OxyContin Maker Purdue Pharma Considering Bankruptcy Amid Lawsuits

Alicia Farmer
March 7, 2019

If Purdue Pharma files for Chapter 11 protection, the lawsuits brought by roughly 1,600 cities, counties and states would be halted and the drug company could negotiate with plaintiffs under a USA bankruptcy judge's supervision, reported Reuters.

The move would stay those suits - which accuse Purdue Pharma of misleading doctors and patients about the addiction risk posed by OxyContin and other prescription opioids - and let the Stamford, Connecticut-based drugmaker negotiate a settlement similar to the $246 billion deal struck by the tobacco industry in 1998.

Purdue Pharma says a lawsuit filed against the company by the MA attorney general amounts to "oversimplified scapegoating" that is not supported by the law. The companies are accused of misrepresentation, fraud and violating the RICO and Louisiana Products Liability acts to dump millions of dollars of prescription opioids into the community.

It still remains unknown if Purdue Pharma will apply for Chapter 11 bankruptcy, but with thousands of lawsuits headed its way, it may be the smartest thing to do.

Purdue tapped law firm Davis Polk & Wardwell for restructuring advice previous year. Along with other drug manufacturers, Purdue is being blamed to have contributed to the deadly opioid crisis that is sweeping the country.

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Jillian Fennimore, a spokeswoman for Democratic Attorney General Maura Healey, said Monday the office would fight the attempt to dismiss the case but did not immediately comment on specific arguments made in the company's filing. The Sacklers are now discussing creating a nonprofit backed by family financial contributions to combat addiction and drug abuse, a person familiar with their deliberations said. "Purdue is still here - ready, willing and eager to prove in this Court that the State's claims are baseless", the company said in court papers. The company reportedly earned only US$1.74 billion in OxyContin sales in 2017, which was a drastic drop from the US$2.6 billion it earned in 2016.

In July, Purdue appointed a new board chairman, Steve Miller, a restructuring veteran who previously held leadership positions at troubled companies including auto-parts giant Delphi and the once-teetering insurer American International Group Inc.

The company is now scheduled to face a trial in May, which was brought forward by Oklahoma's attorney general. In addition to lawsuits consolidated in an OH federal court, more than 300 cases are pending in state courts, and dozens of state attorneys general have sued manufacturers, including Purdue.

In 2007, the company and three executives pleaded guilty in to federal charges of misbranding OxyContin and agreed to pay $634.5M in penalties.

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