Purdue and Sacklers offer to settle opioid suits for up to $12bn
Purdue Pharma, the opioid maker, and members of the controlling Sackler family have offered to settle thousands of lawsuits against the company for $10bn to $12bn, according to people familiar with the matter.
The US states, cities and counties that are pursuing the OxyContin maker for the costs of the opioid addiction crisis are deciding whether to accept the offer ahead of a meeting on Friday, the people said.
Purdue is one of 22 opioid makers, distributors and pharmacies being pursued by a large number of municipalities in the US, with the first of 2,000 cases due to go to trial in Cleveland in October. The company also faces lawsuits from many state attorneys-general.
A couple of the state lawsuits have also named members of the Sackler family as defendants. The New York attorney-general has accused Purdue of unlawfully distributing hundreds of millions of dollars to members of the Sackler family when it knew it was facing significant liablities. The family has denied the allegations and said it will vigorously contest them.
The negotiations — taking place in Cleveland — include at least 10 state attorneys-general, plaintiffs’ attorneys and David Sackler, representing the Sackler family, the people said.
The dealmaking comes as Purdue is considering bankruptcy. Plaintiffs will have to decide whether to accept the deal or risk the slow process of trying to recover money in a bankruptcy court. The settlement offer also involves putting Purdue into bankruptcy, but with an agreement to restructure the company as a trust.
The offer includes $7bn to $8bn from Purdue, $4bn of which would be in-kind payments of drugs including treatments for opioid overdoses. Members of the Sackler family would contribute at least $3bn, which they would raise by selling Mundipharma, another family-owned pharmaceuticals group that focuses its sales in Europe.
As well as pain medication and treatments for addiction, Mundipharma sells medicines for cancer, diabetes and respiratory diseases.
Purdue said it believes a “constructive global resolution is the best way forward” and is working with state attorneys-general and other plaintiffs to achieve it. “While Purdue Pharma is prepared to defend itself vigorously in the opioid litigation, the company has made clear that it sees little good coming from years of wasteful litigation and appeals,” a spokeswoman said.
White House economists have estimated that the epidemic of opioid addiction cost the US $500bn in 2015 alone, if the value of lives lost is included along with healthcare costs and lost earnings.
News of the Purdue offer comes a day after Johnson & Johnson lost an opioid crisis lawsuit in Oklahoma on Monday. The judge found that J&J could be held responsible for costs relating to the epidemic and ordered it to pay $572m to abate the “public nuisance”.
Andrew Kolodny, co-director of opioid policy research at the Heller School at Brandeis University, and a witness for Oklahoma in its case against J&J, said it would be a “terrific deal” for Purdue — but not enough to clean up the crisis.
“It is very clever of Purdue to use the threat of bankruptcy and what they have done here is either a ‘take it or leave it’,” he said. Offering billions of dollars worth of drugs was not as useful as funding doctors and treatment centers that authorities needed to end the epidemic, he added.
Shares in other companies involved in the mass litigation in Ohio had already been falling after the J&J verdict. But they deepened their losses after the size of the Purdue settlement offer was first reported by NBC News on Tuesday.
Teva, the Israeli drugmaker, closed down 9.6 per cent, pharmaceutical company Endo International was down 12.4 per cent, and McKesson, a drug distributor, was lower by 5.7 per cent.
J&J, whose shares rose after analysts said the Oklahoma verdict was less than they expected and far less than the $17bn the state had asked for, trimmed its gains after the Purdue report, closing up 1.4 per cent.
Representatives for members of the Sackler family did not respond to requests for comment.