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Purdue Pharma Files for Bankruptcy as Part of Opioid Litigation Settlement

Purdue Pharma Files for Bankruptcy as Part of Opioid Litigation Settlement

Purdue Pharma, producer of opioid painkiller OxyContin, filed for bankruptcy following opioid crisis litigations.

After long negotiations, Purdue Pharma, the pharmaceutical company that produces the opioid painkiller OxyContin, filed for bankruptcy on Sunday, after being accused of contributing to the opioid crisis that has killed over 70,000 people in 2017 alone.

Purdue Pharma announced on Monday in a statement that a preliminary agreement has been reached on the US opioid litigation settlement. This falls under Chapter 11 of the US bankruptcy code. The settlement is estimated to provide $10 billion to address over 2,000 lawsuits filed by state, local and Native American governments.

On Tuesday a judge gave a way for OxyContin to stay in business while Purdue Pharma pursues its bankruptcy protection and settlement.

Steve Miller, chairman of Purdue’s board of directors said, “this settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, 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 finalize and implement this agreement as quickly as possible.”

Purdue Pharma spent $250 million on legal fees and costs to defend their case this year alone, officials say. They said that the cost of this battle made bankruptcy inevitable.

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In order for the government to use generated money to strengthen drug treatment and policing budgets, Purdue officials are to make a trust responsible for operating the company. The persons set to run the trust will be appointed by a bankruptcy judge, who will also oversee the payouts towards state and local governments that sued. Judge Robert Drain is the US bankruptcy judge assigned to oversee Purdue’s Chapter 11.

Joe Rice, co-lead counsel for the plaintiffs in the multi-district litigation, told CNN after the hearing that, “OxyContin is going to be available in this country…This is not a case that people are going to stop the sale of OxyContin. What we want to do is stop the inappropriate use and the abuse. But people in end of life pain, people with immediate surgical needs, are going to be able to get the medicine they need.”

In October 2017, Purdue claimed that the painkiller provides patients with 12 hours of pain relief, requiring patients are to take the drug twice a day. However, the company allegedly knew that patients were not experiencing the full half-day of pain relief and were experiencing symptoms of withdrawal, increasing the risk of opioid abuse.

RELATED: Purdue Pharma Stops Opioid Marketing, Cuts Pharmaceutical Sales Team By 50 Percent

Negotiations and settlements that were introduced prior to bankruptcy were strongly disputed by a group of states led by Massachusetts and New York. This is mainly because they wanted to go after one of the wealthiest families in the US — the Sacklers. This is because it is believed, as stated by The Washington Post, that the Sackler family had taken billions of dollars from Purdue Pharma over the years and that the money should be used “to right the wrongs that they have done,” said North Carolina’s attorney general, Josh Stein.

Furthermore, as part of the settlement proposal the Sacklers will have to give up ownership of the company and pay $3 billion in cash to the plaintiffs over seven years. Additionally, they are to sell Mundipharma, their Britain-based drug company.