A year ago, under the weight of opioid litigation, Purdue sought protection in bankruptcy court from which it is expected to emerge at some point as a new company. Judge Robert D. Drain, who is overseeing the bankruptcy case in White Plains, N.Y., will review a long line of unsecured creditors alongside the federal penalties. But the $2 billion federal criminal forfeiture penalty stands apart and has considerably more teeth. The Justice Department said on Wednesday it would demand that Purdue directly pay just $225 million of that amount and would earmark the remainder for the municipalities, states and tribes, on condition that they allocate the money to abate local opioid crises.
A second condition of the unusual government-to-government designation, however, has prompted an outcry from 25 state attorneys general: the ownership of Purdue, after it emerges from bankruptcy.
Purdue has proposed that the company be run as a “public benefit corporation,” with proceeds from continuing limited sales of OxyContin and several overdose-reversing medications under development to go toward opioid abatement. The Justice Department endorses that model.
But in a forceful letter addressed to Attorney General William P. Barr earlier this month, the attorneys general decried the public trust model, and its association with governmental entities. Governments should not be in the opioid business, they said. Instead, they said that Purdue should be run privately, with government oversight.
Another objection to Wednesday’s settlement centers on the resolution of civil claims against individual Sacklers, raised by private families who are suing. A forensic audit last year by Purdue found that the Sacklers directed at least $10.7 billion in the company’s proceeds to family-controlled trusts and holding companies, even as Purdue was facing legal scrutiny.
According to the families’ letter, the Justice Department’s agreement is too soon and for too little. Massachusetts, for example, has scheduled depositions against some Sacklers in November, during which more information may come to light.
“The D.O.J. failed,” said Maura Healey, the Massachusetts attorney general. “Justice in this case requires exposing the truth and holding the perpetrators accountable, not rushing a settlement to beat an election. I am not done with Purdue and the Sacklers, and I will never sell out the families who have been calling for justice for so long. ”