(Reuters) – OxyContin maker Purdue Pharma LP and members of the wealthy Sackler family that own the company reached a $270 million settlement to resolve a lawsuit brought by the state of Oklahoma accusing the drugmaker of fueling an opioid abuse epidemic.
The settlement with Oklahoma Attorney General Mike Hunter, unveiled on Tuesday, was the first to result from a wave of recent lawsuits accusing Purdue of deceptively marketing painkillers that eventually helped create a deadly crisis sweeping the United States.
Hunter’s 2017 lawsuit was set to go to a jury in May in what would have been the first trial to result from roughly 2,000 lawsuits filed in federal and state courts nationwide against Purdue and other drugmakers.Hunter accused Purdue, Johnson & Johnson and Teva Pharmaceutical Industries Ltd of deceptive marketing that played down the risks of addiction associated with opioid pain drugs while overstating their benefits, contributing to an epidemic.
Opioids, including prescription painkillers, heroin and fentanyl, were involved in a record 47,600 overdose deaths in 2017 in the United States, according to the U.S. Centers for Disease Control and Prevention.
The companies deny wrongdoing. Purdue has argued that U.S. Food and Drug Administration-approved labels for its opioids carried warnings about the risk of abuse and misuse associated with them.
Purdue’s chief executive this month said the company was weighing filing for bankruptcy protection as an option to address potential liabilities from the lawsuits, a move that Reuters had reported earlier.
Companies facing mounting litigation often consider a bankruptcy filing to halt lawsuits and negotiate with plaintiffs in one federal court proceeding.
‘START OF THE DOMINOES FALLING’
Avoiding the trial with a settlement relieves immediate pressure on Purdue to seek bankruptcy protection, said Alexandra Lahav, a professor at the University of Connecticut School of Law.
While the company has not ruled out a bankruptcy filing, it now plans to focus attention on attempting a far-reaching settlement with other plaintiffs pursuing similar cases, including state and local governments, a person familiar with Purdue’s deliberations said.
“This may be the start of the dominoes falling for Purdue,” Lahav said.
Members of the Sackler family in a statement called allegations that they contributed to the opioid crisis “not accurate” and argued that Tuesday’s agreement did not represent “a financial model for future settlement discussions.”
Purdue Chief Executive Craig Landau and members of the Sackler family expressed compassion for opioid victims and portrayed the settlement as furthering their commitment to combat the addiction crisis.
Around 1,600 lawsuits are consolidated before a federal judge in Ohio, who has pushed for a settlement ahead of the first trial scheduled before him in October.
Purdue will likely attempt to finalize any decisions related to a settlement and a bankruptcy filing before that court date, the source familiar with the company’s deliberations said.
Tuesday’s settlement covers only Purdue, leaving claims pending against J&J and Israel-based Teva. The deal was announced a day after the Oklahoma Supreme Court rejected an effort by Purdue and its co-defendants to delay the May 28 trial.
Purdue’s marketing efforts helped fuel the opioid epidemic and turn OxyContin into a top-selling painkiller that by 2017 had generated an estimated $35 billion in sales since the product’s release in 1996, according to the lawsuit.
The state had been seeking more than $20 billion in damages, according to court papers. Under the terms of Tuesday’s settlement, Purdue said it will contribute $102.5 million to help fund an addiction treatment center at Oklahoma State University, and donate $20 million worth of medications to support its treatment mission. The Sacklers, who were not named as defendants in Oklahoma’s lawsuit, agreed to contribute $75 million toward the university center as well, Purdue said. Another $12.5 million will be made available to Oklahoma localities to help address the opioid epidemic in their communities, and another $60 million will go toward costs and legal fees stemming from the lawsuit, Purdue said. Lawyers for plaintiffs pursuing similar cases nationally against Purdue and other opioid manufacturers welcomed Tuesday’s settlement as a breakthrough that could help secure other deals.
They have often compared the cases against Purdue to widespread lawsuits against the tobacco industry that resulted in a $246 billion settlement in 1998. Paul Hanly, a lead lawyer for the plaintiffs in the federal opioid litigation, said they are “hopeful that the Oklahoma settlement is the beginning of a good-faith program on the part of Purdue to settle all of the nationwide litigation.”
Reporting by Nate Raymond in Boston and Mike Spector in New York; Additional reporting by Jessica DiNapoli in New York; Editing by Jeffrey Benkoe, Bill Trott and Bill Berkrot