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 Purdue is among several drugmakers and distributors that have been
sued for fueling an opioid addiction crisis in the United States,
which claimed 400,000 lives from 1999 to 2017, according to the U.S.
Centers for Disease Control and Prevention.
The lawsuits have accused the Stamford, Connecticut-based Purdue
Pharma of aggressively marketing prescription opioids while
misleading prescribers and consumers about risks from their
prolonged use. Purdue and the Sacklers have denied the allegations.
Purdue said it was actively working with state attorneys general and
other plaintiffs to reach a resolution, without specifying a
settlement amount.
There is currently no agreement and the settlement discussions could
collapse, the sources said.
Representatives for Purdue and the Sackler family held discussions
with cities, counties and states on the contours of the potential
multibillion-dollar settlement last week in Cleveland, said a person
familiar with the matter.
During the meeting, Purdue outlined a plan to file for Chapter 11
bankruptcy protection as a mechanism for implementing the
settlement, which the company hopes will address the lawsuits, the
person said.
The Sacklers would cede control of Purdue under the settlement terms
discussed last week, the person said.
All the parties face a Friday deadline to update a federal judge on
the status of the negotiations, the person said.
The company has said the U.S. Food and Drug Administration approved
labels for OxyContin that warned about risk and abuse associated
with treating pain. The Sacklers have argued they were passive board
members who approved routine management requests rather than
micromanaging the marketing of OxyContin.
RESTRUCTURING
The settlement offer was first reported by NBC. Paul Hanly, a lead
attorney for the plaintiffs, in an email, replied only "Made up.
Ridiculous," when asked to confirm NBC's report. Asked to clarify
after Reuters confirmed the report, he did not respond.
Representatives for the Sackler family declined to comment and a
representative for the state attorneys general did not immediately
respond to a request for comment.
The plan under discussion envisions Purdue restructuring into a
for-profit "public benefit trust" that would last for at least a
decade, one of the people familiar with the matter said.
Purdue would contribute between $7 billion and $8 billion to the
trust, with some of the money coming from the sales of its drugs,
including those that combat opioid overdoses, the person said.
Additional payments would come from the company's cash and insurance
policies, the person said. Three experts would be approved by a
bankruptcy judge as trustees who would select board members to run
the trust, this person said.
The Sackler family, which has amassed an estimated $13 billion
fortune over the years, is also weighing a possible sale of another
pharmaceutical firm it owns called Mundipharma, with some of the
proceeds potentially going toward the settlement under discussion,
the person said. The settlement terms contemplate the Sacklers
initially contributing $3 billion.
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David Sackler, one of a handful of family members who previously sat
on Purdue's board, has taken on a significant role in the recent
discussions, which included at least 10 state attorneys general, the
person said.
Purdue is set on Oct. 21, along with several other drug
manufacturers and distributors, to face the first trial to result
from federal court proceedings that have consolidated around 2,000
lawsuits brought largely by local governments accusing the companies
of fueling the epidemic.
Other companies set to face trial include drugmakers Teva
Pharmaceutical Industries Ltd and Johnson & Johnson and drug
distributors McKesson Corp, Cardinal Health Inc and
AmerisourceBergen Corp.
U.S. District Judge Dan Polster in Cleveland, Ohio, who oversees the
lawsuits, has been pushing for settlements that could "do something
meaningful to abate this crisis."
Purdue, the Sacklers and the communities involved face high-stakes
negotiations and Purdue has been preparing for filing for bankruptcy
protection in case it cannot reach an agreement.
Going into Chapter 11 would give Purdue the exclusive right for
several months to propose a reorganization plan, which if approved
by a U.S. bankruptcy judge could be forced on any local governments
that decide to hold out.
Some state attorneys general have said they will resist any attempt
by Purdue to use bankruptcy.
New York Attorney General Letitia James subpoenaed Wall Street
banks, Purdue corporate entities and family offices in mid-August
for records related to the Sackler family's finances, according to
court records.
In a letter to a judge and an earlier lawsuit, her office
characterized payouts to the Sacklers from Purdue as fraudulent
conveyances, a legal designation for clawing back money during
bankruptcy proceedings.
"The opioid epidemic has ravaged American communities for over a
decade, while a single family has made billions profiting from death
and destruction," James said in a statement. "We won’t let up until
we have delivered justice.”
A lawyer representing the Sackler family said in a statement that
the New York attorney general's "current claims are without merit
and the subpoenas are improper."
(Reporting by Jessica DiNapoli and Mike Spector in New York;
additional reporting by Ankit Ajmera in Bengaluru and Nate Raymond
in Boston; Writing by Tom Hals; Editing by Grant McCool and Lisa
Shumaker)
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