Amidst the bankruptcy proceedings for Purdue Pharma LP, filings have revealed that several U.S. states seek $2.2 trillion from the drugmaker giant for its role in the opioid crisis. The filings, which were made public in mid-August 2020, detail claims from 49 states against the OxyContin maker for allegedly failing to address the high risk of addiction or overdose. The states’ claims join assertions from the U.S. Justice Department that Purdue also owes over $18 billion in penalties stemming from criminal and civil investigations.
OxyContin and the Opioid Crisis
Purdue Pharma LP, privately owned by the wealthy Sackler family, first brought the opioid painkiller OxyContin to market in the late 1990s. In the years since OxyContin’s introduction, prescription opioids have been linked to an estimated 450,000 deaths across the country. Purdue has been accused of employing misleading marketing tactics to highlight the drug’s purported safety and aggressively drive prescription volume. In reality, the drug is highly addictive, and its sale has netted the Sackler family billions in profit.
Taking the Bankruptcy Route
In September 2019, Purdue Pharma announced it was filing for Chapter 11 bankruptcy. This announcement came as the company faced over 2,600 individual lawsuits from hospitals, cities, states, Native American tribes, and more—alongside mounting outcry to answer for its stake in the opioid epidemic. But it’s also been pointed out that though it seemed the Sacklers were finally bowing to the pressure, their voluntary bankruptcy filing actually invokes an automatic stay of civil litigation pending against the company. Bankruptcy has created an alternative to facing the growing lawsuits targeting Purdue.
As part of the bankruptcy proceedings in the U.S. Bankruptcy Court in White Plains, New York, Judge Robert D. Drain set a July 30, 2020 deadline for filing proof-of-claim documents against the company. At the deadline, over 61,000 personal injury claims had been submitted, including claims from the states and federal agencies. Though not much progress has been announced in terms of reaching a settlement, a recent operating report stated Purdue has $1 billion in cash available and the Sackler family offered to pay $3 billion of their own money over seven years—a far cry from the trillions of dollars in claims. The company has also agreed to transfer remaining assets into a trust to benefit claimants.
Claiming Damages
Forty-nine states, various territories, and Washington D.C. made among the largest claims against Purdue Pharma. California and New York’s claims alone totaled $357 billion. Altogether, Purdue is accused of causing $2.156 trillion in damages. In response, the company said it’s committed to working towards settlement and that these types of claims during bankruptcy are typically “filed in amounts substantially larger than what is ultimately allowed by the court.”
The Justice Department has also accused Purdue of legal penalties totaling more than $18 billion. According to federal prosecutors, Purdue abetted doctors to prescribe medically-unnecessary Oxycontin and falsified reporting to federal healthcare insurance programs. Additional penalties are tied to violations of the U.S. Food, Drug and Cosmetic Act, and “violations of federal conspiracy and anti-kickback laws.”
The Settlement Roadmap
Given the incredible volume of claims against Purdue during bankruptcy proceedings, the company faces a long legal road to reaching settlement for its involvement in the opioid crisis. Purdue has pledged to provide addiction treatment and overdose-reversing drugs, though the details on implementation from its bankruptcy estate have not been announced. Though the company has signaled its willingness to cooperate and find a resolution to satisfy all parties, critics have also pressed for greater scrutiny into Purdue’s internal operations and the Sackler family’s finances. As the bankruptcy process proceeds, Purdue and the Sacklers will undoubtedly owe immense sums in damages. But whether this makes a dent in the country’s battle with opioid addiction is yet to be seen.
