September 17, 2019 / 11:11 AM / 2 months ago

Oxycontin maker Purdue begins bankruptcy in push to settle opioid lawsuits

(Reuters) - Oxycontin maker Purdue Pharma LP on Tuesday told a bankruptcy judge it hopes to broaden support for a proposed settlement of 2,600 lawsuits alleging it fueled the U.S. opioid crisis, but opponents of the deal highlighted looming legal battles.

FILE PHOTO: A pharmacist holds a bottle OxyContin made by Purdue Pharma at a pharmacy in Provo, Utah, U.S., May 9, 2019. REUTERS/George Frey/File Photo

A lawyer representing the company told U.S. Bankruptcy Judge Robert Drain in White Plains, New York that the case was an opportunity to end a “chaotic maelstrom” of litigation.

Purdue filed for bankruptcy on Sunday after reaching an outline of a deal with states and local governments that have accused the company of deceptively marketing opioids by overstating benefits and downplaying risks.

It has been accused of contributing to a public health crisis that has led to nearly 400,000 overdose deaths between 1999 and 2017, according to the latest U.S. data.

The settlement, which Purdue estimates is worth more than $10 billion, would require the Sackler family to cede ownership of Purdue to a trust controlled by the plaintiffs that are suing it. In addition to turning over Purdue, the Sacklers would sell their non-U.S. pharmaceutical businesses and also contribute at least $3 billion of their own money.

“Purdue is not shielding itself from these claimants. It is giving itself to these claimants without them even having to prevail in the litigation,” Marshall Huebner, a Davis, Polk & Wardwell lawyer representing Purdue, told the court.

Numerous states oppose the plan, including New York. A lawyer for the state told Drain that the proposed deal did not address how settlement funds will be allocated among governments. He also said settling states did not appear as interested in conducting thorough investigations of Purdue.

“We have different views and different experiences in terms of our aggressive pursuit of some issues, including payments to the Sacklers,” said David Nachman, who leads the New York’s opioid litigation.

On Friday, New York Attorney General Letitia James said she uncovered roughly $1 billion in wire transfers “between the Sacklers, entities they control and different financial institutions, including those that have funneled funds into Swiss bank accounts.”

A spokesman for former Purdue board member Mortimer D.A. Sackler said in a statement that the transfers were legal and appropriate, and accused James of using the transfers to try to undermine the settlement.

Huebner acknowledged that Purdue faces several battles, including over whether a bankruptcy filing pauses government investigations and lawsuits.

“I remain hopeful that parties may be more willing to settle as they learn more about facts and numbers they didn’t previously know,” said Huebner during the three-hour hearing.

Purdue is the second drug company to seek bankruptcy over the opioid crisis. Insys Therapeutics Inc filed for bankruptcy in June, also citing opioid litigation.

The Chandler, Arizona-based drugmaker, which recently agreed to sell its flagship fentanyl spray Subsys, on Tuesday unveiled a liquidation plan to repay its creditors, including states and localities that have sued. The plan did not spell out how much state and local governments would recover, but said they would not be paid in full.

Reporting by Tom Hals in Wilmington, Delaware, Nate Raymond in Boston and Mike Spector in New York.; Editing by Steve Orlofsky and Bill Berkrot

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