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Purdue’s Handover of Opioid Maker Should Be Nixed, State AGs Say

Purdue’s Handover of Opioid Maker Should Be Nixed, State AGs Say

A potential settlement of a U.S. probe into Purdue Pharma LP’s marketing of its opioid painkiller would improperly force local governments to keep selling the company’s controversial OxyContin drug, state attorneys general said in a letter.

Reports that the U.S. Justice Department may require members of the billionaire Sackler family to hand Purdue over to states and municipalities, which would operate the business as a “public benefit company,” drew the challenge from attorneys general for 24 states and the District of Columbia. The handover would come as part of the drugmaker’s bankruptcy case.

“A business that killed thousands of Americans should not be associated with government,” the attorneys general of California, New York, Idaho and other states said in a letter to U.S. Attorney General William Barr Wednesday. “Instead, the business should be sold to private owners.”

As part of Purdue’s Chapter 11 filing last year, executives proposed turning over the company to a trust controlled by states and local governments suing to recoup billions of dollars spent on the fallout fromthe U.S.’s opioid epidemic. The plan also calls for the Sacklers to kick in $3 billion of their own funds.

But about half of the state attorneys general urged Barr not to make the handover part of a Justice Department deal.

Spokespeople for Purdue and the Justice Department declined to comment Wednesday. Spokespeople for members of the Sackler family didn’t immediately return emails.

Another Obstacle

The letter, which was first reported by Reuters, could be another obstacle to Purdue’s efforts to put behind it claims it sparked the public-health crisis over opioids with its illegally marketing of the OxyContin painkiller. States, cities and counties contend the company misled doctors and users about the pills’ risks of addictions to boost profits.

The attorneys general noted that Insys Therapeutics Inc., an opioid maker which sought Chapter 11 protection last year, had its assets sold through a bankruptcy auction to raise money to compensate victims.

“That is a normal, lawful result in a bankruptcy, and the DOJ should encourage Purdue to follow that same path,” the AGs wrote.

Allowing Purdue to “cloak the OxyContin business in public ownership” would create conflicts for governments charged with enforcing laws governing drug sales, they added.

The bankruptcy case is Purdue Pharma LP, 19-23649, U.S. Bankruptcy Court, Southern District of New York (White Plains).

©2020 Bloomberg L.P.