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Purdue Pharma Offers Restructuring Plan, Sackler Family Would Give Up Ownership

Mar 15, 2021
Originally published on March 16, 2021 6:52 am

Under a bankruptcy plan filed late Monday night, Purdue Pharma would pay roughly $500 million in cash up front to settle hundreds of thousands of injury claims linked to the company's role in the deadly opioid epidemic.

The company said additional payments would be spread over the next decade, including installments on roughly $4.2 billion promised by members of the Sackler family who own the firm.

No fixed schedule was provided for when most of those disbursements would occur, though Purdue Pharma predicted as much as $1 billion in additional payouts would happen by 2024.

Two dozen state attorneys general immediately rejected the plan.

They issued a joint statement describing Purdue as a "criminal enterprise" and demanded more money up front to help communities affected by opioid addiction to pay for treatment and public health services.

"What the Sacklers are offering is a way for the payments to be structured that makes it convenient for them," said Massachusetts Attorney General Maura Healey.

"This plan does not go as far as it needs to," said North Carolina Attorney General Josh Stein, who told NPR a final deal must include "more money from the Sacklers."

Sacklers boost their offer

Under the proposed reorganization plan, which still needs approval from a federal bankruptcy court in White Plains N.Y., the Sacklers would give up ownership of Purdue Pharma's domestic operations.

They would admit no wrongdoing and would retain control of their overseas subsidiaries for at least the next seven years.

Critics say the Sacklers would remain one of the wealthiest dynasties in the U.S., despite their company's role fueling an addiction crisis that has killed more than 450,000 Americans.

"That's the most disturbing, the idea that they'll walk away with impunity," said Nan Goldin, an activist campaigning to remove the Sackler name from museums around the globe. "To me this is the one percent twisting justice."

The privately owned firm has now admitted twice to illegally marketing opioid medications in separate plea deals with the Justice Department, once in 2007 and again last year.

As part of those agreements, Purdue Pharma acknowledged lying to doctors and patients about the safety of its flagship product, OxyContin, which became one of the most widely abused prescription narcotics in the United States.

Sales of the highly addictive opioid also made the Sacklers fabulously rich, generating tens of billions of dollars in revenue beginning in the late 1990s.

Speaking during a congressional hearing in December, former board member Dr. Kathe Sackler expressed regret over Purdue's involvement in the opioid crisis, but she said she personally did nothing wrong.

"There is nothing that I can find that I would have done differently based on what I believed and understood then," she said.

The $4.2 billion of personal money offered by members of the Sackler family was more than a billion dollars more than than they offered last year.

In October, the family paid $225 million in damages as part last year's settlement with the DOJ, while admitting no wrongdoing.

A new company that promises to "address the crisis"

If approved, the bankruptcy plan envisions Purdue Pharma being reborn as a new company independent of the Sacklers.

The as-yet-unnamed company would continue selling a variety of medications, including OxyContin. Future profits would be channeled into a variety of trusts, which would own the company indirectly.

Speaking on background, company officials said financial aid will flow to individuals, organizations and communities harmed by the opioid epidemic.

The new firm would also commit to producing medications, including buprenorphine and naloxone, which alleviate opioid addiction and help people recover from overdoses.

Purdue said those drugs would be distributed to communities at low cost.

"With drug overdoses still at record levels, it is past time to put Purdue's assets to work addressing the crisis," said Purdue Pharma president Steve Miller in a statement. "We are confident this plan achieves that critical goal.

Company officials also predicted if the bankruptcy plan unravels, Purdue Pharma's assets could be tangled up for years in costly litigation.

But many state attorneys general described this plan as overly complicated, arguing it would "excessively entangle" governments and other creditors with the operations of a private firm.

Massachusetts Attorney General Healey said she preferred to see Purdue Pharma "wound down and its operations cease."

Critics also noted much of the settlement, which Purdue Pharma valued at roughly $10 billion, would come in the form of low-cost medications, instead of cash, which many communities would prefer.

"Right now, millions of people across the country are desperately suffering from opioid addiction. They need help and they need it now," read the joint statement issued by nearly half of the country's state attorneys general.

Experts interviewed by NPR said the plan, developed through months of negotiations, is likely to serve as the framework for the final dissolution of Purdue Pharma.

Details will almost certainly change before the reorganization wins final approval from Judge Robert Drain.

In an official disclosure statement filed with the court, meanwhile, Purdue Pharma acknowledged it would never be able to satisfy all the opioid claims it faces.

More than 614,000 separate claims were filed against the company as part of these bankruptcy proceedings.

This comes at a moment of reckoning for numerous American corporations that made, sold and distributed opioids even as overdose deaths surged.

AmerisourceBergen, Cardinal Health, Johnson & Johnson and McKesson have tentatively agreed to a settlement with local and state governments worth $26 billion.

The consulting giant McKinsey settled opioid claims last month, agreeing to pay $573 million for its role supporting Purdue Pharma's opioid sales.

Walmart, meanwhile, is entangled in a legal fight of its own with the Justice Department, which filed a suit against the retail giant in late December over alleged "unlawful" opioid sales practices at its pharmacies.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

NOEL KING, HOST:

Purdue Pharma, the company that makes OxyContin, filed its bankruptcy plan last night, and here is the plan. The company itself will be dissolved. A new organization will be created that will direct profits to help people hurt by the opioid epidemic. Now, two dozen states immediately rejected this plan. To help answer why, NPR's addiction correspondent Brian Mann is with us. Hi, Brian.

BRIAN MANN, BYLINE: Hey. Good morning, Noel.

KING: How did Purdue Pharma describe this plan working over time?

MANN: Yeah, so what the company's president, Steve Miller, says is that a new company is going to be created from the ashes of Purdue Pharma that's going to essentially exist to benefit the public. The Sacklers will have no role or ownership. And over time, this new firm will generate hundreds of millions of dollars, much of it from selling OxyContin, which they say they can do ethically and safely. They'll also produce medicines that will go to help people suffering from opioid addiction. And they say the total value of all that over time will be roughly $10 billion. Members of the Sackler family also issued a statement late last night saying this plan offers, and I'm quoting here, "an important step toward providing help to those who suffer from addiction."

KING: It was clearly thought through. Why did so many states come out and reject it offhand?

MANN: Yeah, there were months of negotiations leading up to this. And a big complaint from state attorneys general, most of them Democrats, Noel, is that Purdue Pharma and its owners, the Sacklers, they're going to only offer up about $500 million right at first. The rest of the cash payments, including $4.2 billion promised by the Sacklers themselves - that would be spread out slowly in installments that would be paid over most of the next decade. And that slow pace really angers critics like Maura Healey. She's attorney general in Massachusetts.

MAURA HEALEY: What the Sacklers are offering essentially is a way for the payments to be structured that makes it convenient for them. They get to keep their billions in bank accounts and make money and use the interest to pay, you know, the states out over time while their OxyContin fortune keeps growing.

MANN: And there's one other rub here for critics, and that's the fact that a lot of that $10 billion in value that Purdue Pharma talks about - it doesn't actually come in the form of cash, which communities really need to pay for addiction programs. Instead, the plan envisions providing low-cost addiction treatment drugs like buprenorphine and naloxone, which this new spinoff company they hope to create would make and sell at a discount.

KING: OK, so Attorney General Maura Healey is saying, basically, this family is going to stay rich.

MANN: Yeah.

KING: It seems worth asking, if the federal bankruptcy court approves this plan, what does actually happen to the Sackler family?

MANN: Yeah. So what's happened here is after launching OxyContin and claiming it was safer than opioids, the Sacklers and their company, they made more than $30 billion in revenue. And Purdue Pharma has since, of course, pleaded guilty twice to federal criminal charges for marketing those opioids illegally. Researchers say that drug, OxyContin, contributed to this devastating explosion of addiction.

Now the Sacklers have agreed to give up control of their company, but some critics point out that Purdue Pharma was already sinking under all these lawsuits, so it's not clear how big a financial sacrifice that is. I asked artist Nan Goldin about this. She is an opioid activist after becoming addicted to opioid and losing years to OxyContin.

NAN GOLDIN: To me, I guess that's the most disturbing, is the idea that they'll walk away with impunity. I mean, this is a case of the 1% twisting justice.

MANN: So there's a lot of anger, Noel, as this now goes to a bankruptcy court in New York for approval.

KING: NPR addiction correspondent Brian Mann. Thank you, Brian.

MANN: Thank you, Noel. Transcript provided by NPR, Copyright NPR.