Purdue Pharma, the manufacturer of oxycontin, has been at the center of the opioid crisis that has gravely damaged communities and enveloped the pharmaceutical industry in scandal. A landmark $8.3 billion settlement between the company and the U.S. Justice Department was reached. Still, there remains a question as to whether the Purdue Pharma settlement will do more long-range harm than good.
Purdue was accused of using a combination of misleading marketing tactics, along with kickbacks to doctor’s offices to get oxycontin prescribed. Patients became unwittingly addicted and deaths resulted—over 470,000 in the past 20 years.
The company was charged with conspiracy to defraud, illegal marketing and violating federal anti-kickback laws. There are also a wide range of lawsuits—upwards of 2,000—in different states across the country.
In October 2020, Purdue agreed to a guilty plea on the federal charges. They also agreed to the $8.3 billion settlement, which was approved by a federal bankruptcy judge in New York.
This brings us to the point of why some believe the victory cost too much. The only reason a bankruptcy judge had a say in the matter is because Purdue filed for bankruptcy in September 2020. The Chapter 11 bankruptcy filing puts the Justice Department in line behind other creditors, with legitimate questions about how much of the money will ever make its way to the victims.
A number of state attorney generals, along with legal counsel for victims’ families, opposed the settlement on these very grounds along with concerns over what the deal means for Purdue Pharma in the future.
The government negotiated for Purdue to become a public benefit corporation. That means it will be run by a trust which will be charged with weighing future profits against the overall public good.
Ideally, that would mean investments on behalf of the nearly half a million families impacted by opioid-related deaths. But critics believe it would have been better to simply force Purdue to be sold, with profits then going to the victims’ families.
On the one hand, we have an $8.3 billion settlement that, if paid out, would be a historic landmark for corporate accountability. On the other hand, we have the real fear that none of that money will actually be paid out.
Judge Robert Drain, who approved the settlement, is naturally optimistic about how this will all play out. “Both entities (Purdue & the Justice Department), after all, have the public interest as their guiding imperative and share an interest in resolving the opioid crisis,” Drain said. The coming months, when a company reorganization plan is due in court for approval, will tell us more.