Facing Lawsuits Over Opioid Epidemic, Purdue Pharma Considers Bankruptcy

Mar 15, 2019
Originally published on March 15, 2019 11:10 am
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Lawsuits connected to opioids have been really bad for drug makers. And this year alone, there have been a lot of them - so many that one company, Purdue Pharma, the maker of OxyContin, says it might file for bankruptcy. North Country Public Radio's Brian Mann reports.

BRIAN MANN, BYLINE: In a statement sent to NPR, Purdue Pharma spokesman Bob Josephson said the company has made no decisions but is considering all its options. And that includes bankruptcy. Richard Ausness is a law professor at the University of Kentucky who follows opioid litigation closely.

RICHARD AUSNESS: My guess is they're serious. If you declare bankruptcy, there's an automatic stay in all the lawsuits.

MANN: That would be a serious blow to the more than 1,500 local and state governments suing big pharma. They argue companies like Purdue triggered the opioid epidemic by aggressively marketing highly addictive painkillers. They want help paying for things like increased law enforcement and rehab programs. Adam Zimmerman, an opioid litigation expert at Loyola University, says companies like Purdue facing a barrage of civil claims often use bankruptcy to limit their exposure.

ADAM ZIMMERMAN: Bankruptcy, historically, has proven to be one of the most powerful tools for defendants, from asbestos companies in the 1990s through today's PG&E bankruptcy, as a way to globally resolve large numbers of lawsuits.

MANN: Purdue is a privately held company. Internal documents made public in recent months showed the Sackler family, which owns a controlling interest, pulled roughly $4 billion out of the company while pushing opioid sales. Legal experts differ on whether those profits would be affected by a Purdue bankruptcy. Zimmerman thinks the Sacklers' private fortune could be vulnerable.

ZIMMERMAN: The company that's declared bankruptcy has the ability to go after other parties in order to claw back money that's been wrongly taken away from the company. That actually happened in the Madoff bankruptcy, so that definitely could happen in a case like this, too.

MANN: These opioid lawsuits target a wide range of companies, including Purdue but also name-brand companies like CVS, Walmart and Johnson & Johnson. If Purdue does seek bankruptcy protection, the whole interlocking web of cases becomes much more complicated. And trials could be delayed by months or years. Richard Ausness at the University of Kentucky says governments suing big pharma are already turning their sights on other opioid manufacturers with more assets than Purdue.

AUSNESS: Johnson & Johnson is really getting hammered by the AG in Oklahoma. And they do have big pockets and probably wouldn't be candidates for bankruptcy.

MANN: While Purdue Pharma weighs its options, the company hoped to delay the first big test trial in Oklahoma state court. This week, a judge rejected the request. And that civil case will go forward as scheduled in May. Brian Mann, NPR News. Transcript provided by NPR, Copyright NPR.