Purdue Opioid Deal Pits State Against State on Epidemic Cost

By Erik Larson and Katherine Doherty | September 13, 2019

Purdue Pharma LP, maker of the highly addictive Oxycontin painkiller, is pitting state against state with its offer of about $12 billion to resolve the company’s liability for the massive public-health crisis tied to opioid abuse that’s swept the U.S.

Almost half of the states that are part of the consolidated litigation against Purdue and its billionaire owners, the Sackler family, say the proposal is not nearly enough to make up for an epidemic that government data shows has killed more than 400,000 people — with a rate of 130 fatal overdoses a day in 2017.

But on Wednesday, 23 states and three territories told a judge they’d support the plan, which calls for the Sacklers to file for bankruptcy and hand Purdue over to a trust controlled by the states, people familiar with the negotiations said. The family would guarantee to pay $3 billion, with most of that generated by the sale of a U.K. unit, the people said.

Texas, Ohio, Florida and Tennessee — all Republican-led states — are among those leading the charge to accept the deal, according to another person familiar with the matter. Their split with states that want more from Purdue could lead to an eventual fight in bankrupcty court and disrupt consolidated settlement talks being overseen by a federal judge in Cleveland.

If approved by a judge, the plan would address the devastating effects of the opioid epidemic “and will result in the Sackler family divesting themselves of their business interests in the pharmaceutical industry forever,” Tennessee Attorney General Herbert Slatery said Wednesday in a statement.

“This is the most significant step to date in a multiyear investigation and negotiation to obtain meaningful relief to address the opioid addiction crisis,” Slatery said. He said a bipartisan group of 27 attorneys general had signed on.

Dave O’Neil, spokesman for Ohio Attorney General Dave Yost, said the proposed settlement “provides the greatest certainty for all Ohioans to receive relief as quickly as possible in light of rumored bankruptcy.”

Several Democratic state AGs came out forcefully against the proposal minutes after news broke that the Sacklers’ plan was gaining traction.

“A large number of states are committed to the notion that the Sacklers need to guarantee more money,” North Carolina Attorney General Josh Stein said in a statement. “We believe they created a mess and must help to clean it up.”

Pennsylvania Attorney General Josh Shapiro said in a statement that the proposal is “a slap in the face” to victims.

“A deal that doesn’t account for the depth of pain and destruction caused by Purdue and the Sacklers is an insult, plain and simple,” New York Attorney General Letitia James said in a statement. “As attorney general, I will continue to seek justice for victims and fight to hold bad actors accountable, no matter how powerful they may be.”

Considering that company’s owners earned billions by encouraging the overprescribing of its opioids, the proposed deal doesn’t go far enough, Delaware Attorney General Kathy Jennings said.

“Irrespective of Purdue’s actions or evasions, we will continue to pursue justice on behalf of those harmed by the Sacklers’ greed, callousness, and fraud,” Jennings said.

That resistance could signal trouble for pharmaceutical companies hoping for similar deals to limit their opioid liability and to avoid more costly litigation, according to David Amsellem, an industry analyst at Piper Jaffray & Co.

“The debate among AGs suggests there’s an appetite to punish not just Purdue, but the Sackler family,” as a deterent, Amsellem said. “That’s ominous for other opioid manufacturers.”

For several states, the deal is worth doing.

“Sadly, this agreement cannot bring back those who have lost their lives to opioid abuse, but it will help Florida gain access to more life-saving resources and bolster our efforts to end this deadly epidemic,” the state’s attorney general, Ashley Moody, said in a statement. “We will continue to aggressively pursue our state case against all remaining defendants.”

“Texas is committed to holding Purdue Pharma accountable for fueling the opioid epidemic through deceptive marketing, and we are proud to participate in the nation’s most significant step in addressing this deadly crisis,” Marc Rylander, a spokesman for the state’s attorney general, said in a statement.

William Tong, the attorney general of Connecticut, said in a statement on Wednesday that his state hasn’t signed on to any deal and that he’s prepared to pursue claims against Purdue even in bankruptcy court, if it comes to that.

“Our position remains firm and unchanged,” Tong said. “The scope and scale of the pain, death and destruction that Purdue and the Sacklers have caused far exceeds anything that has been offered thus far.”

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