The Sackler family members who own Purdue Pharma, the drugmaker blamed for fuelling the US opioid crisis, have increased the amount of cash they would contribute to a potential bankruptcy settlement to $4.3bn in an attempt to win over states that rejected the deal.
In a filing to bankruptcy court, members of the billionaire philanthropist family are pledging an extra $1.3bn on top of their 2019 offer, which was rejected by 24 states and the District of Columbia. The funds would be disbursed over a nine-year period.
Purdue filed for Chapter 11 bankruptcy after the OxyContin maker was hit with thousands of lawsuits from states, towns and cities across the US, which have become the main creditors in any bankruptcy settlement.
The state, tribal and local authorities are seeking funds to deal with the fallout from the opioid crisis, which has resulted in more than half a million overdose deaths in the US.
The Sackler family members who own the maker of the powerful opioid OxyContin will also promise to end involvement in the pharmaceuticals industry as part of the settlement.
“Today marks an important step toward providing help to those who suffer from addiction, and we hope this proposed resolution will signal the beginning of a far-reaching effort to deliver assistance where it is needed,” said members of the Raymond and Mortimer Sackler families in a statement.
the extra money offered by Sackler family members for a Purdue Pharma bankruptcy settlement worth an estimated at $10bn
Purdue Pharma estimates the overall value of the settlement is worth about $10bn but that could be contested because it includes estimated proceeds from the sale from drugs that have not yet been approved.
Even after increasing their own cash contribution, the overall total delivered to creditors would be no higher than the previous offer, which the company also estimated was worth about $10bn.
But that proposal included $1.5bn from the sale of Mundipharma, an international pharma business also owned by members of the Sackler family, which has not yet been sold, and attributed more value to Purdue itself.
In a statement, the company said it believed there was “broad and strong support” for the plan, including from some state attorneys-general, as well as other governmental and private creditors.
Last year the company agreed to a criminal and civil settlement with the US Department of Justice, admitting it “knowingly and intentionally conspired and agreed with others to aid and abet” doctors dispensing medication “without a legitimate medical purpose”.
That settlement was potentially worth more than $8.3bn. But Purdue can put $1.8bn of that sum towards the putative bankruptcy deal, rather than to the federal government, as long as it is spent on public health programmes intended to alleviate the opioid crisis.
In that October settlement, the Sackler family members agreed to pay $225m but denied any wrongdoing.
Since the original bankruptcy proposal in September 2019, some state attorneys-general have named the family members, not just Purdue, in their suits, with the New York AG alleging they have withdrawn more than $10bn from the company.
A lawyer for the Raymond Sackler arm of the family said at the time that more than half of the money had been paid in taxes or reinvested in the businesses that will be sold as part of the bankruptcy settlement.
The bankruptcy plan, which will be considered in a court hearing in August, involves forming a new company containing the assets and drug development pipeline of Purdue Pharma.
The new company would sell drugs to alleviate the impact of the epidemic, such as buprenorphine naloxone, which treats opioid dependence. But the other drugs, a nasal spray and an injectable for overdoses, are in earlier stages of development, so it is hard to ascertain whether they will be worth the $4bn that the company is forecasting.
Under the plan, the company will give money to organisations including to a new National Opioid Abatement Trust, which would distribute it to programmes that hope to temper the crisis, and other funds, including one for personal injury claims.
It would initially give $500m and later disperse about $1bn generated by assets and operations before 2024.
The company argued the bankruptcy settlement is the best solution, in part because there have been no offers to buy Purdue Pharma.
Lawyers for Purdue said it had received one expression of interest but no firm proposal. It added that its pipeline of other drugs are too early stage and unlikely to be adequately valued by a buyer and pointed out that the revenue stream associated with its opioid painkiller business was likely to be “heavily discounted by potential purchasers”.