OxyContin maker Purdue Pharma files for bankruptcy
Move comes after weeks of negotiations to try to reach a settlement over potentially extensive legal liabilities
The corporate headquarters of Purdue Pharma, in Stamford, Connecticut.
Purdue Pharma, the opioid maker owned by members of the Sackler family, has filed for bankruptcy, as it hopes to force holdout states to accept its offer to settle litigation that accuses it of helping cause the US opioid epidemic.
The maker of OxyContin announced that it had filed for Chapter 11 bankruptcy late on Sunday night, after weeks of negotiations to try to reach a settlement over potentially extensive legal liabilities from more than 2,600 lawsuits.
States were split over whether to support its offer – which Purdue estimates is worth more than $10 billion (€9 billion) – or risk getting less to fund a clean-up of the crisis if the company went bankrupt. The agreement, which does not include an admission of wrongdoing, is now subject to approval by the bankruptcy court.
Steve Miller, the turnround specialist who became chairman of Purdue Pharma’s board last year, said the bankruptcy and settlement offer was “the best and only way to resolve the unmanageable litigation rapidly depleting the company’s assets and which threatens to ultimately destroy the entire value of Purdue”.
“Whatever else people might wish for is not on the table to be decided. Now, there is a stark choice,” he said. “We are hopeful of gaining the support of the rest of the states. The alternatives are to allow all the resources available to be devoted to communities in need or spend it all on litigation.”
Some 24 state attorneys-general including from Texas and Tennessee, as well as officials from five US territories, agreed to accept Purdue’s offer last week. The lead lawyers representing 1,000 cities and counties also supported the offer.
The holdouts include New York, Massachusetts and North Carolina, which have all said they intend to pursue the Sackler family for more of their personal wealth to contribute towards large healthcare and law enforcement bills related to the opioid epidemic.
Purdue’s offer would see the company run for the benefit of the claimants, with all the assets put in a trust. A new company would be formed, governed by a new board selected by the claimants and approved by the bankruptcy court. Purdue said the new company could potentially contribute “tens of millions of doses of opioid overdose reversal and addiction treatment medicines at no or low cost”.
Purdue Pharma values its cash, assets and pipeline of drugs at $3.5bn and its offer of free opioid-reversal medicines at $4.5 billion. – Copyright The Financial Times Limited 2019