Purdue Pharma, manufacturer of blockbuster painkiller OxyContin, has reached a tentative settlement with 22 state attorneys general and more than 2,000 cities and counties that sued the company over its role in the opioid crisis of the past two decades, people close to the deal said Wednesday.
The executive committee of lawyers representing cities, counties and other groups in a consolidated federal lawsuit against Purdue and other drug companies is recommending the deal be accepted. But some attorneys general, who sued Purdue and his controlling family, the Sacklers, in state courts are still opposed to a deal.
Under terms of a plan that has been under discussion for months, the Sacklers would relinquish control of their company , Stamford, Conn.-based Purdue Pharma. Purdue would declare bankruptcy and be resurrected as a trust whose main purpose would be to fight the opioid epidemic.
If the deal becomes final, it would be the first comprehensive settlement in the broad legal effort to hold drug companies accountable for their role in the opioid epidemic. To date, Purdue has also settled with one state, Oklahoma, for $ 270 million, and won a victory when a North Dakota judge threw out the state case against the company.
Oklahoma also won a $ 572 million verdict against Johnson & Johnson and settled with Teva Pharmaceuticals, a generic drugmaker, for $ 85 million.
The deal also would mark the end of Purdue, the company widely blamed for its leading role in driving the prescription opioid epidemic as it spread in the late 1
The deal revealed Wednesday was said to be worth $ 10 billion to $ 12 billion, including a $ 3 billion payment from the Sacklers. It would also include at least $ 1.5 billion from the sale of the family's international drug conglomerate, Mundipharma, according to documents and people close to the talks.
The federal plaintiffs and many attorneys general apparently felt the proposal was as good as they could goat. The attorneys for the cities and counties agreed to recommend that they "move forward in support of the current proposal, subject to satisfactory documentation of the essential terms and final documents," said Paul J. Hanly, Jr., Paul T. Farrell Jr. and Joseph F. Rice, three of the leaders of that group. "We feel good progress has and will continue to be made."
But some states objected that the Sacklers were not contributing enough cash from their personal fortunes, built almost entirely on the sale of OxyContin and taken out of the company in recent years, according to court papers filed by some states.
Connecticut Attorney General William Tong said he remained opposed to any deal.
"I cannot speak to other states or divulge confidential negotiations, but Connecticut has not agreed to any settlement, ”he said in a statement. "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."
Another major concern is that the Purdue offer relies in significant measure on the assumed value of its assets and the sale of a subsidiary. States opposing the deal fear these values may be overestimated, and some settlement money may never materialize.
It was not clear Wednesday whether the Sacklers had agreed to increase their personal contribution to the settlement or whether other terms had changed. ] Still pending is the mammoth federal case in Cleveland against other drug companies, known as a "multidistrict litigation" or MDL, where the lawsuits from cities, counties, Indian tribes, hospitals and other groups have been consolidated. Judge Dan Aaron Polster presided over that litigation, urging the parties to settle before trial so that money can be funneled quickly into drug treatment, emergency care, law enforcement and other local needs.
The federal trial is scheduled to begin in mid -October with two test cases, Cuyahoga and Summit counties, as the first plaintiffs to make their case. Meanwhile, more than 40 lawsuits against drug companies are wending their way through state courts. A growing number of states have also sued the Sackler family personally.
Although the state cases are not in Polster's jurisdiction, he has urged their attorney general to work with other plaintiffs to make a deal with the two dozen drug companies that have been
"There's an incredible incentive to make a deal before bankruptcy, because that would make the process much less expensive for the states and cities," said Adam Zimmerman, a professor at Loyola Law School in Los Angeles. If Purdue sought bankruptcy protection without a settlement, “we might see any kind of arrangement tied up in bankruptcy court for a very long time. It could be years, ”he added.
Ohio Attorney General Dave Yost, who wants the states to control the legal effort against the pharmaceutical industry, has asked a federal appeals court to delay or halt the federal trial, claiming the smaller jurisdictions are usurping the authority of states. Another 13 states and the District of Columbia have filed briefs in support of that effort, according to Yost's office.
Yost criticized using two Ohio counties as "bellwether" cases, saying they represent only a tiny portion of the state's 88 counties.
"The rest of Ohio – and Ohio itself – is being left behind in the MDL lawsuit in Cleveland," he said late last month. "The hardest-hit counties of Appalachia and the vast majority of the state are being asked to take a number and wait – and that wait could delay or prevent justice."
Zimmerman characterized the conflict as a struggle for control of the legal
"I think the main motivation [for Yost] has to do with who holds the balance of power with respect to negotiating a global settlement," he said. "This is kind of a Hail Mary."
The prescription drug epidemic has taken more than 200,000 lives via overdoses since 1999, according to federal statistics. Another 200,000 deaths are blamed on heroin and illegal fentanyl smuggled overdoses in the country from China and Mexico.
The trials target drug manufacturers, distributors and retailers, and there are divisions among the defendants as well as among the states. Manufacturers, for example, have raised different legal arguments than distributors.