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Purdue reaches $8B settlement on federal opioid charges—but will it ever pay that amount?
  • Publisher:Phexcom
  • Publication:2020/10/20

After years in court over its role in the nation's opioid crisis, Purdue Pharma has signed a massive settlement to walk away from federal civil and criminal charges. But as the company wades throught court-supervised bankruptcy, will the government—or individuals hurt by Purdue's bad behavior—see anywhere close to that amount in damages?

Purdue has reached an $8 billion-plus deal with the U.S. Department of Justice (DOJ) to plead guilty and settle federal criminal and civil claims for its role in fueling the nation's opioid epidemic, the Trump administration said Wednesday.

Purdue has been assessed a $3.54 billion criminal penalty and will forfeit an additional $2 billion, the government said. The company has also agreed to pay $2.8 billion to settle the government's civil claims. In addition, the company's founding Sackler family will forfeit $225 million in civil damages.

Of that $2 billion forfeiture, Purdue will pay $225 million on the day it exits Chapter 11 restructuring as a "public benefit trust" organization, the DOJ said in a release. That payment may be "credited" to state and local claims against Purdue, the DOJ said, with the government waiving the remaining $1.775 billion. 

The $8 billion settlement—or $6.225 billion, depending on how you view it—is separate from a civil payout worth between $10 billion and $12 billion Purdue has proposed to settle state and local claims. A wave of lawsuits is seeking trillions of dollars from the company and, taken together, cast doubt on how much Purdue will ever pay out given its bankruptcy proceedings. 

RELATED: State attorneys general promise bankruptcy court showdown as Purdue inks $10B opioid settlement

In September, Purdue reached a deal with 24 state attorneys general; plaintiffs in the national multidistrict litigation in Cleveland; and other officials that offers up at least $10 billion to help fight the opioid crisis that the drugmaker itself allegedly helped create.

As part of the deal, the company filed for bankruptcy with the intent to restructure as a public benefit trust to provide the free drugs and financial contributions that make up the lion's share of the settlement.

Purdue Chairman Steve Miller said in a statement the “unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public.” 

However, that purported deal seemed to be on the rocks within weeks of signing as state attorneys general backed away. The company is currently in restructuring and shielded from additional lawsuits during that effort. 

RELATED: Sackler family directed—and covered up—Purdue's opioid sales tactics. Now, it should pay the price: AG

Meanwhile, the Sacklers have also been the target of thousands of lawsuits for their role in driving Purdue's opioid wave. The family's civil settlement does not admit wrongdoing. 

In a statement, the Sacklers said family members who served on Purdue's board acted "ethically and lawfully" and were not involved with Purdue's conduct during the period covered in the company's settlement.

Earlier this week, the Trump administration made the surprising move of seeking to curtail Purdue's bankruptcy proceedings to limit the Sacklers' financial disclosure requirements, The Wall Street Journal reported. The DOJ argued the probe would jeopardize other families' and corporations' willingness to testify in federal investigations.