Utah’s attorney general gets behind proposed settlement with Purdue Pharma

(Rick Bowmer | AP) In this Thursday, May 31, 2018, photo, Utah Attorney General Sean Reyes speaks during a news conference in Salt Lake City. Utah is the 45th state to join a lawsuit alleging large pharmaceutical companies conspired to raise prices on generic medications by as much as 1,000%.

Utah Attorney General Sean Reyes has issued a statement supporting a settlement framework with Purdue Pharma, which filed for bankruptcy this week after making billions from the sale of OxyContin.

"Purdue was morally bankrupt and now it is legally so," Reyes said in a prepared statement. "Although there is no dollar amount that will undo the pain and suffering that so many families have endured, I'm focused on getting resources to Utahns as quickly as possible."

The company’s bankruptcy filing was in keeping with the settlement framework agreed upon by Reyes and 28 other attorneys general, according to a news release.

Under the proposed settlement, the Sackler family would hand over Purdue’s assets to a bankruptcy court, said Robert Wing, who heads the commercial enforcement division of the attorney general’s office.

"The question of what happens to those assets has not been fully decided," he said. "They could be sold at liquidation or there is a possibility that they will be put into a new company."

Under the tentative settlement deal, a reconstituted company could operate under the guidance of trustees, with profits going to pay the company's creditors. The bankruptcy court will have power to decide whether the reformed company can remain in the opioid business, according to Wing.

The deal could be worth up to $12 billion over time, but Wing said states and other groups that have taken legal action against the company haven’t yet decided how to parcel out that money.

The settlement would resolve an administrative action that Reyes’ office filed earlier this year against the opioid manufacturer, Wing said. However, the deal is still tentative until the bankruptcy court gives its blessing, he added.

Legal battles still lie ahead for Stamford, Conn.-based Purdue, which is spending millions on legal costs as it defends itself in lawsuits from 2,600 government and other entities. About half the states have not signed onto the settlement proposal. And several of them plan to object to the settlement in bankruptcy court and to continue litigation in other courts against members of the Sackler family. The family agreed to pay at least $3 billion in the settlement plus contribute the company itself.

In a statement, the families of late company owners Mortimer and Raymond Sackler said they have “deep compassion for the victims of the opioid crisis” and believe the settlement framework “is a historic step toward providing critical resources that address a tragic public health situation.”

Objections came over the amount of the deal, which some officials say will not reach close to the $12 billion mark, and because it means the company won’t be found liable by a jury or judge.

Purdue chairman Miller said the company has not admitted wrongdoing and does not intend to. “The alternative is to not settle but instead to resume the litigation,” he said on a conference call with reporters. “The resumption of litigation would rapidly diminish all the resources of the company and would be lose-lose-lose all the way around. Whatever people might wish for is not on the table now.”

Because so many states balked at the settlement, it could complicate the bankruptcy process. The Sackler family members said they’re still trying to get more states to sign on.

“We are hopeful that in time, those parties who are not yet supportive will ultimately shift their focus to the critical resources that the settlement provides to people and problems that need them.”

Key issues that could be decided include whether the suits against the Sacklers in state courts will be able to move ahead, and what will happen to the company itself. Under the tentative settlement deal, it would continue to operate, but with profits used to pay for the settlement. Another option could be for a judge to order it be sold.

Court filings assert that members of the Sackler family were paid more than $4 billion by Purdue from 2007 to 2018. Much of the family’s fortune is believed to be held outside the U.S., which could complicate lawsuits against the family over opioids.

A court filing by the New York attorney general’s office on Friday contended that Sackler family members used Swiss and other hidden accounts to transfer $1 billion to themselves. The discovery of the transfers bolsters several states’ claims that family members worked to shield its wealth because of the growing legal threats against them and Purdue.

The Sacklers have given money to cultural institutions around the world, including the Smithsonian Institution, New York City’s Metropolitan Museum of Art and London’s Tate Modern.

The lawsuits assert that the company aggressively sold OxyContin as a drug with a low risk of addiction despite knowing that wasn’t true.

Since OxyContin, a time-released opioid, was introduced in 1996, addiction and overdoses have surged. In both 2017 and 2018, opioids were involved in more than 47,000 deaths, according to the U.S. Centers for Disease Control and Prevention.

In recent years, there have been more deaths involving illicit opioids, including heroin and fentanyl, than the prescription forms of the drugs. That change has happened as awareness of the dangers of prescription opioids has increased and prescribers have become more cautious.

Purdue’s drugs are just a slice of the opioids prescribed, but critics assign a lot of the blame to the company because it developed both the drug and an aggressive marketing strategy.

According to a lawsuit filed by the Massachusetts attorney general, the company pushed big sales of OxyContin from the start. Doing so meant persuading doctors who had been reluctant to prescribe such strong painkillers that this one was safe.

A court filing asserts that Richard Sackler, then a senior vice president in charge of sales at the company, told the sales force at a launch party for the drug: “The launch of OxyContin Tablets will be followed by a blizzard of prescriptions that will bury the competition. The prescription blizzard will be so deep, dense, and white.”

Along with others in the industry, Purdue paid doctors who attested to the drug’s safety and became a major funder of groups that advocated for pain patients and campaigned to have opioids prescribed.

In court filings, Purdue has pointed out that its products were approved by federal regulators and prescribed by doctors.

A federal judge overseeing close to 2,000 of the cases has been pushing the parties to reach a grand settlement that would make a difference in the opioid crisis. The judge, Cleveland-based Dan Polster, has scheduled a trial for the claims brought by Ohio’s Cuyahoga and Summit Counties for October.

One lawyer who is suing Purdue on behalf of clients including the city of Albuquerque, N.M., and the state of Utah said it’s long been a consideration that Purdue could not afford to pay the massive amounts being sought in the lawsuits.

“I don’t think there’s enough money in that company to pay for the damages that are claimed,” said Jonathan Novak.

That is one reason there are other defendants in most opioid lawsuits, he said, including members of the Sackler family and huge drug distribution companies such as McKesson Corp. and Cardinal Health. State and local governments have also been battling over how any national settlements would be distributed.

The Associated Press contributed to this story.