Under terms of a plan negotiated for months, the Sacklers would relinquish control of Stamford, Conn.-based Purdue Pharma and admit no wrongdoing. The company would declare bankruptcy and be resurrected as a trust whose main purpose would be producing medications to combat the opioid epidemic.
If the deal becomes final, it would be the first comprehensive settlement in the broad effort to hold drug companies accountable for their role in the opioid epidemic. To date, Purdue has also settled with one state, Oklahoma, for $270 million, and won a victory when a North Dakota judge threw out that state’s case against the company.
The deal also would mark the demise of Purdue as a private company widely blamed for its role in driving the prescription opioid epidemic in the late 1990s and the first years of this century. In 2007, Purdue and three of its executives pleaded guilty to criminal charges of misleading doctors and the public about the safety of OxyContin and paid a $635 million fine.
The prescription drug epidemic has taken more than 200,000 lives via overdoses since 1999, according to federal statistics. An additional 200,000 deaths are blamed on overdoses from heroin and illegal fentanyl smuggled into the country from China and Mexico.
On Wednesday, the divide over the settlement broke down largely along party lines, with most Republican state attorneys general in favor of it and Democrats largely opposed. The states openly opposing the deal — including California, Connecticut, North Carolina, New York, New Jersey, Maryland and Pennsylvania — could take their objections to bankruptcy court and tie up the proceedings for years, some experts said.
“These people are among the most responsible for the trail of death and destruction the opioid epidemic has left in its wake,” said North Carolina Attorney General Josh Stein, who plans to sue the Sacklers personally.
“This apparent settlement is a slap in the face to everyone who has had to bury a loved one due to this family’s destruction and greed,” said Pennsylvania Attorney General Josh Shapiro. “It allows the Sackler family to walk away billionaires and admit no wrongdoing.”
But Republican attorneys general, Dave Yost of Ohio and Ken Paxton of Texas, backed the agreement.
“The proposed settlement with Purdue provides the greatest certainty for all Ohioans to receive relief as quickly as possible in light of rumored bankruptcy,” said Yost spokeswoman Bethany McCorkle.
In addition to 23 states, four territories supported the deal. Paxton said it would “secure billions in funding to address opioid addiction across the nation, and permanently remove the Sackler family from the pharmaceutical industry.”
In a statement, Purdue said it “continues to work with all plaintiffs on reaching a comprehensive resolution to its opioid litigation that will deliver billions of dollars and vital opioid overdose rescue medicines to communities across the country impacted by the opioid crisis.”
Members of the Mortimer D. Sackler and Raymond Sackler families issued a statement saying that “the family supports working toward a global resolution that directs resources to the patients, families and communities across the country who are suffering and need assistance. This is the most effective way to address the urgency of the current public health crisis and to fund real solutions, not endless litigation.”
The deal was said to be worth $10 billion to $12 billion, including a guarantee of $3 billion payment from the Sacklers over seven years. That could be financed at least in part by the sale of the family’s international drug conglomerate, Mundipharma, according to an analysis of the deal reviewed by The Washington Post. If the Sacklers earn more than $3 billion from that sale, part of it would go to the plaintiffs as well, according to a provision of the settlement.
The federal plaintiffs and many attorneys general believed the proposal was as good as they could get. The lawyers for the cities and counties agreed to recommend they “move forward in support of the current proposal, subject to satisfactory documentation of the essential terms and final documents,” said Paul J. Hanly Jr., Paul T. Farrell Jr. and Joseph F. Rice, three of the leaders of that group. “We feel good progress has and will continue to be made.”
But some states objected that the Sacklers were not contributing enough cash from their personal fortunes, built largely on the sale of OxyContin and taken out of the company in recent years, according to court papers filed by some states.
Another major concern is that the deal relies in significant measure on the assumed value of Purdue’s assets and the sale of its global drug company. States opposing it fear that these values may be overestimated and that some of the settlement money may never materialize.
“The $10 to $12 billion figures are vaporous,” said Maryland Attorney General Brian E. Frosh (D). “I have not seen a deal that would yield anywhere close to those kinds of returns.”
Still pending is the mammoth federal case in Cleveland against other drug manufacturers, distributors and retail pharmacy chains, known as a “multidistrict litigation” or MDL. In that case, the lawsuits from cities, counties, Indian tribes, hospitals and other groups have been consolidated. Judge Dan Aaron Polster has presided over that litigation, urging the parties to settle before trial so that money can be funneled quickly into drug treatment, emergency care, law enforcement and other local needs.
The federal trial is scheduled to begin in mid-October with two test cases, Cuyahoga and Summit counties, as the first plaintiffs. Meanwhile, the more than 40 lawsuits against drug companies are wending their way through state courts. Purdue would be eliminated from those cases where a settlement is finalized. A growing number of states also have sued the Sackler family personally.
Oklahoma, the first state to go to trial, last month won a $572 million verdict against Johnson & Johnson. In addition to settling with Purdue before the trial, it reached an agreement with Teva Pharmaceuticals, a generic drugmaker, for $85 million.
In another development Wednesday, Polster certified a plan that could allow every municipality in the nation to share in the proceeds if a settlement is reached with all the drug companies. Plaintiffs’ attorneys had proposed the novel arrangement to bolster the chances of a sweeping settlement.
Polster called the creation of this negotiation class a “powerful, creative and helpful” option and reiterated that he hopes it leads to a settlement that would “expedite relief to communities so they can better address this devastating national health crisis.”
Although the state cases are not in Polster’s jurisdiction, he has urged a broad settlement that includes them.
“There’s an incredible incentive to make a deal before bankruptcy, because that would make the process much less expensive for the states and cities,” said Adam Zimmerman, a professor at Loyola Law School in Los Angeles. If Purdue sought bankruptcy protection without a settlement, “we might see any kind of arrangement tied up in bankruptcy court for a very long time.” “It could be years,” he added.
Yost, who wants the states to control the legal effort against the pharmaceutical industry, has asked a federal appeals court to delay or halt the federal trial. Another 13 states and the District of Columbia have filed briefs in support of that effort, according to Yost’s office.
Yost criticized using two Ohio counties as “bellwether” cases, saying they represent only a tiny portion of the state’s 88 counties.
“The rest of Ohio — and Ohio itself — is being left behind in the MDL lawsuit in Cleveland,” he said in a statement late last month. “The hardest-hit counties of Appalachia and the vast majority of the state are being asked to take a number and wait — and that wait could delay or prevent justice.”
Zimmerman characterized the conflict as a struggle for control of the legal process.
“I think the main motivation [for Yost] has to do with who holds the balance of power with respect to negotiating a global settlement,” he said. “This is kind of a Hail Mary.”