Purdue Pharma: Sackler Family's 'Personal Wealth' Offered In Opioid Deal

Sep 9, 2019
Originally published on September 10, 2019 3:12 pm

Updated at 8 p.m. ET

The family that owns Purdue Pharma, maker of Oxycontin, has agreed to give up "the entire value" of the privately owned firm to settle claims that Purdue played a central role in the nation's deadly opioid epidemic.

That's according to a spokesperson for the firm, who detailed the Sackler family's offer in an email sent to NPR on Monday.

"Additionally, the Sacklers have offered $3 billion in cash as part of the global resolution," wrote Josephine Martin, Purdue Pharma's head of corporate affairs and communications.

This is the first time Purdue Pharma or the Sacklers have publicly disclosed elements of their negotiating position, though the company had acknowledged settlement talks were underway.

According to Martin, the Sacklers also offered to contribute another $1.5 billion from the sale of Mundipharma, a company owned by family members.

The email was sent after NPR reported that the family had balked at a demand from state attorneys general that they pay roughly $4.5 billion out of their personal wealth.

"We needed more security on the part of the Sacklers that the money they were pledging, they would in fact pay," said Josh Stein, North Carolina's state attorney general, speaking on Morning Edition.

"And we didn't have that commitment and the Sacklers rejected those proposals," Stein said.

Over the weekend, Stein and other state attorneys general declared that talks with the Sacklers and Purdue Pharma executives had reached an impasse.

But in her email, Purdue's Pharma's Martin disputed the suggestion that proposed pay-outs would not affect the personal fortunes amassed by members of the Sackler family through the sale of prescription opioids.

"As 100 percent owners of Purdue, this obviously constitutes their personal wealth," Martin wrote, referring to pay-outs the Sackler family agreed in principle to make from their various assets.

The New York Times had previously reported some of the details of the proposed national settlement between Purdue Pharma and thousands of plaintiffs suing the firm. This is the first time, however, that the company has commented or confirmed the broad outlines of the deal.

In a separate email to NPR, Purdue Pharma also said the drug firm still hopes to achieve a settlement, rejecting the claim by state attorneys general that talks had ended.

"Purdue Pharma believes a settlement that benefits the American public now is a far better path than years of wasteful litigation and appeals," the statement said. "Those negotiations continue and we remain dedicated to a resolution that genuinely advances the public interest."

Martin declined NPR's interview requests and wouldn't say whether Purdue Pharma is considering an "imminent" bankruptcy filing, as state attorneys general predicted over the weekend.

"States have already begun preparations for handling the bankruptcy proceedings," wrote Stein, North Carolina's state attorney general, and Herbert Slatery, attorney general for Tennessee, in a memo sent to other state officials obtained by NPR.

The drug firm acknowledged last March, however, that filing for Chapter 11 is one of the strategies being contemplated if a settlement can't be reached.

The proposal offered by attorneys general would also have forced Purdue Pharma into a structured bankruptcy proceeding, while dissolving the Sacklers' overseas opioid business.

Overdose deaths linked to prescription opioids have killed more than 218,000 Americans since the addiction crisis began in the late 1990s, according to the Centers for Disease Control and Prevention.

State and local governments have filed more than 2,000 lawsuits claiming Purdue Pharma played a central role marketing opioid medications, including Oxycontin, while downplaying the risks.

Over two decades, opioid sales generated billions of dollars in profits for the company, making the Sacklers one of the richest families in the U.S.

If Purdue Pharma does file for bankruptcy without first reaching some kind of structured deal, it could take years to sort out the remaining value of the company's assets and then determine who's first in line for compensation.

Pressure to reach a settlement is also intensifying because a federal opioid trial involving Purdue Pharma and more than 20 other drugmakers, distributors and pharmacy chains is set to begin next month in Cleveland.

While that legal process moves forward, state attorneys general have promised to continue pursuing the Sacklers personally to recoup profits the family received from opioid sales, even if Purdue Pharma seeks Chapter 11 protection.

"I won't let them get away with their crimes," Pennsylvania Attorney General Josh Shapiro wrote Saturday on Twitter. "I will sue them personally, so that we can dig into their personal pocketbooks."

The Wall Street Journal also reported Friday that the U.S. Justice Department is involved in separate talks with Purdue Pharma. Justice Department officials declined to comment to NPR.

According to the newspaper, those negotiations involve possible civil penalties tied to federal probes of Oxycontin sales, but could also include criminal charges using statutes normally used to prosecute drug dealers.

Copyright 2019 NCPR. To see more, visit NCPR.

DAVID GREENE, HOST:

Let's talk about the latest development in the push to hold drug companies accountable for the nation's opioid crisis. Purdue Pharma manufacturers the opioid medication OxyContin. That company is owned by one of the wealthiest families in America, the Sacklers. Purdue is facing a wave of lawsuits. But state attorneys general say they are at an impasse in negotiations. And the company is likely to file for bankruptcy. So what could that mean? Well, North Country Public Radio's Brian Mann covers opioid litigation for NPR and joins me this morning. Hi, Brian.

BRIAN MANN, BYLINE: Hi, David.

GREENE: Let's just talk about the substance, first, of these talks with Purdue Pharma and what they were meant to accomplish.

MANN: Yeah. This was really high-stakes stuff. Purdue Pharma and its owners, the Sackler family - they've signaled for months that they want some kind of national settlement that would cap their liability and get money paid out to these communities hit hard by the opioid epidemic. We've heard payouts could run as high as 10 to 12 billion dollars. But in this latest round of talks, state attorneys general demanded something specific. They wanted the Sacklers to commit to paying roughly $4.5 billion out of their personal fortunes as part of that compensation. They say the Sacklers balked at that. And here's Josh Stein. He's attorney general for the state of North Carolina.

JOSH STEIN: We needed more security on the part of the Sacklers that the money that they were pledging they would, in fact, pay. And we didn't have that commitment. And the Sacklers rejected those proposals. The deal was there to be made, and they refused. And so this is where we find ourselves.

GREENE: All right. So North Carolina's attorney general - they're saying the deal was there. They refused. Is there still hope for a deal? I mean, what happens now?

MANN: Right. So at this point, Stein and other members of his negotiating team - they predict Purdue Pharma will now file for bankruptcy protection imminently. In an email they sent Saturday that was obtained by NPR, they said states across the U.S. are already preparing for that bankruptcy to happen. And Purdue has signaled in the past that bankruptcy is one of the options they're considering. The company declined to answer our questions about this over the weekend or say whether bankruptcy is, in fact, imminent. But Purdue Pharma did send NPR a statement late last night saying they still hope to negotiate some kind of deal. In fact, they say talks with some government officials, possibly local government officials, are still continuing.

GREENE: But what about bankruptcy? And what implication could that have, I mean, for these lawsuits against the company, of course? But I'm just thinking about all the people who say they need money to recover from opioids.

MANN: Yeah, this is going to complicate all of that enormously. Remember, more than 2,000 state and local governments have sued. Total claims could run into the tens of billions of dollars. And a major federal trial involving Purdue Pharma and 20 other drug companies is scheduled for just next month in Ohio. So if this bankruptcy happens, it could throw all of that into chaos. It might take years to sort out what assets remain and then who's first in line to get some kind of compensation.

GREENE: But, I mean, Brian, this is also the story of a famous and controversial American family - right? - the Sacklers. I mean, opioid sales made them one of the richest families in the country. If Purdue Pharma does file for Chapter 11 protection, I mean, what could happen to their personal wealth?

MANN: Yeah. There's a legal argument being made by some of these states that the Sacklers effectively stripped billions of dollars out of Purdue Pharma over the years. In part, it's alleged because the family suspected their company would eventually face lawsuits like this. So 17 states are already suing the Sacklers directly to try to claw back some of those profits. And Josh Stein, the attorney general of North Carolina, said - says other states will follow.

STEIN: Many states, like mine, will be filing lawsuits against the Sacklers in their individual capacity in creating this epidemic. I think almost more than any other family and company, they have to wear that burden.

MANN: So the Sacklers and Purdue Pharma - they're going to face other legal troubles that won't end if there's a bankruptcy. The Wall Street Journal also reported Friday that the U.S. Justice Department is involved in separate talks with Purdue Pharma that could involve criminal, as well as civil complaints.

GREENE: Brian Mann from North Country Public Radio covers opioid litigation for us at NPR. Thanks, Brian.

MANN: Thank you, David. Transcript provided by NPR, Copyright NPR.