Johnson & Johnson and several distributors earlier this year paid $26 billion to end US claims against them in ongoing proceedings against drug companies involved in opioid sales.

The arrangement approved last week by Judge Robert Drain of the US Bankruptcy Court in White Plains, New York – who has presided over a host or prominent corporate insolvencies – will convert Purdue into a new public benefit company that will leverage its financial resources to address the opioid epidemic and compensate those harmed by its products. Purdue’s owners, the Sackler family, who contributed $4.5 billion to settle the case, will be exempt from future claims.

In 2019, Purdue filed for protection from litigation under the US Chapter 11 insolvency mechanism, giving it time to pursue settlements with plaintiffs who charged that the drugmaker misled doctors and patients by playing down or ignoring OxyContin’s addictive properties and to work out a restructuring scheme for the company.

Despite the court’s approval of the bankruptcy exit plan, authorities of nine states, contending that the settlement structure is unconstitutional and the Sackler family is not contributing enough, have hinted they may continue the fight for what they hope would be a fairer deal.

 As business newspaper Wall Street Journal noted, the owners of Purdue have sufficient funds to pay more, having collected more than $10 billion from the company between 2008 and 2017, while leveraging tax avoidance schemes. In 2020, the drugmaker pleaded guilty to three federal felonies involving the sale and marketing of OxyContin and cut a civil and criminal deal with the US Department of Justice that let it off with a $225 million payment.

A reorganization plan presented in March of this year will see Purdue transfer ownership to two new trusts and place management in the hands of a new board with no representation of the Sackler family. The process will be funded mostly by the legal settlement with the family, along with insurance proceeds and the continued operation of the drugmaker, including the sale of opioids when it exits Chapter 11.

The plan also creates a mechanism to compensate hundreds of thousands of users or family members of opioid victims who can show they were injured by OxyContin addiction or overdose. A special National Opioid Abatement Trust (NOAT), in which Native American tribes and tribal organizations will hold a minority interest, will have funds of $700-750 million to compensate personal injury claimants. Payouts could be as small as $3,500 but could range up to $48,000 if severe injury – or death – from opioid addiction can be proven, reports said.

In his ruling, which will end all claims against Purdue and the Sackler family, the bankruptcy judge said that although the new company would continue to sell opioids, it would be subject to an injunction restricting its business operations, and its sales would be subject to strict forms of independent monitoring and oversight.

In the final tally, Drain said that although the compensation sum agreed with the family could have been higher, it was clear that after a lengthy trial, apart from ending it there was “no other reasonable conceivable means” to achieve the objective of getting money to opioid victims and afflicted communities, as the US addiction crisis continues.

At least 500,000 people are believed to have died in the opioid crisis to date. In 2019, the Department of Health and Human Services (HHS) estimated that 10 million people in the United States had abused opioids.

Author: Dede Williams, Freelance Journalist