By Tom Hals and Mike Spector
(Reuters) – OxyContin maker Purdue Pharma LP and its controlling Sackler family have been negotiating with cities, counties and states on a proposed settlement worth an estimated $10 billion to resolve more than 2,600 lawsuits alleging they helped fuel the U.S. opioid crisis.
Those negotiations could be complicated by a Reuters report on Tuesday that Purdue is the unidentified company that was involved in an alleged kickback scheme aimed at improperly boosting prescriptions of opioid medications, though it was not charged with wrongdoing and has said it is cooperating with Justice Department investigations.
The following is the state of legal woes facing Purdue and the Sacklers:
Purdue filed for Chapter 11 bankruptcy protection in September in White Plains, New York, to put thousands of lawsuits on hold and give it time to broaden support for its wide-ranging settlement proposal.
Purdue Chairman Steve Miller said in a September interview that continued litigation would deplete the company’s assets. Purdue has projected spending hundreds of millions of dollars on legal and professional fees, much of it devoted to opioid litigation, according to bankruptcy court records.
The company is also working to resolve Justice Department probes.
Supporters of Purdue’s settlement plan when it filed for bankruptcy included 24 states and five U.S. territories, as well as lead lawyers for thousands of counties and other plaintiffs suing the company and, in some cases, the Sacklers.
Two dozen states led by Massachusetts, New York and Connecticut were opposed or uncommitted to the settlement plan, setting the stage for contentious legal battles over who bears responsibility for a public health crisis that has claimed the lives of some 400,000 people between 1999 and 2017, according to U.S. data.
Purdue and the Sacklers have denied the allegations in the lawsuits that allege they aggressively marketed addictive prescription painkillers while misleading doctors and patients about their abuse and overdose risks.
U.S. Bankruptcy Judge Robert Drain agreed to put the lawsuits by various states on hold at least until April to give negotiators more time to reach a settlement.
Purdue still faces U.S. Justice Department criminal and civil investigations over its handling of OxyContin. Any financial penalty emerging from those cases could eat into funds that might go to U.S. communities to help mitigate the crisis in a broad settlement.
Purdue has responded to subpoenas and other investigative demands from federal prosecutors and is engaged in discussions with U.S. officials to resolve the probes, the company has said in bankruptcy court papers.
Purdue also convinced Drain to temporarily halt lawsuits against the Sacklers. Many states have vowed to extract more money from the family, which has not budged from a proposal to pay $3 billion over seven years and at least an additional $1.5 billion through a sale of another business they own called Mundipharma.
The Sacklers, who also would cede control of Purdue under terms of the proposed settlement, could attempt to use bankruptcy proceedings to largely shield themselves from future legal exposure and the possible financial liabilities associated with it. Settlements approved in bankruptcy court often come with legal releases. Some states would be expected to fight that.
New York Attorney General Letitia James has subpoenaed Wall Street banks, Purdue corporate entities and family offices for records related to the Sacklers’ finances.
In October, states opposed to the settlement said court records showed Purdue steered up to $13 billion to the Sackler family over an unspecified time frame. A lawyer for the Sacklers said “many billions of dollars from that amount” went toward tax payments and investments in businesses that will soon be sold for the benefit of the states suing the company.
In September, James highlighted wire transfers made by former Purdue board member Mortimer D.A. Sackler, including some made through Swiss bank accounts. A Sackler representative said the decade-old transfers were legal and appropriate.
‘PHARMA CO. X’
Reuters on Tuesday identified Purdue as the drugmaker referred to by Vermont federal prosecutors as “Pharma Co. X” in court filings on Monday. The unnamed company is described as paying kickbacks to Practice Fusion, now a unit of Allscripts Healthcare Solutions Inc, to develop an alert used in physicians’ software with the goal of boosting its opioid product sales.
(Reporting by Tom Hals in Wilmington, Del., and Mike Spector in New York; Editing by Vanessa O’Connell and Bill Berkrot)