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Purdue, the Sacklers and the communities involved face high-stakes negotiations and Purdue has been preparing for filing for bankruptcy protection in case it cannot reach an agreement.
OxyContin maker Purdue Pharma LP and its owners, the Sackler family, are in discussion to settle more than 2,000 opioid lawsuits against the company for US$10 billion to US$12 billion, two people familiar with the matter said on Tuesday.
The lawsuits have accused the United States-based pharmaceutical company of aggressively marketing prescription opioids while misleading prescribers and consumers about risks from their prolonged use. Purdue and the Sacklers have denied the allegations.
The firm said it was actively working with state attorneys general and other plaintiffs to reach a resolution, without specifying a settlement amount. There is currently no agreement and the settlement discussions could collapse, the sources said.
Representatives for Purdue and the Sackler family held discussions with cities, counties, and states on the contours of the potential multibillion-dollar settlement last week in Cleveland, a person familiar with the matter said as firstly reported by NBC.
During the meeting, Purdue outlined a plan to file for Chapter 11 bankruptcy protection as a mechanism for implementing the settlement, which the company hopes will address the lawsuits. The Sacklers would cede control of Purdue under the settlement terms discussed last week.
Going into Chapter 11 would give Purdue the exclusive right for several months to propose a reorganization plan, which if approved by a U.S. bankruptcy judge could be forced on any local governments who decide to hold out.
Some state attorneys general have said they will resist any attempt by Purdue to use bankruptcy.
All the parties face a Friday deadline to update a federal judge on the status of the negotiations.
“The opioid epidemic has ravaged American communities for over a decade, while a single-family has made billions profiting from death and destruction,” New York Attorney General Letitia James said in a statement. “We won’t let up until we have delivered justice.”
Paul Hanly, a lead attorney for the plaintiffs, in an e-mail, replied only “Made up. Ridiculous,” when asked to confirm NBC’s report. Asked to clarify after Reuters confirmed the report, he did not respond.
Representatives for the Sackler family declined to comment and a representative for the state attorneys general did not immediately respond to a request for comment.
The plan under discussion envisions Purdue restructuring into a for-profit “public benefit trust” that would last for at least a decade, one of the people familiar with the matter explained.
Purdue would contribute between US$7 billion and US$8 billion to the trust, with some of the money coming from the sales of its drugs, including those that combat opioid overdoses. Three experts would be approved by a bankruptcy judge as trustees who would select board members to run the trust.
The Sackler family, which has amassed an estimated US$13 billion fortune over the years, is also weighing a possible sale of another pharmaceutical firm it owns called Mundipharma, with some of the proceeds potentially going toward the settlement under discussion.
David Sackler, one of a handful of family members who previously sat on Purdue’s board, was present for the discussions in the meeting last week, which included at least 10 state attorney generals.
Purdue is set on Oct. 21 to go on trial for the first time over about 2,000 federal lawsuits, largely by local governments, accusing several drug makers and distributors of fueling the epidemic.
Other companies set to face trial include drugmakers Teva Pharmaceutical Industries Ltd and Johnson & Johnson and drug distributors McKesson Corp, Cardinal Health Inc, and AmerisourceBergen Corp.
U.S. District Judge Dan Polster in Cleveland, Ohio, who oversees the lawsuits, has been pushing for settlements that could “do something meaningful to abate this crisis.”
A lawyer representing the Sackler family said in a statement that the New York attorney general’s “current claims are without merit and the subpoenas are improper.”