The Justice Department reached an $8.34 billion settlement with OxyContin-maker Purdue Pharma LP, the agency said Wednesday, helping clear the way for the bankrupt drugmaker to turn over future profits to cities and states that accuse it of fueling the opioid crisis.
The settlement resolves yearslong criminal and civil probes by federal prosecutors into Purdue’s marketing and distribution of powerful opioid painkillers. The final price tag for Purdue, however, is largely symbolic: Because the company’s assets fall well short of $8 billion, it will pay $225 million and the federal government is expected to cede most of the rest to allow more money to flow to states, counties and Native American tribes.
Purdue has agreed to plead guilty to three counts related to payments to health-care providers and other actions. The deal doesn’t prevent the government from prosecuting owners or employees of Purdue in the future.
Purdue’s owners, members of the Sackler family, will separately contribute $225 million to resolve civil claims, the Justice Department said.
Purdue filed for bankruptcy more than a year ago under the weight of thousands of lawsuits filed by state and local governments alleging the company’s aggressive marketing of OxyContin helped lead to widespread drug addiction and overdose deaths. Since 1999, at least 450,000 people in the U.S. have died from overdoses of prescription and illegal opioids.
Stamford, Conn.-based Purdue has denied the allegations and proposed turning itself into a corporate trust, run for the benefit of the public. The Justice Department agreement supports Purdue structuring itself into such a trust, which would continue to sell OxyContin and develop opioid overdose- and addiction-treatment drugs.
Two dozen states, however, have opposed any future for Purdue other than a sale to a private buyer.
“The public deserves assurance that no opioid business is given the special protection of being placed under a public umbrella,” a group of 25 states, including Massachusetts and California, wrote in a letter last week to Attorney General William Barr. Selling the business outright, the letter says, “may also deliver more upfront money that cities and states can use to abate the opioid epidemic.”
The current value of Purdue’s bankruptcy estate is around $5 billion, which includes $3 billion pledged by the Sacklers. States that oppose Purdue’s proposed bankruptcy plan want to see more money personally contributed by the Sacklers and are in a mediation to try to get clarity into what the family is worth.
The Sacklers have been shielded from litigation until next March by the judge overseeing Purdue’s chapter 11 case even though the family didn’t personally file for bankruptcy.
The Justice Department has penalized Purdue before. After a federal investigation, the company and three of its executives in 2007 pleaded guilty to criminal charges of misleading the public about the addiction risk of OxyContin and paid $634.5 million in government penalties and costs.
Purdue is one of three drugmakers to file for bankruptcy in recent years in an attempt to negotiate a settlement of opioid-related lawsuits. Counties and states are also negotiating a $26 billion opioid settlement with three major drug distributors and drugmaker Johnson & Johnson.
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