Purdue Pharma, the pharmaceutical company responsible for OxyContin, has recently filed a new bankruptcy plan outlining a $7.4 billion settlement for their role in the opioid crisis.
The big picture: The plan requires the Sackler family, owners of Purdue Pharma, to contribute approximately $6.5 billion over 15 years, with an initial payment of $1.5 billion upon plan activation.
- An additional $500 million may be added if certain pharmaceutical businesses sold by the Sacklers exceed expected values.
- Purdue Pharma is set to raise and provide $900 million while transforming into a new public benefit company that will focus on developing and distributing opioid use disorder and overdose rescue medications. The Sackler family will have no association with this new entity.
- The bankruptcy plan aims to ensure that victims of the opioid epidemic are adequately compensated, with over $850 million allocated to individual victims. Local governments and states are encouraged to reinvest settlement payments into initiatives targeting the drug crisis.
Driving the news: The US Supreme Court blocked Purdue Pharma’s original bankruptcy plan, which would have granted the Sacklers immunity from opioid-related lawsuits.
- The revised settlement no longer provides automatic liability protection for the family, and they will contribute $1 billion more under this new arrangement.
What we’re watching: The successful execution of the settlement hinges on the participation of creditors who have the option to opt into the agreement to receive compensation.
- Those who choose not to participate can pursue legal action directly against the Sackler family.
