Purdue Pharma reaches ‘tentative’ settlement deal in federal lawsuit

Purdue Pharma has reached a ‘tentative’ settlement with 22 state attorney generals suing the company in a blockbuster federal opioids case. 

The pharmaceutical company and its owners, the Sackler family, had rejected calls for them to pay $4.5 billion out of their own pocket to settle the disputes, but a deal was reached on Wednesday. 

Under the proposed agreement, the Sackler family would relinquish control of the company, it would declare bankruptcy and then be resurrected as a trust to tackle the opioid epidemic. 

Many for the 22 state attorney generals and 2,000 counties which have sued the company are in agreement about the deal but some are stalling, according to The Washington Post.

Purdue is known for producing OxyContin, a highly addictive opioid painkiller. 

The company has been widely blamed for the opioid crisis which is ravaging the country but has always denied responsibility for it.   

Richard Sackler

Jonathan Sackler

The Sackler family that owns Purdue Pharma has allegedly rejected calls for them to pay $4.5 billion of their own wealth to settle various lawsuits brought against the opioid maker. Pictured: Richard Sackler (left) and Jonathan Sackler (right) who are the children of the late Purdue Pharma co-founder Raymond Sackler

On Tuesday it emerged that Purdue and the Sackler family rejected two offers from the states over how payments under any settlement would be handled and that the family declined to offer counterproposals. 

‘As a result, the negotiations are at an impasse, and we expect Purdue to file for bankruptcy protection imminently,’ Tennessee Attorney General Herbert Slatery and North Carolina Attorney General Josh Stein wrote in their message, which was sent to update attorneys general throughout the country on the status of the talks. 

Purdue refused to comment.

In March, Purdue and members of the Sackler family reached a $270 million settlement with Oklahoma to avoid a trial on the toll of opioids there. 

Under one earlier proposed settlement, Purdue would enter a structured bankruptcy that could be worth $10 billion to $12 billion over time. 

Included in that total would be $3 billion from the Sackler family, which would give up its control of Purdue and contribute up to $1.5 billion more by selling another company it owns, Mundipharma, which is based in Cambridge, England.

Shapiro said the attorneys general believed what Purdue and the Sacklers were offering would not have been worth the reported $10 billion to $12 billion.

In their latest offers, the states also sought more assurances that the $4.5 billion from the Sacklers would actually be paid, according to the message circulated on Saturday which had the subject line: ‘The Sacklers refused to budge’.  

In their message, Tennessee’s Slatery and North Carolina’s Stein said the states have already begun preparations for handling bankruptcy proceedings. 

‘Like you, we plan to continue our work to ensure that the Sacklers, Purdue and other drug companies pay for drug addiction treatment and other remedies to help clean up the mess we allege they created,’ they wrote.

A failure in negotiations sets up one of the most tangled bankruptcy cases in the nation’s history. 

Purdue, the Sackler family and a group of state attorneys general had been trying for months to find a way to avoid trial and determine Purdue's responsibility for a crisis that has cost 400,000 American lives over the past two decades

Purdue, the Sackler family and a group of state attorneys general had been trying for months to find a way to avoid trial and determine Purdue’s responsibility for a crisis that has cost 400,000 American lives over the past two decades

It would leave virtually every state and some 2,000 local governments that have sued Purdue to battle it out in bankruptcy court for the company’s remaining assets. 

Purdue threatened to file for bankruptcy earlier this year and was holding off while negotiations continued.

It’s not entirely clear what a breakdown in settlement talks with Purdue means for the Sackler family, which is being sued separately by at least 17 states.

Those lawsuits are likely to continue but face a significant hurdle because it’s believed the family – major donors to museums and other cultural institutions around the world – has transferred most of its multibillion-dollar fortune overseas. 

Pennsylvania Attorney General Josh Shapiro, who was one of the four state attorneys general negotiating with Purdue and the Sacklers, said Saturday he intends to sue the Sackler family, as other states have.

‘I think they are a group of sanctimonious billionaires who lied and cheated so they could make a handsome profit,’ he said. ‘I truly believe that they have blood on their hands.’

The nearly 2,000 lawsuits filed by city and county governments – as well as unions, hospitals, Native American tribes and lawyers representing babies who were born in opioid withdrawal – have been consolidated under a single federal judge in Cleveland. 

Most of those lawsuits also name other opioid makers, distributors and pharmacies in addition to Purdue, some of which have been pursuing their own settlements.

Purdue also faces hundreds of other lawsuits filed in state courts and had sought a wide-ranging deal to settle all cases against it.

The company has been the most popular target of state and local governments because of its OxyContin, the prescription painkiller many of the government claims point to as the drug that gave rise to the opioid epidemic. The lawsuits claim the company aggressively sold OxyContin and marketed it as a drug with a low risk of addiction despite knowing that wasn’t true.

The impasse in the talks comes about six weeks before the scheduled start of the first federal trial under the Cleveland litigation, overseen by U.S. District Judge Dan Polster. That trial will hear claims about the toll the opioid epidemic has taken on two Ohio counties, Cuyahoga and Summit.

A bankruptcy filing by Purdue would most certainly remove the company from that trial.

The bankruptcy judge would have wide discretion on how to proceed. That could include allowing the claims against other drugmakers, distributors and pharmacies to move ahead while Purdue’s cases are handled separately. Three other manufacturers have already settled with the two Ohio counties to avoid the initial trial. 

WHO ARE THE SACKLERS?  

The Sackler family’s drug company, Purdue Pharma, has made tens of billions on opioid sales, and the Sacklers have spent some of that money supporting the arts. 

 ARTHUR SACKLER

Arthur, a doctor and psychiatrist, founded a research laboratory in 1938, but Arthur’s real genius was in marketing, and he leveraged it to sell a number of medications, including the anti-anxiety drug, Valium.

He owned one-third of Purdue Pharma, which he and his younger brothers Mortimer and Raymond co-founded out of a series of smaller companies they had bought.

Arthur remained a relatively silent partner in the old Purdue, and died in 1987 before it became the company we know it as today.

He never saw any of Purdue’s OxyContin profits.

He donated the funds to open a number of medical education programs, libraries and museums.

After his death in 1987, his brothers bought Arthur’s portion of Purdue and one of his four children, daughter Elizabeth, has largely taken over his philanthropy work.

MORTIMER SACKLER

Mortimer was an American physician and psychiatrist.

He and his brothers, the older Arthur and the younger Raymond published prolific medical research before buying a number of pharmaceutical companies, including, in 1952, Purdue Pharma.

After Arthur’s death Mortimer and Raymond bought out his descendants’ share of Purdue Pharma, and in 1991 they created the company that would become a pain management giant we now know.

Mortimer became a lavish arts patron, known for equally extravagant donations and parties, beginning in the 1970s.

He died in 2010.

 RAYMOND SACKLER 

Raymond was a doctor like his older brothers, and the three were partners in all things until each of their deaths.   

Together with Mortimer, Raymond found success with their opioid painkiller, OxyContin, which became the Purdue Pharma’s signature drug. 

Raymond was milder and more private than his brother, Mortimer.

Raymond had two children, Richard and Jonathan, before his death last year. 

 RICHARD SACKLER 

Richard Sackler followed in his father’s footsteps, getting his medical degree at New York University School of Medicine. 

He came to Purdue after medical school, leading the research and development that ultimately produced the extended release form of OxyContin that would elevate the family’s fortune to previously unfathomable. 

He became president of Purdue in 1991, pioneering marketing campaigns (in the vein of his uncle, Arthur) that enticed droves of medical professionals to buy Purdue’s opioid.

Richard became co-chairman in 2003, by which point $1.6 billion in OxyContin had been sold.  

His marketing schemes sparked suspicion, and in 2015, Richard was deposed before his company paid out a $24 million settlement. 

The company appealed in 2017, but the case has not moved forward. 

In addition to his arts philanthropy, Richard’s foundations have donated to controversial causes, including anti-Muslim groups. 

ELIZABETH SACKLER

Arthur’s daughter has publicly and persistently attempted to distance herself from branch of her family that has profited from OxyContin. 

Elizabeth is a licensed psychiatrist and well-known philanthropist. 

She is the founder of an eponymous Center for Feminist Art at the Brooklyn Museum in New York. 

On Tuesday, she backed Goldin’s petition, expressing disgrace for her uncles’ business.  

Elizabeth Sackler is a patron of the arts and has publicly distinguished herself, and her father, from her uncles and their company, Purdue Pharma. 

Elizabeth Sackler is a patron of the arts and has publicly distinguished herself, and her father, from her uncles and their company, Purdue Pharma. 

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