Washington Post and Herald staff
Purdue Pharma, manufacturer of blockbuster painkiller OxyContin, has reached a tentative settlement with 22 states and more than 2,000 cities and counties that sued the company over its role in the opioid crisis of the past two decades, people close to the deal said Wednesday.
But not all of the plaintiffs are on board.
The executive committee of lawyers representing cities, counties and other groups in a federal lawsuit against Purdue and other drug companies is recommending the deal be accepted. But some state attorneys general, who sued Purdue and its owners, the Sackler family, in state courts are still opposed to a deal.
Among the thousands of plaintiffs are the city of Everett, Snohomish County and the Tulalip Tribes. It wasn’t immediately known if those jurisdictions were in favor of the settlement or opposed.
Everett and Snohomish County officials said a judge’s gag order prevented them from commenting on this case.
If the settlement materializes, Everett and the county “will have an opportunity to decide whether to participate in such a settlement or continue pursuing (their) lawsuit,” officials for both governments said Wednesday.
The state of Washington is not involved in the consolidated lawsuit but is, instead, suing in King County Superior Court.
Under terms of a plan negotiated for months, the Sacklers would relinquish control of Stamford, Connecticut-based Purdue Pharma. The company would declare bankruptcy and be resurrected as a trust whose main purpose would be to combat the opioid epidemic.
If the deal becomes final, it would be the first comprehensive settlement in the broad legal effort to hold drug companies accountable for their role in the opioid epidemic. To date, Purdue has also settled with one state, Oklahoma, for $270 million, and won a victory when a North Dakota judge threw out the state case against the company.
The deal also would mark the end of Purdue, the company widely blamed for its role in driving the prescription opioid epidemic as it spread in the late 1990s and the first years of this century. In 2007, Purdue and three of its executives pleaded guilty to criminal charges of misleading doctors and the public about the safety of OxyContin and paid a $635 million fine.
On Wednesday, the divide over the settlement broke down largely along party lines, with most Republican state attorneys general in favor of it and Democrats largely opposed.
Pennsylvania’s Democratic attorney general, Josh Shapiro, who tried to negotiate a settlement he could accept, opposes the final deal and has vowed to sue the Sacklers personally. Another Democratic opponent, North Carolina attorney general, Josh Stein, said Wednesday he would do the same.
“These people are among the most responsible for the trail of death and destruction the opioid epidemic has left in its wake,” Stein said.
But Ohio’s Republican attorney general, Dave Yost, backs the agreement. “The proposed settlement with Purdue provides the greatest certainty for all Ohioans to receive relief as quickly as possible in light of rumored bankruptcy,” said a spokeswoman for Yost.
The deal was said to be worth $10 billion to $12 billion, including a $3 billion payment from the Sacklers. It also would include at least $1.5 billion from the sale of the family’s international drug conglomerate, Mundipharma, according to documents and people close to the talks.
The federal plaintiffs and many attorneys general apparently felt the proposal was as good as they could get. The lawyers for the cities and counties agreed to recommend that the municipalities “move forward in support of the current proposal, subject to satisfactory documentation of the essential terms and final documents,” said Paul Hanly Jr., Paul Farrell Jr. and Joseph Rice, three of the leaders of that group. “We feel good progress has and will continue to be made.”
But some states objected thatthe Sacklers were not contributing enough cash from their personal fortunes, built almost entirely on the sale of OxyContin and taken out of the company in recent years, according to court papers filed by some states.
Connecticut Attorney General William Tong said he remained opposed to any deal because of that.
“The scope and scale of the pain, death and destruction that Purdue and the Sacklers have caused far exceeds anything that has been offered thus far,” he said in a statement.
Another major concern is that the deal relies in significant measure on the assumed value of Purdue’s assets and the sale of a subsidiary. States opposing it fear these values may be overestimated, and some of settlement money may never materialize.
It was not clear Wednesday whether the Sacklers had agreed to increase their personal contribution to the settlement or whether other terms had changed.
Still pending is the mammoth federal case in Cleveland against other drug companies, known as a “multidistrict litigation” or MDL, where the lawsuits from cities, counties, Indian tribes, hospitals and other groups have been consolidated. Judge Dan Aaron Polster has presided over that litigation, urging the parties to settle before trial so that money can be funneled quickly into drug treatment, emergency care, law enforcement and other local needs.
The federal trial is scheduled to begin in mid-October with two test cases, Cuyahoga and Summit counties, as the first plaintiffs. Meanwhile, the more than 40 lawsuits against drug companies are wending their way through state courts. A growing number of states also have sued the Sackler family personally.
Oklahoma, the first state case to go to trial, last month won a $572 million verdict against Johnson & Johnson. In addition to settling with Purdue before the trial, it reached an agreement with Teva Pharmaceuticals, a generic drugmaker, for $85 million.
Although the state cases are not in Polster’s jurisdiction, he has urged a broad settlement that includes them.
“There’s an incredible incentive to make a deal before bankruptcy, because that would make the process much less expensive for the states and cities,” said Adam Zimmerman, a professor at Loyola Law School in Los Angeles. If Purdue sought bankruptcy protection without a settlement, “we might see any kind of arrangement tied up in bankruptcy court for a very long time. It could be years,” he added.
Yost, who wants the states to control the legal effort against the pharmaceutical industry, has asked a federal appeals court to delay or halt the federal trial. Another 13 states and the District of Columbia have filed briefs in support of that effort, according to Yost’s office.
Yost criticized using two Ohio counties as “bellwether” cases, saying they represent only a tiny portion of the state’s 88 counties.
“The rest of Ohio – and Ohio itself – is being left behind in the MDL lawsuit in Cleveland,” he said late last month. “The hardest-hit counties of Appalachia and the vast majority of the state are being asked to take a number and wait – and that wait could delay or prevent justice.”
Zimmerman characterized the conflict as a struggle for control of the legal process.
“I think the main motivation [for Yost] has to do with who holds the balance of power with respect to negotiating a global settlement,” he said. “This is kind of a Hail Mary.”
The prescription drug epidemic has taken more than 200,000 lives via overdoses since 1999, according to federal statistics. Another 200,000 deaths are blamed on overdoses from heroin and illegal fentanyl smuggled into the country from China and Mexico.
The trials target drug manufacturers, distributors and retailers, and there are divisions among the defendants as well as among the states. Manufacturers, for example, have raised different legal arguments than distributors.
Everett initially filed its complaint against Purdue Pharma in Snohomish County Superior Court in January 2017. The city later joined the consolidated case in Cleveland.