Purdue Pharma proposes $10 billion bankruptcy plan to settle lawsuits

Purdue Pharma, maker of the OxyContin, has proposed a $10 billion plan to lift itself out of bankruptcy and to reinvent itself as a company whose profits would go toward combatting the nationwide opioid epidemic.

The plan, filed late Monday in the U.S. Bankruptcy Court Southern District of New York, includes a $4.5 billion settlement from the Sackler family, founders of Purdue Pharma, and would settle thousands of lawsuits filed against the company.

“Purdue has delivered a historic plan that can have a profoundly positive impact on public health by directing critically-needed resources to communities and individuals nationwide who have been affected by the opioid crisis,” Steve Miller, chairman of Purdue’s board of directors, said in a statement.

Under the plan, billions of dollars would be transferred into the National Opioid Abatement Trust to cover government claims and a trust to cover claims by Indian tribes and tribal organizations. It also dissolves Purdue and replaces it with a new company that will provide millions of doses of opioid addiction treatments and overdose reversal medicines such as naloxone nasal spray and buprenorphine.

The newly established company will not be operated by any government entity or the Sacklers, according to the proposal. Instead, an independent board of managers will oversee the post-bankruptcy company.

The $4.5 billion contribution from the Sacklers outlined in the new plan is a $1.5 billion increase from the working agreement reached in September 2019. The money would be paid in cash over nine or 10 years. Also, the Sacklers would be required to sell their worldwide drug companies within seven years and to stop manufacturing or selling opioid medications.

More than 615,000 separate claims from governments, tribes, hospitals and other entities were filed against Purdue as part of the bankruptcy proceedings.

About $700 million to $750 million would go to individuals who filed personal injury claims against Purdue. With nearly 135,000 claims, these individuals would receive an average payment of about $5,600.

Although Purdue said it believes there is broad support for the plan, 24 attorneys general on Tuesday jointly expressed their disappointment in the plan.

“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 said in a statement. “Our states investigated Purdue and the Sacklers and filed the lawsuits that took down their criminal enterprise.”

“Right now, millions of people across the country are desperately suffering from opioid addiction. They need help and they need it now,” the attorneys general said. “Now, the Sacklers and Purdue need to own up to their decades of misconduct and their role in creating this crisis.”

More than 450,000 people have died from an overdose involving an opioid, including prescription and illicit drugs, since 1999, data from the Centers for Disease Control and Prevention shows. An estimated 2 million people in the U.S. live with an opioid use disorder.

According to its bankruptcy plan, Purdue will distribute $500 million in cash immediately after emerging from bankruptcy, the proposal says. The drugmaker also anticipates generating another $1 billion through the new company by the end of 2024.

Last October, the opioid manufacturer made a plea deal with the Department of Justice for illegally marketing opioid medications for years. The Sackler family paid $225 million in damages as part of the settlement with the department.

As part of the deal, Purdue Pharma admitted to lying to doctors and patients about the safety of its highly addictive opioid, OxyContin, which the company introduced to the market in the 1990s.