A deal worth as much as $12 billion that’s being negotiated between Purdue Pharma and its owners, and the state, local and tribal governments involved in national opioid litigation has the potential to shape efforts to reach a global settlement with other manufacturers, drug distributors and retailers in lawsuits consolidated before a federal judge in Cleveland. The lawsuits aim to find help for communities besieged by an opioid crisis that has killed 400,000 people across the U.S. since 2000.
Some questions and answers about Purdue Pharma, the negotiations and their importance to the multi-district litigation in Cleveland:
WHAT IS PURDUE PHARMA?
It’s the nickname for Purdue Pharmaceutical Co., a privately held company based in Stamford, Connecticut. Purdue employs thousands of people worldwide and controls numerous subsidiaries. Its principal owners are the ultra-wealthy Sackler family , whose members would relinquish control of the company under the deal, to which about half the states and lawyers representing thousands of local governments have agreed. The company would pay out the up to $12 billion over time.
WHY IS PURDUE BEING SUED?
Counties, cities and states allege the company manufactured and distributed prescription painkillers, including the time-release painkiller OxyContin, that it knew were addictive and potentially deadly. They argue those medicines were responsible for triggering the national opioid crisis that began taking hold in the early 2000s, and they want the company to compensate them for the costs of fighting the epidemic. Purdue vehemently denies their claims. It argues that the Federal Drug Administration approved its drugs for sale, that they represented only a sliver of the total sold and that many opiate-related deaths are from drugs like heroin and illegal fentanyl, over which it has no control.
IS THIS A SETTLEMENT?
Not yet. These are settlement terms that some have agreed to, but even then they need to be approved by various parties. Besides that, about half the attorneys general whose states have sued Purdue are not on board. Their opposition could jeopardize the success of the deal, as could a ruling by the judge. Purdue’s expected bankruptcy filing adds another layer of uncertainty about the ultimate outcome.
WHY IS A SETTLEMENT IMPORTANT?
Two reasons: money and image. Purdue pleaded guilty to federal charges in 2007 to misleading doctors, patients and regulators about the drug’s risks and paid a $634 million fine. Attorneys for local governments argue that since that time the Sacklers have removed billions of dollars from the company and shielded that wealth in an intricate web of offshore companies and trusts. Wednesday’s deal could include a prepackaged Purdue bankruptcy. Without such a settlement, the company could file a free-fall bankruptcy that would greatly reduce the amount of money available to compensate governments for the costs of the crisis. For the company, a settlement could also avoid the potential embarrassment of a trial-by-jury set to begin in Cleveland next month.
WHAT DOES PURDUE SAY ABOUT IT?
Purdue says the deal would “deliver billions of dollars and vital opioid overdose rescue medicines to communities across the country impacted by the opioid crisis.”
WHAT DO STATES THINK?
Roughly half the states that have sued Purdue in state court have not agreed to settle. Several state attorneys general have vowed to continue their legal battles against the company. Their arguments include wanting to hold the Sacklers publicly accountable and believing a jury verdict could bring an even bigger payout. New York, Massachusetts, Connecticut, Vermont, Idaho and Maine were among states saying they aren’t part of the agreement. Pennsylvania’s attorney general, another settlement opponent, sued some members of the Sackler family Thursday over their role in the opioid crisis.
WHY DO MANY STATES SAY THE DEAL’S VALUE IS MUCH LESS?
First, a major component of up to $4.5 billion depends on the Sackler family selling its international pharmaceutical company Mundipharma. If the sale price is too low, up to one-third of that amount might not be delivered. The deal also includes projections of future product sales from Purdue, including of overdose antidotes that are still in development; critics say the projections may not be met.
WHAT IS MUNDIPHARMA?
It’s a cluster of companies owned by trusts that benefit the Sackler family. The companies operate in more than 120 countries, and an emerging markets group has expanded into Asia, Africa and Latin America, selling a number of drugs, including opioids. The Associated Press reported in May that high-ranking executives from the Italian arm of the company were caught up in a sprawling corruption probe involving a prominent pain doctor. Mundipharma’s activities have also come under scrutiny in Australia . It has expanded rapidly into the developing world, with China expected to become its second-largest market after the U.S.
WHY IS A PURDUE SETTLEMENT CRUCIAL TO THE LAWSUIT IN CLEVELAND?
It’s seen as a potential template for settling with the remaining other manufacturers, drug distributors and retailers in talks being urged on by U.S. District Judge Dan Polster, who has said his primary interest in consolidating the thousands of lawsuits is getting help to those who need it as quickly as possible. The first federal trial, involving claims from Ohio’s Cuyahoga and Summit counties, is scheduled to begin Oct. 21.
WHAT IS THE OVERALL FINANCIAL TOLL OF THE OPIOID CRISIS?
As of 2015, costs totaled over $500 billion. That’s according to a 2017 report of the White House Council of Economic Advisers. The total includes lost productivity, as well as costs borne by taxpayers, such as ambulance runs, jail treatment costs, and the costs of caring for children whose parents have died from opioid overdoses.
WHY SO MANY DEATHS?
Federal data released in July showed staggering numbers of pain pills were prescribed across the U.S. at the height of the crisis. In one rural Appalachian county in Ohio, the previously unavailable figures showed an average yearly total of 107 opioid pills per resident were distributed over a seven-year period. The National Institute on Drug Abuse has said prescription painkillers act on the brain in the same way as heroin or morphine. People with legal prescriptions became addicted or their unattended or discarded pill bottles were pilfered for recreational use. Easy access meant more addicted people, who often later turned to heroin or illegal fentanyl. The federal and state governments have since cracked down by shutting down pill mills and closely tracking prescriptions and prescribers.
Associated Press writers Geoff Mulvihill in New Jersey and Claire Galofaro in Louisville, Kentucky, contributed to this report.