general, among others, are very unhappy with the settlement.
MANN: Yeah. We've seen a really fierce response from attorneys general around the country - Connecticut, Massachusetts and other states. The Sackler family is hugely controversial. A lot of evidence that they played a big role in pushing opioid sales over the years. And, remember; you know, 200,000 people have died. And now there is a very real prospect that members of the family will walk away fabulously wealthy because of OxyContin sales.
INSKEEP: Well, if some states, or even half the states, were to reject this deal, does the deal still go through? And is it a settlement?
MANN: Yeah, this is going to go to bankruptcy court, and there could be a whole lot more litigation and negotiation there if these states refuse to get on board. Billions of dollars are going to flow from this, and whenever there's that much money, there's going to be a big fight. There's no formula for dividing up the cash.
Meanwhile, one thing that's interesting here is that state attorneys general, even more of them now, are promising to continue suing the Sackler family directly, going after that personal wealth, even after this company, Purdue Pharma, ceases to exist.
INSKEEP: Well, I'm curious about that. Wouldn't a settlement effectively preclude other lawsuits? And if it didn't, wouldn't the Sacklers be refusing to sign off at all?
MANN: Well, that's going to be an interesting question. In fact, these attorneys general say that they think they can pursue the Sacklers and the money that they pulled out of this company over the years. A lot of the litigation focuses exactly on that question.
INSKEEP: What happens now with thousands of other lawsuits that focus on other pharmaceutical companies and distributors and pharmacy chains and everybody else?
MANN: Right. Negotiations going on right now with other big drug companies, name-brand companies like Johnson & Johnson. A federal trial is scheduled for next month in Ohio, so there's pressure to get more of these deals done.
One other big development, Steve, that happened yesterday is that the federal judge overseeing that federal case, Dan Polster, he approved a massive expansion of local governments included in his case. It now involves tens of thousands of cities and counties, other local jurisdictions. They all have a stake now in how this litigation plays out. So the pharmaceutical industry's financial liability for this epidemic is still potentially massive.
INSKEEP: Brian, thanks for your close attention to all this.
MANN: Thank you, Steve.
INSKEEP: Brian Mann of North Country Public Radio, who covers opioid litigation for NPR. Transcript provided by NPR, Copyright NPR.