'Better Than Nothing:' Experts Weigh In on Purdue Pharma Deal
The attorneys general in New York and Connecticut, among other states, are steadfastly opposed to a recent settlement worth billions with Purdue Pharma; they say it's not enough. Experts weigh in on the chances those states have in collecting by holding out for more.
September 17, 2019 at 04:20 PM
4 minute read
Experts disagree on the soundness of Connecticut and New York's decision to continue to litigate against Purdue Pharma, as about 2,600 municipalities took an opposite approach and settled with the drug manufacturer.
For starters, Purdue has since sought Chapter 11 bankruptcy protection, a move that could make it harder for successful litigants to collect damages. Plus, the Wall Street Journal Tuesday reported that the company has moved to shield its owners, members of the Sackler family, from lawsuits by plaintiffs who didn't sign on to the settlement agreement.
Litigating has become an even bigger gamble, said Lindsey Simon, a professor at the University of Georgia School of Law.
"The Sacklers won't get a release [from the creditors], so everyone can sue" them, Simon said. "But it's unclear how successful the claims against the Sacklers would be."
Collecting would be the biggest hurdle.
"Are there sufficient assets here?" Simon wondered. "For the parties who want to settle, it's guaranteed money. Even if it's not what you want, it's better than nothing."
Settlement details are hazy, but reports indicate that litigants who took the deal could get up to $12 billion, with about $3 billion guaranteed over seven years. Reports also indicate Purdue Pharma would sell its British-based drug company, Mundipharma, under the agreement.
Bob White, professor of law at Quinnipiac University School of Law, noted the inherent risks, especially if the company fails to generate the remaining $9 billion from future sales of its prescription painkiller OxyContin.
For this reason, White believes Connecticut Attorney General William Tong, New York counterpart Letitia James and others who have not settled have a good chance at winning damages in the end.
The question, though, is how much.
"Chapter 11 is an invitation to a negotiation. Tong is looking for a better deal," White said. "I think there is a basis for Mr. Tong's claims, and he stands a decent chance in improving the deal in bankruptcy court."
But first, litigants must resolve a major issue early: Does the bankruptcy petition stay any further action by the dissident states against Purdue and the Sacklers?
"That is a tough call," White said. "This will certainly go on for a while through bankruptcy and negotiations."
Meanwhile, Tong and James have continued to criticize the Stamford, Connecticut-based drug company, alleging the Sacklers moved cash overseas to limit their litigation exposure.
"At every turn, we will fight their craven strategy to use bankruptcy to shield their wealth, and to evade our claims to secure billions of dollars for addiction science, treatment and recovery," Tong said Monday.
The same day, James issued a similar statement.
"It shouldn't come as a shock that Purdue's bankruptcy filing comes just 48 hours after my office exposed about $1 billion in wire transfers involving Swiss bank accounts," she wrote. "In no uncertain terms, any deal that cheats Americans out of billions of dollars, allows the Sacklers to evade responsibility, and lets this family continue peddling their drugs to the world is a bad one, which is why New York remains opposed to it."
Amanda Bronstad contributed to this report.
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