Purdue Pharma Files For Bankruptcy: What You Need To Know

OxyContin maker Purdue Pharma filed for Chapter 11 bankruptcy protection Sunday in a widely expected move.

Why The Bankruptcy Filing

Each day, over 130 people in the U.S. die from opioid overdoses, according to the National Institute on Drug Abuse.

Purdue is facing a slew of lawsuits filed by several states, counties and cities over its role in the opioid crisis.

The bankruptcy filing follows an agreement the company reached in principle for settling U.S. opioid litigation with 24 state attorneys general.

"This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis," Steve Miller, chairman of Purdue's board, said in a statement. 

The Settlement Terms

The settlement will provide over $10 billion to address the opioid crisis, with Purdue contributing all its assets to a trust established for the benefit of the claimants.

The new company's board will be constituted by nominees selected by claimants and approved by the bankruptcy court. The new company will contribute tens of millions of doses of opioid overdose reversal and addiction treatment medications at no or low cost.

Apart form the 100% of Purdue, the company's founding Sackler families will contribute a minimum of $3 billion, with the potential for substantial further monetary contributions form the sales of their ex-U.S. pharma businesses.

The bankruptcy, which will be a court-supervised process, will result in an orderly and equitable resolution of claims against Purdue while also preserving the value of its assets for the benefit of those impacted by the opioid crisis, according to the company. 

The company has not admitted to any wrongdoing but said it sees the settlement as a prudent step to sidestep a lose-lose situation for all stakeholders.

Several pharma companies involved in the opioid crisis have struck or are in negotiations to strike settlement agreements. Johnson & Johnson JNJ was recently ordered to pay $572 million by a judge in Oklahoma.

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