Why OxyContin Maker Purdue Pharma is Still Bankrupt

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STAMFORD – Three years ago this week, OxyContin maker Purdue Pharma filed for bankruptcy. Around this time a year ago, he had just gotten approval from a bankruptcy judge for a settlement plan. But today, his bankruptcy remains unfinished.

Given the complexity and litigation of the bankruptcy of Stamford-based Purdue – which is trying to settle several thousand lawsuits brought against the company over its alleged role in the national opioid crisis – a protracted process was inevitable. Even after resolving long-running disputes with states such as Connecticut, uncertainty remains over the end of the bankruptcy, further heightening concerns over when settlement funds will finally be disbursed to help fight. against an incessant epidemic.

“There have been risks in a bankruptcy process with so many creditors, plaintiffs and states,” Connecticut Attorney General William Tong said in an interview. “I hear from victims and survivors of opioids, and they are concerned that there are always risks in this process. There have always been risks in this process.

In response to a request from Hearst Connecticut Media, Purdue reiterated its intention to enact its settlement plan.

“We made great progress during the bankruptcy. Today, nearly all creditors agree the plan is the fairest and best way to provide billions of dollars of value for victim compensation, opioid crisis relief, and emergency relief medication. overdose,” the company said in a statement. “We are optimistic that the courts will ultimately uphold the confirmation order.”

The company did not make anyone available to interview for this article.

A long and complex process

By seeking Chapter 11 protection, Purdue has consolidated thousands of lawsuits filed in recent years by local and state governments across the country, including Connecticutwho allege the company fueled the opioid crisis with deceptive marketing of OxyContin, a prescription opioid that is the company’s top-selling drug. Additionally, more than 135,000 claims on personal injury forms have been filed against the company through bankruptcy.

After about two years in bankruptcy proceedings, Purdue’s settlement plan last year garnered resounding support from voting creditors and then won backing from the presiding bankruptcy judge. But when Judge Robert Drain approved the settlement framework in September 2021, Connecticut and several other “unwilling” states appealed the decision because they said the terms offered — including a payment of about $4.3 billion by members of the Sackler family who own the company — were unacceptable.

“Due to the complex nature of the process, it takes a very long time, especially with such a controversial and very public process like this,” Robert Bird, a business law professor at the University of Connecticut, said in an interview. . . “It creates an environment where many contentious issues have to be resolved through the courts before the money is finally paid out.”

Tong and the attorneys general of the other “non-consenting” states were particularly critical of Drain’s endorsement of the plan’s stipulation for “non-debtor releases” that would have forced them to waive their claims against the Sacklers. The Sacklers, who have not personally filed for bankruptcy, have denied allegations by Tong and other attorneys general that they abused the bankruptcy process to shield themselves from liability.

Last March, Connecticut and the other “unwilling” states finally reached a settlement with Purdue and the Sacklers. Among key terms, the Sacklers agreed to increase their contribution to the settlement to $6 billion.

“I will never be satisfied with this process,” Tong said. “I did what I had to do to hold the Sacklers accountable and bring the most value possible to victims and to addiction treatment, prevention and science. But don’t think for a second that I am happy.

Even if no state opposes a settlement any longer, the plan cannot be implemented without additional court approval. Drain’s decision was overturned last December by District Judge Colleen McMahon. She agreed with the “non-consenting” states that the bankruptcy court had no power to compel the states to waive their claims against the Sacklers.

Purdue has appealed McMahon’s decision, but is still awaiting a decision on its appeal from the Court of Appeals for the Second Circuit. If the Second Circuit finds that the bankruptcy court properly upheld the settlement plan, Purdue officials expect it will take at least two to three months before the company emerges from bankruptcy.

“While the delay due to the district court ruling was unfortunate, the fact that our creditors came together to form the value maximization plan that was upheld by the bankruptcy court is remarkable and sets our timing well. ahead of what we would otherwise be,” Purdue said in its statement. “We believe so strongly in Knoa Pharma’s vision that the wait will have been worth it when Knoa Pharma is able to commit billions of dollars to opioid reduction efforts – where funds are urgently needed.” (Knoa Pharma is the successor company to Purdue, a company that would develop and distribute millions of doses of opioid addiction treatment and overdose medications, according to Purdue’s plan.)

If a party disagrees with the Second Circuit’s decision, it could appeal to the United States Supreme Court. fight non-consensual releases of non-debtors.

Today, the Justice Department, through its bankruptcy-focused U.S. administrator program, stands as the primary opponent among a small number of remaining opponents of the settlement plan. “None of the 50 states, no local governments and none of the hundreds of thousands of creditors continues to appeal our confirmation order,” Purdue said in its statement.

A message left this week at the Department of Justice was not returned. In a statement last December praising McMahon’s decision, Attorney General Merrick Garland said the “bankruptcy court had no power to deprive victims of the opioid crisis of their right to sue the Sackler family.” The department remains committed to opioid reduction efforts and supporting victims of opioid abuse.

As part of a settlement with the Department of Justice, Purdue pleaded guilty in November 2020 to three criminal charges of conspiracy to defraud the government and violation of the anti-bribery law. At the same time, the Sacklers involved with Purdue agreed to a $225 million settlement with the department to resolve allegations of marketing and financial misconduct at Purdue. The Sacklers have admitted no wrongdoing in connection with this agreement.

To the dismay of many, including Tong and Sen. Richard Blumenthal, D-Connecticut, the Justice Department has not criminally charged anyone currently or previously involved with Purdue in connection with the company’s guilty plea.

“I’m concerned, and I’m going to ask the DOJ based on their continued opposition” to the settlement plan, Blumenthal, a member of the Senate Judiciary Committee who sued Purdue when he was the state’s attorney general, says. in an interview. “They owe an explanation to the victims (opioids), in particular.”

The lack of clarity on the endpoint of bankruptcy worries many loved ones of opioid victims and survivors of opioid addiction. They fear further delays or even missing out entirely on the personal injury funds that are included in the settlement plan. Eligible applicants would each receive between $3,500 and $48,000 each, for a total of up to $750 million.

“It seems everyone was worried about getting the lawyers paid, and the states were worried about getting money into the states,” Norwalk resident Dede Yoder, whose son died of an overdose of fentanyl and carfentanil at age 21 in 2017, after being prescribed OxyContin as a teenager, said in an interview “But the real victims of all of this, it’s like we’re not even one of them. And yet, it is about us.

More opioid settlement funds on the way

As Purdue’s bankruptcy drags on, funds from settlements with other companies implicated in the opioid epidemic are already pouring into the state. These funds are urgently needed for treatment and prevention programs to address an ongoing opioid crisis. Last year, there were 1,413 opioid-related deaths in Connecticut, up 11% from 2020, according to the Office of the Chief Medical Examiner.

Of the other colonies to which Connecticut joined, it would receive in years to come about 300 million dollars pharmaceutical distributors Cardinal, McKesson and AmerisourceBergen and drugmaker Johnson & Johnson; approximately $7.5 million consulting firm McKinsey & Co., whose clients included Purdue; and nearly $14 million from drugmaker Mallinckrodt.

In addition, the State is in line to receive amounts to be determined from drugmakers Allergan, Endo and Teva, after Tong’s announcements over the past two months that the state would join settlements with these companies.

“People know that if they played a role in the opioid crisis, they’re in trouble,” Tong said. “Anyone who works for the attorneys general –
or pursue cases with us or defend cases against us – know that Connecticut is a leader in the fight against the addiction industry and that we are very aggressive.

[email protected]; twitter: @paulschott

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