Coverage: Purdue Pharma reaches $270M opioid settlement

Purdue Pharma LP and its owners, the Sackler family, agreed to pay $270 million to resolve a lawsuit filed by Oklahoma’s attorney general, the majority of which will fund a national opioid addiction center, its first attempt at settling one of the lawsuits around its OxyContin drug.

Sara Randazzo of The Wall Street Journal had the news:

While the deal only directly affects one of the more than 35 states and hundreds of municipalities pressing claims against Purdue, it allows the company to avoid a rapidly approaching May trial date, the first scheduled in the opioid cases. The televised trial could have exposed the company to potentially damaging testimony and an unpredictable jury verdict.

Purdue, based in Stamford, Conn., can now focus on resolving the rest of the lawsuits filed by cities, counties and states, possibly on a global basis. The municipalities claim aggressive marketing of prescription painkillers by Purdue and other pharmaceutical companies helped trigger widespread drug addiction that has saddled the communities with significant financial burdens.

The Oklahoma deal could speed up those settlement talks. “It’s got to set off a feeding frenzy,” said Elizabeth Burch, a law professor at the University of Georgia. “There’s blood in the water now.”

Jen Hoffman of the New York Times reported that the company could file for bankruptcy court protection:

As headlines mounted, the company began exploring the possibility of filing for Chapter 11 bankruptcy restructuring, a step that could temporarily insulate it from big judgments. While it has yet to decide, the possibility of bankruptcy exerted powerful leverage at the bargaining table in Oklahoma, people familiar with the negotiations said.

Once a company files for Chapter 11 protection, only secured creditors, such as banks, can expect to be repaid in full. While an Oklahoma jury could potentially have hit Purdue with a stratospheric civil judgment, the likelihood of the state collecting even a significant portion from bankruptcy court — never mind how much appellate courts would reduce the award — would be remote and at some point far in the future. Legal experts said the settlement amounts to a bird-in-the-hand decision.

Legal experts said similar calculations could come into play in the 35 other state cases still pending against Purdue, as well as in the federal litigation, which combines 1600 suits brought by cities, counties, Native American tribes and others.

“There is blood in the water now, and with the threat of bankruptcy, the concern is that counties and states may settle on the cheap early to avoid getting little to nothing later on, “ said Elizabeth Chamblee Burch, a law professor at the University of Georgia.

Laura Santhanam of PBS reported that other settlements could follow:

This lawsuit “is just the beginning,” said Kathleen Sebelius, who served as health secretary during the Obama administration and now co-chairs of the Aspen Health Strategy Group, which studied the opioid crisis so far and how to reduce overdoses and deaths. She said she “hasn’t seen anything quite like this since the tobacco litigation” of the 1990s.

With Oklahoma’s Purdue settlement in hand, Sebelius said other state attorneys general have a template to follow. They also have an empathetic public.