By GEOFF MULVIHILL, Associated Press
A judge said Wednesday he would approve a plan that would lock members of the Sackler family, owners of OxyContin maker Purdue Pharma, into pumping at least $1.2 billion more into a nationwide settlement that, if ultimately confirmed, would turn the company into a public trust.
US Bankruptcy Judge Robert Drain’s initial approval set the stage for an emotional virtual hearing on Thursday that will allow people recovering from addiction and those who have lost loved ones to the health crisis. speak directly to some of the Sacklers.
Wednesday’s hearing with Drain, whose courtroom is in White Plains, New York, was more conventional. But in a topsy-turvy legal saga, even the routine case had a twist.
States that were among the first to support earlier versions of the Purdue settlement objected to a key provision. Joined by some local governments, unions and individuals, they argued it was unfair that states that resisted and then negotiated a bigger payout from the Sacklers were given an inordinate share of the extra money to be used to fight the coronavirus. ‘epidemic.
John Guard, Florida’s assistant deputy attorney general, told Drain during the hearing, conducted via videoconference on Wednesday, that authorizing additional funds for recalcitrant states could complicate negotiations for future national opioid settlements involving other companies.
Aaron Cahn, an attorney representing West Virginia, called the additional $277 million for the subset of states “a money grab.”
Still, Drain, which approved an earlier settlement last year, agreed to the new settlement terms, pointing out that all states would receive more money to address the opioid crisis under the deal than they wouldn’t have before. The original deal was later thrown out by an appeals court judge largely due to opposition from attorneys general in eight states and the District of Columbia.
After the initial deal was canceled, the Stamford, Connecticut-based drugmaker went through two months of mediation to reach a new one, announced last week.
Even after Drain’s initial approval on Wednesday, several legal hurdles remain before the company’s entire bankruptcy reorganization plan is finalized, including the decision of the 2nd U.S. Circuit Court of Appeals that Purdue’s overall reorganization plan is even legal. If that happens, the company’s overall reorganization plan will still need to be confirmed by a bankruptcy court.
Like the original settlement, the new one would require members of the Sackler family who own Purdue to relinquish their ownership. It would be spun off into a new company known as Knoa Pharma, the profits of which would be used to tackle an opioid crisis linked to the deaths of more than 500,000 Americans over the past two decades.
Much like the original deal, the new one asks the Sacklers to contribute cash to the fight against the outbreak in exchange for protection from civil lawsuits. The main difference is that Sackler’s contribution would now be $5.5 billion to $6 billion in cash, rather than just over $4.3 billion and $175 million in charitable assets. The exact amount would depend on what they bring in selling their international pharmaceutical companies.
In total, the settlement could be worth $10 billion or more over time.
Most of the money is to be used by state and local governments to counter the crisis, although $750 million is to be distributed to victims of the crisis and their survivors. More than $100 million is set aside for medical follow-up and payments for children born in opioid withdrawal, and Native American tribes expect more than $150 million.
Proponents say the cash is key to stemming the crisis. Overdose deaths have increased in the United States, exacerbated by the isolation of the COVID-19 pandemic and the widespread availability of illicit versions of the synthetic opioid fentanyl.
While members of the Sackler family would be immune from civil suits, they would not have immunity from criminal charges. There is no indication they are in the works, but seven Democratic US senators last month asked the US Department of Justice to consider charges.
Also under the new plan, a longer list of company documents would now be made public. The family members also agreed not to resist if the educational and cultural institutions to which they donated wanted to remove their name.
Another part of the new deal recommended by the mediator is Thursday’s release of statements from people whose lives have been devastated by the crisis, either losing loved ones or years of their own lives to addiction. The names of the speakers, who will represent millions of people affected by the crisis, have not been announced.
This will be the first opportunity for them to speak directly to members of the Sackler family in a public place. It’s unclear which of the Sacklers will be in attendance, but there must be at least two – and they mustn’t talk.
“No one can underestimate how historic tomorrow’s session will be,” Arik Preis, a lawyer representing Purdue creditors, told Drain on Wednesday.
Purdue and the Sacklers have long been considered the main villains of the opioid crisis. The company has twice pleaded guilty to criminal charges for how it promoted and sold its signature painkiller OxyContin, an innovative extended-release opioid painkiller first marketed in 1996.
People found they could manipulate the drug to get high doses of opioids all at once – which the company eventually took steps to make harder.
At the same time, the company was working to persuade doctors to prescribe opioids for more types of pain, including those for which strong drugs were previously considered off limits.
Other drugmakers, distributors, marketers and pharmacies involved in the opioid industry have faced similar lawsuits from state and local governments, Native American tribes and other entities.
Last month, drugmaker Johnson & Johnson and wholesalers AmerisourceBergen, Cardinal Health and McKesson announced they were finalizing settlements worth a combined $26 billion. As in the proposed Purdue settlement, most of that money is to be used to fight the crisis.
This story has been updated to correct the spelling of Arik Preis’ last name.
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