The Headline
Purdue Pharma reaches another settlement and files for bankruptcy
The Grind
Purdue Pharma filed for bankruptcy protection this Sunday as part of a $10 billion deal that settles roughly half of the 2,200+ lawsuits regarding its role in the opioid crisis.
“This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis,” says Steve Miller, head of Purdue’s board of directors.
The Details
Purdue Pharma was founded in 1892 in New York and purchased by the Sackler family in 1952.
The company is famous for its painkiller OxyContin, an extended-release opioid first prescribed in 1996. In ads, OxyContin was described as “smooth and sustained pain control” lasting 12 hours. Officials claimed the drug was less addictive than other painkillers.
OxyContin is roughly 1.5 times stronger than morphine.
Purdue marketed its product to doctors by offering them incentives such as free trips and paid speaking engagements. By 2001, OxyContin had brought in nearly $3 billion in revenue.
Reports about addiction and abuse began to surface in 2000. In 2003, the DEA claimed that Purdue’s aggressive marketing methods had “very much exacerbated OxyContin’s widespread abuse.”
In 2004, West Virginia charged Purdue for ‘deceptive marketing.’ In 2007, Purdue was fined $600 million for misleading the public about OxyContin’s potential for addiction.
In 2012, the New England Journal of Medicine published a study which found that nearly 80% of those seeking help for heroin addiction had previously abused pharmaceutical narcotics – primarily OxyContin.
In 2016, as total revenue from OxyContin eclipsed $30 billion, an investigation revealed that Purdue’s executives had been aware of OxyContin’s potential for abuse from the very beginning.
The Takeaway
The settlement reached last week will see Purdue restructured as a public beneficiary trust, with all profits going to the plaintiffs. Purdue’s addiction treatment drugs will be provided to the public at no cost.
The Sackler family will forfeit ownership of the company, contribute $3 billion in cash, and sell its UK-based pharmaceutical network (Mundipharma) – but will remain wealthy and will not be criminally charged.
Plaintiffs who refused the terms of the settlement have promised to pursue further litigation to recover additional money from the Sackler family (much of which is believed to be held offshore). A recent filing by the New York attorney general’s office revealed nearly $1 billion in wire transfers from Purdue to the Sackler family.
According to Forbes, the family is worth nearly $13 billion.
“This apparent settlement is a slap in the face to everyone who was had to bury a loved one due to this family’s destruction and greed,” argues Pennsylvania Attorney General Josh Shapiro. “It allows the Sackler family to walk away billionaires and admit no wrongdoing.”