New York (AFP) – Purdue Pharma has filed for bankruptcy in a settlement aimed at preventing further legal action over painkiller OxyContin, blamed for plunging millions into addiction and fueling the US opioid crisis.
The proposal would see the Sacklers, one of America’s richest families, cede control of the pharmaceutical giant, which is facing thousands of state and federal lawsuits, the company said Sunday.
If approved by a bankruptcy judge, Purdue says it expects the proposed restructuring to provide more than $10 billion to help tackle addictionand see the new company’s profits re-directed in ways that benefit the claimants and the American people.
Purdue Chairman Steve Miller said the settlement will “provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis.”
The company has filed for reorganization under Chapter 11 of the US Bankruptcy Code and, if the proposal receives court approval, it will then dissolve and transfer its assets to a trust managed by a new governing board.
The new board will be selected by the claimants, who include thousands of municipals governments and nearly two dozen states, and will be approved by the Bankruptcy Court.
This body will then oversee the operation of the new company, including the continued sale of OxyContin, so that its profits and assets can be used to benefit those impacted by opioid addiction.
Miller said in a statement that the restructuring will avoid “wasting hundreds of millions of dollars and years on protracted litigation.”
But around 26 states are expected to contest the filing and further pursue litigation against the Sackler family, according to Bloomberg.
“This is a fork in the road,” Miller told CNBC Monday, urging authorities to back the settlement.
– Sinking into addiction –
The cases against Purdue seek to address the costs of millions of Americans sinking into addiction after using potent opioid painkillers that doctors freely, and often criminally, prescribed over the past two decades.
Well over 400,000 people died of opioid overdoses in that period, while the pharmaceutical companies involved raked in billions of dollars in profits.