Can Purdue finally get its bankruptcy plan over the line?

After years of wrangling, OxyContin manufacturer Purdue Pharma is on the brink of a bankruptcy agreement that could allow it to put years of litigation over its role in the opioid crisis in the rearview mirror.

One of the final pieces in the plan could fall into place later today when a federal judge is scheduled to deliver a criminal sentence to the company that would resolve a US Department of Justice (DoJ) investigation into the mis-marketing of OxyContin (oxycodone) and the payment of kickbacks to prescribers to boost sales.

However, there is expected to be a last-ditch attempt by some plaintiffs – among the many thousands suing the company for its role in driving opioid addiction – to reject the negotiated sentence.

Last year, the company agreed a settlement with the federal government that includes around $7.4 billion in fines and other penalties, although the DoJ will take only $225 million of that total in order to divert the remainder to organisations – including state and local governments – that are dealing with the fallout from the opioid epidemic, estimated to have claimed hundreds of thousands of lives since the late-1990s.

That agreement can't proceed unless US District Judge Madeline Cox Arleo rules it valid in a hearing scheduled to take place in Newark, New Jersey, later today. If it goes through, Purdue Pharma will be dissolved and replaced by a company (Knoa Pharma) that will use its profits to fight the crisis and to develop drugs to treat people with opioid use disorder (OUD). That could occur as soon as Friday, according to a report in The Independent.

The terms of the settlement include an initial payment of $2.4 billion – including $900 million from the company and $1.5 billion from the Sackler family that has controlled it for decades and, according to the DoJ, "ran Purdue with one goal in mind: maximising profits for their family, no matter the cost."

Under the plan, the family will be largely insulated from civil lawsuits related to OxyContin, despite a 2024 Supreme Court ruling that previously blocked such protections. They could still face criminal prosecutions, although none have so far been filed.

Around 54,000 people with personal injury claims against Purdue voted to accept the settlement, but more than 200 voted against it, and they are expected to make the case for criminal charges to be brought against the family and former company executives at today's hearing.

Photo by Sasun Bughdaryan on Unsplash