To resolve thousands of local lawsuits, Purdue has proposed a global settlement that it values at about $10 billion. That figure includes future profits from drugs still in development as well as a $3 billion contribution from the Sacklers, which is separate from the $225 million the family has agreed to pay the federal government.
A year ago, under the weight of opioid litigation, Purdue filed for bankruptcy, and it is expected to emerge at some point as a new company. At least two other opioid manufacturers, Insys Therapeutics and Mallinckrodt, have also sought bankruptcy protection because of litigation.
Judge Robert D. Drain, who is overseeing the Purdue bankruptcy case in White Plains, N.Y., will have to approve the terms of the federal settlement and will review the billions of dollars in federal penalties alongside a long line of unsecured creditors. When the bankruptcy is finalized, Purdue said in the federal agreement, it would post documents related to the prosecutions on a public website.
But one bucket of sanctions, the $2 billion in criminal forfeiture of profits, is more likely to be paid in full. The Justice Department said on Wednesday that it would require that Purdue directly pay the U.S. Treasury just $225 million, but would earmark the remaining $1.775 billion for municipalities, states and tribes, on condition that they allocate the money to abate local opioid crises.
A second condition of the settlement has prompted an outcry from some two dozen state attorneys general: the ownership of Purdue, after it emerges from bankruptcy.
Purdue has proposed that the company be run as a “public benefit corporation,” with proceeds from continuing limited sales of OxyContin and several overdose-reversing medications under development to go toward opioid abatement. The Justice Department endorses that model.
But in a forceful letter addressed to Attorney General William P. Barr earlier this month, the state attorneys general decried the public trust model. Governments should not be in the opioid business, they said. Instead, they argued that Purdue should be run privately, with government oversight.