Painkiller OxyContin manufacturer files for bankruptcy
The move is aimed in part to resolve more than 2,600 lawsuits.
The company that made billions selling the prescription painkiller OxyContin has filed for bankruptcy just days after reaching a tentative settlement with many of the state and local governments suing it over the toll of opioids.
The filing by Purdue Pharma in White Plains, New York, was anticipated before and after the tentative deal, which could be worth up to 12 billion dollars (£9.63 billion), was struck.
This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation Chairman of Purdue's board of directors
“This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation,” Steve Miller, chairman of Purdue’s board of directors, said in a statement.
“And instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis.
“We will continue to work with state attorneys general and other plaintiff representatives to finalise and implement this agreement as quickly as possible.”
But legal battles still lie ahead for Stamford, Connecticut-based Purdue, which is spending millions on legal costs as it defends itself in lawsuits from 2,600 government and other entities.
About half the states have not signed on to the proposal.
And several of them plan to object to the settlement in bankruptcy court and to continue litigation in other courts against members of the Sackler family, which owns the company.
The family agreed to pay at least three billion dollars (£2.41 billion) in the settlement plus contribute the company itself, which is to be reformed with its future profits going to the company’s creditors.
In a statement, the families of late company owners Mortimer and Raymond Sackler said they have “deep compassion for the victims of the opioid crisis” and believe the settlement framework “is a historic step toward providing critical resources that address a tragic public health situation”.
Objections came over the amount of the deal, which some officials say will not reach close to the 12 billion dollar mark, and because it means the company will not be found liable by a jury or judge.
Purdue chairman Mr Miller said the company has not admitted wrongdoing and does not intend to.
“The alternative is to not settle but instead to resume the litigation,” he said on a conference call with reporters.
“The resumption of litigation would rapidly diminish all the resources of the company and would be lose-lose-lose all the way around. Whatever people might wish for is not on the table now.”
The Sackler family members said they are still trying to get more states to sign on.
“We are hopeful that in time, those parties who are not yet supportive will ultimately shift their focus to the critical resources that the settlement provides to people and problems that need them,” they said.
Since OxyContin, a time-released opioid, was introduced in 1996, addiction and overdoses have surged.
In both 2017 and 2018, opioids were involved in more than 47,000 deaths, according to the US Centres for Disease Control and Prevention.