The maker of OxyContin painkillers has reached an $8.3bn (£6.3bn) settlement and agreed to plead guilty to criminal charges to resolve a probe of its role in fuelling America’s opioid crisis.
Purdue Pharma will admit to enabling the supply of drugs “without legitimate medical purpose”.
The deal with US Department of Justice resolves some of the most serious claims against the firm.
But it still faces thousands of cases brought by states and families.
Purdue called the deal an “essential” step to wider resolution of the matter.
“Purdue deeply regrets and accepts responsibility for the misconduct detailed by the Department of Justice,” said Steve Miller, who joined Purdue’s board as chairman in July 2018, shortly before the firm sought protection from the litigation by filing for bankruptcy.
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The settlement with the DoJ must receive court approval to go forward.
The judge overseeing the bankruptcy case will be weighing how it will affect negotiations with other states and cities that have filed lawsuits against Purdue, many of which have already objected to the terms.
They say it lets the company and its owners, the Sackler family, off too lightly for their roles creating a crisis that has claimed the lives of more than 400,000 Americans since 1999.
“DoJ failed,” said Massachusetts attorney general Maura Healey after the settlement was announced.
“Justice in this case requires exposing the truth and holding the perpetrators accountable, not rushing a settlement to beat an election. I am not done with Purdue and the Sacklers, and I will never sell out the families who have been calling for justice for so long.”
DOJ failed. Justice in this case requires exposing the truth and holding the perpetrators accountable, not rushing a settlement to beat an election. I am not done with Purdue and the Sacklers, and I will never sell out the families who have been calling for justice for so long. https://t.co/M2NJ2DvcSr
— Maura Healey (@MassAGO) October 21, 2020
Justice Department officials defended the deal as “significant”, noting that the department would forego much of the $8bn in fines, allowing the money to be directed to other creditors in the bankruptcy case – such as the communities ravaged by opioid abuse that have sued the company.
They said they continue to review possible criminal charges against executives at the company and the Sackler family.
“This resolution does not provide anybody with a pass on the criminal side,” Rachel Honig, federal prosecutor for New Jersey said at a press conference.
What did Purdue do?
The settlement follows years of investigation into claims that Purdue and other drug-makers encouraged over-prescription of opioids, leading to overdoses and addiction which strained public health and policing resources in cities and towns across the US.
Under the terms of the settlement, Purdue will admit to conspiring to defraud the US and violating anti-kickback laws in its distribution of the addictive painkillers.
Those included payments the firm made to healthcare companies and doctors to encourage prescribing the drugs, which were ultimately paid for by public health programmes.
What will Purdue actually pay?
Purdue will pay $225m to the Justice Department and a further $1.7bn towards addressing claims made in other lawsuits.
The settlement also includes a $3.54bn criminal fine and $2.8bn civil penalty, which will compete with other claims in bankruptcy court – such as those made by communities affected by the opioid crisis. It is unclear how much of that sum will actually be collected.
The Sackler family has also agreed to pay $225m and give up ownership of the firm.
The company would reorganise as a new company run by a trust for the “public benefit”. It would continue to produce OxyContin and other drugs aimed at treating addiction, with the government likely having a significant role.
Purdue backed that idea in an earlier settlement proposal but it is opposed by many states, including Massachusetts.
What about the other claims?
Along with the reorganisation as a “public benefit” firm, Purdue has proposed to settle the wider claims against it with a deal worth more than $10bn.
But critics of the plan want to see the company sold and greater effort made to recover money from the Sackler family. Court documents revealed last year that the family had transferred more than $10bn out of the company between 2008 and 2017, as scrutiny of its conduct increased.
The Sackler family, which would commit $3bn to the wider settlement, said in a statement that members that had served on the Purdue board of directors had acted “ethically and lawfully” and that “all financial distributions were proper”.
“We reached today’s agreement in order to facilitate a global resolution that directs substantial funding to communities in need, rather than to years of legal proceedings,” the family said.