After months of negotiations and threats, Purdue Pharma LP (Stamford CT) finally filed for bankruptcy earlier this week. But it’s hardly a done deal, according to The New York Times.
The bankruptcy filing is part of a settlement agreement that the company and its owners negotiated with lawyers for states and thousands of local governments that have struggled for years with the opioid crisis. They support the deal because it offers guaranteed cash and an end to litigation.
But the plan has been greeted with scalding condemnation by some state attorneys general and others who contend that it allows Purdue, the maker of OxyContin, and its owners, the billionaire Sackler family, to walk away at a bargain price and without an admission of wrongdoing. The deal, they say, will be neither speedy enough nor sufficiently lucrative to begin to remedy the harms of the opioid crisis. Whether these states can derail the proceedings remains uncertain.
If the bankruptcy is approved, those cases would be resolved.
For now, as a bankruptcy judge considers Purdue’s petition, those cases are largely postponed.
The overwhelming majority of opioid cases against Purdue have been brought by cities, counties and tribes, and they are now consolidated before a federal judge in Ohio. Those plaintiffs have agreed to the settlement deal outlined in the bankruptcy filings. Attorneys general for 24 states and five US territories have also said they support the deal. But the settlement must be approved by the bankruptcy judge and Purdue’s creditors.
The fate of lawsuits brought by 24 other states and the District of Columbia that have not committed to the deal is still unclear. Purdue is seeking a preliminary injunction to halt those cases.
In court filings, Purdue referred to “a kaleidoscope of piecemeal litigation.” In 2019 alone, it said, the company will have spent $263 million on legal costs. It argued that its plan will end costly litigation for all parties and bring relief to the plaintiffs as quickly as possible.
There is a “police powers” exception to the automatic suspension of lawsuits in bankruptcy court. If a state is using that power to protect its citizens through a lawsuit against a company, often that case can continue even if the company has filed for bankruptcy. In this instance, for example, states could say they are suing Purdue and the Sacklers to protect public health or to guard against consumer fraud.
Attorney General Josh Stein of North Carolina, who is preparing to sue the Sacklers, said, “I allege that these people are among the most responsible for the trail of death and destruction the opioid epidemic has left in its wake.”
Similarly, various leaders of the fight against the Sacklers issued withering statements.
Over the past two weeks, news services here in the US would have us believe that it’s the scurrilous, money-grubbing, totally devoid of ethics and principles and without so much as a shred of human decency Sackler family are the true culprits behind America’s opioid crisis. It is striking to me how quickly and completely public attention has been diverted to the Sacklers and their privately held Purdue Pharma, conveniently a symbolic “whipping boy” atop a problem for which many, many others are equally and perhaps even more complicit.
In late August, for example, we saw a milestone reckoning in court for a drugmaker deeply involved in America’s opioid calamity. A judge in Oklahoma ordered Johnson & Johnson to pay $572 million to fund a state plan to combat opioid addiction. Whatever the outcome of legal appeal, this is a milestone in a public-health calamity that cost 47,600 American lives in 2017 and could well claim a further 500,000 over the next decade (see article in The Economist). Faced with such human wreckage, states, counties and municipalities have served firms with roughly 2,500 lawsuits.
The simple fact is that the origin of the epidemic lies in the marketing of prescriptions by pharma firms almost 25 years ago. Opioids have long been known to be highly addictive and easy to overdose on. Almost one in five addicts dies within a decade. Yet newer versions of the drugs were sold as having lower risks. Firms also worked hard to promote the idea that doctors were undertreating chronic pain.
Drugmakers involved in scam-selling opioids could begin to make amends by shouldering their share of the blame and settling quickly. That way the money will arrive sooner, and less of it will go to lawyers. There are encouraging signs that Purdue Pharma, which traces back to the origin of the epidemic, may settle a cluster of lawsuits for up to $12 billion.
Yet it is imperative not to lose sight of why the opioid crisis struck America so much harder than anywhere else. The blame lies partly with the incentives knitted into its healthcare system.
For starters, many drug distributors and pharmacies, enthralled by growing sales, failed to take action, as they are obliged to, when signs emerged that opioids were being diverted for illicit use. Doctors and hospitals, focusing on bottom line, also swung towards rashness when serving up pills. The system placed sales and customer “satisfaction” before patients’ welfare. Medical-professional societies were at best prostrate, and in a few cases complicit, in encouraging overuse.
Regulators fell short, as well. States could have limited prescription sizes, or set rules for how opioids were to be prescribed. The Food and Drug Administration failed to take account of the public-health impact of opioids when it reckoned them safe. It has since not done enough to reform its approval regime, and it has still not properly reevaluated the opioids already on the market to determine whether they need to be removed from sale.
Eager to prove they are serious, some states have introduced laws to tighten supply. Oddly enough, perhaps, they need to be wary. Prescription opioids are no longer the main cause of death from addiction. Efforts to cut off people who are addicted risk sending them onto the black market. Regulators need to focus instead on medically assisted treatment for addicts, which has been shockingly neglected. This would likely save thousands of lives a year.
The full cost of dealing with the crisis will run to hundreds of billions of dollars, which is why litigation is needed–and why, unlike in tobacco settlements, the damages from pharma companies should go directly into alleviating the harm from opioids rather than into general government spending. Unfortunately, even then, substantial settlements with drug firms and distributors will not pay for the entire bill. Hefty sums will still have to come from taxpayers.
All this should be a warning to governments everywhere. In most parts of the world there is a shortage of pain relief. But as governments expand access to drugs, they should heed the lessons from America, says The Economist. Opioids need to be dispensed according to properly enforced rules. Regulators have a role in supervising how they are marketed. Doctors should be vigilant and inform patients of the risks.
None of this is meant to absolve the patently unscrupulous companies that sold drugs mindful of the damage they were causing or looked the other way while the cash register kept ringing. All of us have a right to expect high ethical standards from those who supply our medicines. But portraying the Sackler family has the chief culprit in this horrific catastrophe and doing everything conceivable to, in effect, destroy their name in perpetuity isn’t the answer. There’s plenty of “blame” to go around. Plenty.
This is a problem, a job for the entire US healthcare system to resolve. And sufficient time as well as money must be devoted to restoring the role of these medicines for the sake of their importance in treating truly inhumane, yet avoidable pain.