Why OxyContin maker Purdue Pharma is still in bankruptcy: ‘There’s been risk in this process all along’ – CT Insider

STAMFORD Three years ago this week, OxyContin maker Purdue Pharma filed for bankruptcy. Around this time a year ago, it had just secured a bankruptcy judges approval for a settlement plan. But today, its bankruptcy remains unfinished.

Given the complexity and contentiousness of Stamford-based Purdues bankruptcy which is attempting to settle several thousand lawsuits filed against the company related to its alleged role in the nationalopioid crisis a protracted process was inevitable. Even after resolving longstanding disputes with states such as Connecticut, uncertainty persists about when the bankruptcy will conclude, further heightening concerns about when settlement funds will finallybe disbursed to help tackle an unrelenting epidemic.

There have been risks to a bankruptcy process with so many creditors and claimants and states, Connecticut Attorney General William Tong said in an interview. I hear from opioid victims and survivors, and theyre concerned that there continues to be risk in this process. Theres been risk in this process all along.

In response to an inquiry from Hearst Connecticut Media, Purdue reiterated its intent to enact its settlement plan.

Weve made great progress during the bankruptcy. Today, nearly every creditor agrees that the plan is the fairest and best way to deliver billions of dollars of value for victim compensation, opioid crisis abatement and overdose-rescue medicines, the company said in a statement. We are optimistic that the courts will ultimately uphold the confirmation order.

The company did not make anyone available for an interview for this article.

By filing for Chapter 11 protection, Purdue consolidated thousands of lawsuits filed in recent years by local and state governments across the country, including Connecticut, that allege the company fueled the opioid crisis with deceptive marketing of OxyContin, a prescription opioid that is the company's top-selling drug. In addition, more than 135,000 claims on personal-injury forms have been filed against the company through the bankruptcy.

After about two years of bankruptcy proceedings, Purdues settlement plan last year garnered resounding support from voting creditors and then gained the backing of the presiding bankruptcy judge. But when Judge Robert Drain approved the settlement framework in September 2021, Connecticut and several other non-consenting states appealed the decision because they said the proposed terms including a payout of about $4.3 billion by the Sackler family members who own the company were unacceptable.

Because of the complex nature of the process, it takes a very long time especially with one thats so controversial and highly public such as this one, Robert Bird, a professor of business law at the University of Connecticut, said in an interview. This creates an environment where many disputed issues have to get resolved by the courts before money finally gets paid.

Tong and the other "non-consenting" states attorneys general were particularly critical of Drains approval of the plans stipulation for non-debtor releases that would have forced them to release their claims against the Sacklers. The Sacklers, who did not personally file for bankruptcy, have denied allegations from Tong and other attorneys general that they have misused the bankruptcy process to shield themselves from liability.

Last March, Connecticut and the other non-consenting states finally reached a settlement with Purdue and the Sacklers. Among the key terms, the Sacklers agreed to raise their contribution to the settlement to up to $6 billion.

I will never be happy with this process, Tong said. I did what I had to do in order to hold the Sacklers accountable and deliver as much value as I could for victims and for treatment, prevention and addiction science. But dont think for a second that Im pleased.

Even though no states are objecting anymore to a settlement, the plan cannot be implemented without additional court approval. Drains ruling was overturned last December by district judge Colleen McMahon. She agreed with the non-consenting states that the bankruptcy court lacked the authority to compel states to release their claims against the Sacklers.

Purdue appealed McMahons decision, but it still awaits a ruling on its appeal from the Second Circuit Court of Appeals. If the Second Circuit finds that the bankruptcy court properly confirmed the settlement plan, Purdue officials anticipate it would take at least two to three months before the company emerges from bankruptcy.

While the delay due to the District Court decision was unfortunate, the fact that our creditors came together to form the value-maximizing plan that was confirmed by the bankruptcy court is remarkable and put our timing far ahead of where we would otherwise be, Purdue said in its statement. We believe so strongly in the vision for Knoa Pharma, that the wait will have been worth it when Knoa Pharma is able to flow billions of dollars in value to opioid abatement efforts where funds are urgently needed. (Knoa Pharma is the planned successor company to Purdue, an enterprise that would develop and distribute millions of doses of opioid-addiction treatment and overdose-reversal medicines, according to Purdues plan.)

If a party disagrees with the Second Circuits ruling, it could appeal to the U.S. Supreme Court.. Should the case end up in the Supreme Court, Tongs office has said that while Connecticut has agreed to settle, it reserves its right to continue its fight against non-consensual non-debtor releases.

Today, the Department of Justice, through its bankruptcy-focused U.S. Trustee program, stands as the most-prominent holdout among a tiny number of remaining opponents of the settlement plan. None of the 50 states, no local governments and none of the other hundreds of thousands of creditors are continuing to appeal our confirmation order, Purdue said in its statement.

A message left this week for the Justice Department was not returned. In a statement last December lauding McMahons ruling, Attorney General Merrick Garland said that, the bankruptcy court did not have the authority to deprive victims of the opioid crisis of their right to sue the Sackler family. The department remains committed to opioid abatement efforts and supporting victims of opioid abuse.

As part of a settlement with the Justice Department, Purdue pleaded guilty in November 2020 to three criminal charges of conspiring to defraud the government and violating anti-kickback law. At the same time, the Sacklers involved with Purdue agreed to a $225 million settlement with the department to resolve allegations of marketing and financial misconduct at Purdue. The Sacklers did not admit to any wrongdoing as part of that deal.

To the dismay of many, including Tong and Sen. Richard Blumenthal, D-Connecticut, the Justice Department did not criminally charge any individuals currently or previously involved with Purdue in connection with the companys guilty plea.

I am concerned, and Im going to put the question to DOJ about what is the basis for their continuing opposition to the settlement plan, Blumenthal, a member of the Senate Judiciary Committee who sued Purdue when he was state attorney general, said in an interview. They owe an explanation to the (opioid) victims, especially.

The lack of clarity about the bankruptcys end point troubles many relatives of opioid victims and survivors of opioid addiction. They are worried about further delays or even missing out entirely on the personal-injury funds that are included in the settlement plan. Eligible claimantswould each receive between $3,500 and $48,000 each, for a total of up to $750 million.

It seems like everyone was worried about getting the lawyers paid, and the states were worried about getting money into the states, Norwalk resident Dede Yoder, whose son died from an overdose of fentanyl and carfentanil at age 21 in 2017, after being prescribed OxyContin as a teenager, said in an interview But the actual victims of this whole thing, its like we werent even part of it. And yet, were the ones who its all about.

As Purdues bankruptcy drags on, funding from settlements with other companies implicated in the opioid epidemic are already flowing into the state. Those funds are urgently needed for treatment and prevention programs to tackle an unrelenting opioid crisis. Last year, there were 1,413 opioid-involved deaths in Connecticut, up 11 percent from 2020, according to the Office of the Chief Medical Examiner.

Among other settlements that Connecticut has joined, it will receive in the coming years about $300 million from pharmaceutical distributors Cardinal, McKesson, and AmerisourceBergen and drugmaker Johnson & Johnson; about $7.5 million from consulting firm McKinsey & Co., whose clients included Purdue; and nearly $14 million from drugmaker Mallinckrodt.

In addition, the state is in line to receive to-be-determined amounts from drugmakers Allergan, Endo and Teva, after announcements from Tong in the past couple of months that the state would join settlements with those companies.

People know that if they had a role in the opioid crisis that theyre in trouble, Tong said. Anybody who works for attorneys general or is prosecuting cases alongside us or defending cases against us knows that Connecticut is a leader in taking on the addiction industry and that we are very aggressive.

pschott@stamfordadvocate.com; twitter: @paulschott

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Why OxyContin maker Purdue Pharma is still in bankruptcy: 'There's been risk in this process all along' - CT Insider