US-based drugmaker Purdue Pharma has officially filed for bankruptcy. The company’s painkiller OxyContin is facing several lawsuits because of its involvement in a much-hyped opioid crisis.
The move brings some relief
Purdue Pharma has over 2,000 pending lawsuits from almost all states in the US related to its prescription painkiller OxyContin. The drug is frequently associated with the opioid crisis, bringing a legal nightmare for the Sackler family-owned company.
The company is said to have triggered a public health crisis in the country. It downplayed the risks associated with its medication, especially that of addition. It led to as many as 400,000 deaths between 1999 and 2017. With its bankruptcy filing, the company has also announced a $10 billion plan that will settle the lawsuits related to its painkiller.
The company filed its Chapter 11 bankruptcy in White Plains, New York on Sunday. Its settlement proposal is being backed by several thousand local governments as well as half of the states suing the company. All of Purdue’s assets owned by the Sackler family will now be given to a trust. The company will come back with a reformed structure, and its new board will be selected by the claimants, on condition of approval by the bankruptcy court. Whatever revenue the firm generates will be channeled towards drug treatments.
Is the company doing enough?
Initially, the settlement amount was thought to be $12 billion. However, it has now been lowered to $10 billion. According to the filing, the company’s assets are worth $10 billion, and it owes loans worth $1 billion. It is up to the bankruptcy court now to decide how this settlement money will be distributed between different states, cities, and counties that have sued the company.
The Sackler family will make a $3 billion contribution to the settlement fund. They will be using funds from Mundipharma, the UK-based subsidiary of Purdue to pay this amount.
The company was expected to file for bankruptcy since its legal hassles could have been too harsh to handle. According to the company’s chairman of the board Steve Miller,
“This settlement framework avoids wasting hundreds of millions of dollars and years of protracted litigation.”
He said that this settlement would instead channelize the company’s resources worth billions to the claimants who suffered from the opioid crisis across the country.
About two dozen states have either opposed the settlement procedure or didn’t explicitly support it. Some of them like Connecticut, New York and Massachusetts want the Sackler family to contribute a bigger chunk of their resources to the settlement.