Purdue’s $4.5 Billion Opioid Deal Wins Key State Support
(Bloomberg) -- Purdue Pharma LP won the support of more than a dozen states that had opposed its $4.5 billion bankruptcy plan after members of the Sackler family that own it agreed to pay more money and relinquish control of two family foundations.
An agreement in principle was reached with New York and several other states that had been objecting to Purdue’s Chapter 11 reorganization. New York Attorney General Letitia James said the deal was “not perfect” but would quickly deliver aid to states if approved.
The pact brings Purdue and its owners, members of the billionaire Sackler family, much closer to shedding the crushing opioid lawsuits that drove the company into bankruptcy in 2019. Purdue’s advisers have been struggling to win the support of more than 20 dissenting state attorneys general since the case began.
“We’ll be able to more quickly invest these funds in prevention, education and treatment programs, and put an end to the delays and legal maneuvering that could possibly continue for years and across multiple continents,” James said in a statement.
Purdue’s bankruptcy is premised on a settlement of trillions of dollars of legal claims tied to its alleged role in the U.S. opioid epidemic. The proposed settlement, refined during the last two years, calls for handing over the company’s assets to trusts for the benefit of states, cities and counties suing to recoup billions spent dealing with the crisis. It also calls for selling those assets as early as 2024.
Members of the Sackler family have agreed to pay more than $4 billion of their own cash and exit the opioid business entirely as part of the deal. In exchange, the family members will be insulated from any current or future opioid lawsuits. Those so-called third party releases have been a flashpoint in the bankruptcy -- many states that now support the deal had argued they couldn’t be forced to relinquish legal claims against members of the Sackler family, who have not themselves filed for bankruptcy.
The additional support resulted from a last-ditch mediation ordered by Purdue’s bankruptcy judge, Robert Drain, between dissenting states, Sackler family members, Purdue itself and other stakeholders. Talks took place nearly 150 times in the last two months, including a marathon session on July 1 that ran from 8:30 a.m. until about midnight, court papers show.
As a result, members of the Sackler family agreed to pay an additional $50 million, relinquish control of family foundations worth at least $175 million, and waive any naming rights related to charitable contributions until the overall settlement is satisfied.
“This resolution to the mediation is an important step toward providing substantial resources for people and communities in need,” the Raymond and Mortimer Sackler families said in an emailed statement. “The Sackler family hopes these funds will help achieve that goal.”
A representative for Purdue didn’t immediately respond to a request for comment.
The other states that dropped their objection to the deal with Purdue and members of the Sackler family are Colorado, Hawaii, Idaho, Illinois, Iowa, Maine, Massachusetts, Minnesota, Nevada, New Jersey, North Carolina, Pennsylvania, Virginia, and Wisconsin, according to the filing.
James and Massachusetts Attorney General Maura Healey have been two of the most outspoken opponents of Purdue and its owners. In a press conference Thursday, James acknowledged that the public may wonder why the deal was accepted now, even though it’s not very different from previous offers the states have been rejecting as too low.
“We can’t let perfect be the enemy of the good; We can’t let perfect be the enemy of getting results,” James said. “This deal gets one of the nation’s most harmful drug dealers out of the opioid business.”
Healey said the most significant aspect of the deal is the requirement that the Sacklers and Purdue make public for the first time millions of documents stemming from the investigations and lawsuits over OxyContin. She said it would be an unprecedented release of documents, including those protected by so-called attorney-client privilege.
The Massachusetts attorney general didn’t mince words when talking about the Sacklers, calling them “villains for the history books” and saying “their time is over.”
Spokespeople for the Sackler family didn’t immediately respond when asked about Healey’s comments.
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