Citing mounting costs of litigation that are siphoning funds that could otherwise go to abate the opioid crisis, a bankruptcy judge on 11 October ordered a pause in legal action by states against Purdue Pharma and its owners, the Sacklers, writes Mary Williams Walsh for The New York Times.
The ruling was a setback for 25 states that have forcefully opposed a national opioid settlement negotiated last month among the company and the Sacklers and cities, counties and other states that have filed lawsuits against them. To raise money for the settlement, Purdue has filed for Chapter 11 bankruptcy and asked that all litigation against it and the Sacklers be halted.
At the end of a seven-hour hearing, Judge Robert D Drain of the United States bankruptcy court in White Plains, New York, pushed the parties to a compromise to address the opposing states’ key concerns, according to The New York Times.
Rather than stopping the lawsuits altogether, as is customary in bankruptcy, he gave all the parties until 6 November to come up with a disclosure plan. It would assure that the Sacklers reveal how much money they have earned from the sales of the opioid painkiller OxyContin, and that an angry public would eventually learn the complete story of the company’s role in the opioid epidemic.
For much of the hearing, lawyers for various states and municipalities objected to the suspension of their cases that bankruptcy typically imposes. They said halting their lawsuits would make it impossible for them to fulfil their duty to get to the bottom of the opioid crisis, hold the appropriate parties accountable and make health care regulation in their jurisdictions more effective for the future.
Midway through the hearing, Judge Drain became testy and openly challenged the implication that those goals could not be achieved in federal bankruptcy court as well, The New York Times reports.
“No one wastes time in front of me!” he shouted at one point. “Everyone, the debtor first and foremost, would engage in good faith” if all the various state court proceedings were halted and conducted under the bankruptcy rules instead.
He added that he did not think the state lawsuits would produce the sought-after factual records of the opioid crisis, or an enforceable settlement that would put money into the hands of those most in need. When the states took on the tobacco companies and negotiated payments for health care, he pointed out, most of their legislatures ended up diverting the money to plug holes in their budgets.
“That could not happen in a bankruptcy plan, because a bankruptcy plan is binding,” Judge Drain said, according to The New York Times.
But at the end of the day, the compromise plan was designated as voluntary, to assuage concerns about a federal judge imposing his will on states, which by law are sovereign.
Earlier tentative settlement
Under a tentative national settlement reached last month with lawyers representing two dozen states and about 2,000 counties, cities and tribes that have sued in federal court, the Sacklers would have seven years to contribute $3 billion to the plaintiffs, and to sell Mundipharma, their British pharmaceutical company. They would also give up ownership of Purdue, which would be restructured into a new company, overseen by public administrators.
The new company would continue to sell its signature opioid, OxyContin, as well as other medications, but all profits would go to pay the cities, counties and states for the costs of the opioid epidemic. Purdue would also contribute several drugs in its pipeline designed to treat addiction and overdoses.
Full report in The New York Times, which allows free access to three articles a month