Purdue Pharma has reached a settlement of $8.3 billion with the US Department of Justice (DOJ) to resolve multi-year civil and criminal investigations into the company’s past marketing practices related to its opioid medicines.

Under the agreement, Purdue accepts responsibility for specified misconduct that took place before June 2017 and resolves allegations regarding conduct between 2007 and February 2018 by pleading guilty and agreeing to pay fines and forfeiture. The majority of these settlement funds will be directed to state, local, and tribal governments for opioid-crisis abatement purposes.

The resolutions with Purdue are subject to the approval of the US bankruptcy court. Purdue filed for reorganization under Chapter 11 of the US Bankruptcy Code in 2019 over liabilities from opioid litigation. At that time, it reached an agreement of more than $10 billion for settling opioid litigation with 24 state attorneys general, analogous officials from five US territories, and plaintiffs’ executive committee and co-lead counsel in multidistrict litigation.

Under its settlement with the DOJ, the criminal resolution includes a criminal fine of $3.544 billion and an additional $2 billion in criminal forfeiture. For the $2 billion forfeiture, the company will pay $225 million on the effective date of its bankruptcy, and the DOJ is willing to credit the value conferred by the company to state and local governments. Purdue has also agreed to a civil settlement in the amount of $2.8 billion to resolve its civil liability. Separately, the Sackler family, former shareholders of Purdue Pharma, has agreed to pay $225 million in damages to resolve certain civil liabilities.

In commenting on the DOJ settlement, Steve Miller, who joined Purdue’s Board as Chairman in July 2018, said in an October 21, 2020 statement: “Resolving the DOJ investigations is an essential step in our bankruptcy process. The settlement agreement will pave the way for Purdue to submit a plan of reorganization to the bankruptcy court that will transfer all of Purdue’s assets to a public benefit company, and ultimately deliver more than $10 billion in value to claimants and communities.”

Purdue says that its agreement with the DOJ resolves all potential criminal charges against the company with respect to the production, sale, marketing, and distribution of its opioid products through the present (as reported on October 21, 2020). The company said that the civil settlement was entered into to avoid the delay, uncertainty, and expense of protracted litigation.

Going forward, Purdue will operate as a new public benefit company by dissolving the company and repurposing its assets entirely for the public benefit under different ownership and overseen by new trustees. Over the past several years, the company has made several key changes relating to its opioid business specifically and overall company structure. These changes have included: (1) ending all promotion of opioids and opioid products to healthcare professionals and eliminating its sales force; (2) appointing a new President and CEO; (3) adding a new independent Chairman of the Board and other directors with restructuring and pharmaceutical industry experience; (4) accepting the resignations of all Sackler family members from its Board; (5) agreeing to be bound by and continuing to comply with a voluntary injunction that further restricts the company’s promotion of its opioid medications; and (6) agreeing to have an independent monitor review the company’s compliance with the voluntary injunction.

The settlement agreement with DOJ is being submitted to the bankruptcy court for review and approval. Under its agreement with the DOJ, Purdue’s $225-million payment is deferred until the entry of the judgment of conviction, which is expected to take place after the bankruptcy court approves a plan of reorganization.

Source: Purdue Pharma and US Department of Justice