OxyContin maker Purdue Pharma reportedly exploring bankruptcy

Sackler family, the companys wealthy owners, are under mounting pressure to address their role in the opioid crisis

Purdue Pharma, the maker of OxyContin, is exploring filing for bankruptcy to address potentially significant liabilities from roughly 2,000 lawsuits alleging the drugmaker contributed to the deadly opioid crisis sweeping the United States, people familiar with the matter said on Monday.

The potential move shows how Purdue and its wealthy owners, the Sackler family, are under pressure to respond to mounting litigation accusing the company of misleading doctors and patients about risks associated with prolonged use of its prescription opioids.

Purdue denies the allegations, arguing that the US Food and Drug Administration-approved labels for its opioids carried warnings about the risk of abuse and misuse associated with the pain treatments.

Filing for Chapter 11 protection would halt the lawsuits and allow Purdue to negotiate legal claims with plaintiffs under the supervision of a US bankruptcy judge, the sources said.

More than 1,600 lawsuits accusing Purdue and other opioid manufacturers of using deceptive practices to push addictive drugs that led to fatal overdoses are consolidated in an Ohio federal court. Purdue has held discussions to resolve the litigation with plaintiffs lawyers, who have often compared the cases to widespread lawsuits against the tobacco industry that resulted in a $246bn settlement in 1998.

We will oppose any attempt to avoid our claims, and will continue to vigorously and aggressively pursue our claims against Purdue and the Sackler family, the Connecticut attorney general William Tong said. Connecticut has a case against Purdue and the Sacklers.

Bankruptcy filing not certain

A Purdue bankruptcy filing is not certain, the sources said. The Stamford, Connecticut-based company has not made any final decisions and could instead continue fighting the lawsuits, they said.

As a privately-held company, it has been Purdue Pharmas longstanding policy not to comment on our financial or legal strategy, Purdue said in a statement.

We are, however, committed to ensuring that our business remains strong and sustainable. We have ample liquidity and remain committed to meeting our obligations to the patients who benefit from our medicines, our suppliers and other business partners.

Purdue faces a May trial in a case brought by Oklahomas attorney general that, like others, accuses the company of contributing to a wave of fatal overdoses by flooding the market with highly addictive opioids while falsely claiming the drugs were safe.

Last year, U.S. President Donald Trump also said he would like to sue drug companies over the nations opioid crisis.

Opioids, including prescription painkillers, heroin and fentanyl, were involved in 47,600 overdose deaths in 2017, a sixfold increase from 1999, according to the latest data from the US Centers for Disease Control and Prevention.

Purdue hired law firm Davis Polk & Wardwell LLP for restructuring advice, Reuters reported in August, fueling concerns among litigants, including the Oklahoma attorney general Mike Hunter, that the company might seek bankruptcy protection before the trial.

Companies facing widespread lawsuits sometimes seek bankruptcy protection to address liabilities in one court even when their financial condition is not dire. The California utility PG&E filed for bankruptcy earlier this year after deadly wildfires raised the prospect of large legal bills even though its stock remained worth billions of dollars.

Deceptive marketing

The Massachusetts attorney general Maura Healey in June became the first attorney general to sue not just Purdue but Sackler family members. Records in her case, which Purdue has asked a judge to dismiss, accused Sackler family members of directing deceptive marketing of opioids for years while enriching themselves to the tune of $4.2bn.

Family
Family and friends who have lost loved ones to OxyContin leave pill bottles outside the headquarters of Purdue Pharma. Photograph: Jessica Hill/AP

Some other states have since also sued the Sacklers.

The drugmaker downplayed the possibility of a bankruptcy filing in a 22 February court filing in the Oklahoma case. Purdue is still here ready, willing and eager to prove in this court that the States claims are baseless, the company said in court papers.

Sales of OxyContin and other opioids have fallen amid public concern about their addictive nature, and as restrictions on opioid prescribing have been enacted. OxyContin generated $1.74bn in sales in 2017, down from $2.6bn five years earlier, according to the most recent data compiled by Symphony Health Solutions.

Purdues CEO, Craig Landau, has cut hundreds of jobs, stopped marketing opioids to physicians and moved the company toward developing medications for sleep disorders and cancer since taking the helm in 2017.

In July, Purdue appointed a new board chairman, Steve Miller, a restructuring veteran who previously held leadership positions at troubled companies including auto-parts giant Delphi and the once-teetering insurer American International Group Inc.

Mortimer DA Sackler no longer sits on Purdues board, according to a filing the company made with the Connecticut secretary of state late Monday.

The Oklahoma case and other lawsuits seek damages from Purdue and other pharmaceutical companies accused of fueling the opioid crisis. In addition to lawsuits consolidated in an Ohio federal court, more than 300 cases are pending in state courts, and dozens of state attorneys general have sued manufacturers, including Purdue.

Settlement discussions have not yet resulted in a deal.

Purdue and three executives in 2007 pleaded guilty to federal charges related to the misbranding of OxyContin and agreed to pay a total of $634.5m in penalties, according to court records.

Read more: https://www.theguardian.com/society/2019/mar/04/opioid-crisis-oxycontin-maker-purdue-pharma-bankruptcy-sackler-family

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