After months of negotiations, Purdue Pharma agreed late Monday to a milestone plan to reform the OxyContin maker into a public trust company overseen by an independent board no longer controlled by members of the billionaire Sackler family.
In exchange, the members would be released from opioid-related litigation — a contentious point as many suing the company blame the Sackler family, in part, for the opioid epidemic that has killed more than 450,000 people in the United States in the past two decades, following Purdue’s development of OxyContin in 1996.
Already facing criticism, the plan must be approved by Judge Robert D. Drain in federal bankruptcy court in White Plains, N.Y., and will likely face legal objections from creditors who take issue with either the size of the Sacklers’ contribution or the company’s continued sale of opioids. Significant details of the restructuring plan, including which other shareholders will be released from civil litigation, have yet to be finalized.
The plan proposes trusts to distribute money to several groups: states, local governments and tribal organizations to fund opioid abatement programs; individuals, like the family members of overdose victims or guardians of infants born with neonatal abstinence syndrome; and hospitals and insurers.
Purdue says the plan will make more than $10 billion in value available to opioid abatement programs.
“With drug overdoses still at record levels, it is past time to put Purdue’s assets to work addressing the crisis,” Steve Miller, chairman of Purdue’s board of directors, wrote in a statement. “We are confident this plan achieves that critical goal.”
The trusts would receive an initial cash distribution of $500 million after the company emerges from bankruptcy and an estimated $1 billion from assets and operations through 2024.
Under the plan, states and local governments would select the board of directors that would oversee the new public trust company. The company’s managers would have the option to sell it by 2024, but the buyer would need to follow the same monitoring and regulatory practices for its opioid products.
Two branches of the Sackler family named in the litigation, heirs of brothers Mortimer and Raymond Sackler, would have no say in the board selections and would end their involvement in pharmaceutical companies worldwide within seven years. The third Sackler brother, Arthur, sold his shares before OxyContin’s introduction, and his successors were not involved in the litigation.
“Today marks an important step toward providing help to those who suffer from addiction,” the Sackler members involved in the litigation said in a statement, “and we hope this proposed resolution will signal the beginning of a far-reaching effort to deliver assistance where it is needed.”
Lawyers representing thousands of communities suing drug companies said the new filing “is certainly a step on the ladder of progress” but more details needed to be ironed out.
“The open issues are significant and must be resolved consistent with the interest of the thousands of cities and counties in crucial need of getting resources to their communities before they can support a final plan,” the lead attorneys wrote in a statement. “Purdue is trying to walk a fine line but the only way to the future is to protect the health and safety of our citizens.”
Nearly two dozen state attorneys general, including Letitia James (D-N.Y.) and William Tong (D-Conn.), blasted the plan, saying they were “disappointed” because the Sacklers and Purdue “need to own up” for their role in the crisis. The group has argued in favor of pursuing legal action against Sackler family members.
“While it contains improvements over the proposal that Purdue announced and we rejected in September 2019, it falls short of the accountability that families and survivors deserve,” they wrote in a statement.
The legal releases laid out in the plan would not shield the Sackler family members from criminal charges.
Members of the family withdrew about $10 billion in profits from 2008 to 2017, according to a forensic audit of their finances filed in the case. The family’s attorneys have argued that the distributions complied with a corporate integrity agreement and about half were paid as taxes.
According to Monday’s filing, about 130,000 personal injury claimants, including family members who lost relatives to overdoses from OxyContin, would receive compensation up to an estimated maximum of $48,000. That dollar amount, to families torn apart by addictive opioids, is insufficient, said Charlotte Bismuth, a former New York assistant district attorney following the bankruptcy case.
“I am absolutely appalled, disgusted and angered by the paltry payments reserved for personal injury victims,” Bismuth wrote in an email. “Families were devastated emotionally and financially: $48,000 doesn't even begin to cover funeral costs and lost wages. It is an insult to those families who lost their reason to live overnight.”
Purdue pleaded guilty in November to three federal felonies, including paying illegal kickbacks, as part of a settlement with the Justice Department. The settlement includes a criminal fine of more than $3.5 billion, criminal forfeiture of $2 billion and a civil settlement of $2.8 billion.
Purdue said its plan would satisfy an agreement with the federal government to keep $1.7 billion of the forfeiture to spend on battling the opioid crisis.
The company and Sacklers have also faced scrutiny from Congress. During heated questioning from the House Oversight Committee in December, David Sackler, who served on Purdue’s board from 2012 to 2018, and Kathe Sackler, a board member from 1990 to 2018 and a former company vice president, denied wrongdoing but apologized to victims of the crisis.
“I want to express my family’s deep sadness about the opioid crisis,” David Sackler told lawmakers. “OxyContin is a medicine that Purdue intended to help people, and it has helped and continues to help millions of Americans.”
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