Purdue Pharma reveals details on settlement fund allocation following complaint from AG Morrisey

West Virginia


CHARLESTON, W.Va. – West Virginia Attorney General Patrick Morrisey, with support from 18 counties and 64 municipalities, as well as pledged support from dozens of others, raised an objection Friday to Purdue Pharma’s failure to disclose how its $7 billion proposal would be split among states.

Purdue Pharma responded Sunday by disclosing publicly the once-closely held Denver Plan, which the attorney general opposes since it would distribute settlement funds based on a state or local government’s population instead of the intensity of the problem, according to a press release.

The attorney general’s objection argued that any such disbursement would violate the overriding principle of the case, namely that the money should go where it is most needed, the release explains.

“West Virginia and our supporting counties and municipalities oppose settlement distributions largely based on population,” Morrisey said. “Such proposals fail to recognize the disproportionate harm caused by opioids in West Virginia, and we must work toward providing just accountability in West Virginia and the nation.”

The attorney general said his objection, filed in U.S. Bankruptcy Court for the Southern District of New York, had argued that Purdue’s failure to disclose terms of the ultimate distribution plan undermines its desire to avoid court challenges to an inherently inequitable arrangement.

The objection further argued that an allocation plan based upon population—with only minimal consideration given to the intensity of the addiction epidemic—will render the broader bankruptcy plan unconfirmable since it would fail to account in any meaningful way for the great disparities in intensity of opioid addiction and opioid death that exist between the states, according to the release.

The $7 billion proposal represents a combining of company assets and a guaranteed $4.275 billion from the Sackler family, a contribution of nearly 50% more than the family’s offer from two years ago, according to the attorney general’s office. It also removes the family’s control and ownership of Purdue Pharma, effectively barring them from any future involvement in opioid sales in the U.S.

The attorney general joined a preliminary framework with 27 attorneys general in September 2019 and has since filed a proof of claim in the matter on behalf of West Virginia, the release states.

Morrisey filed suit against Purdue Pharma and former chief executive Richard Sackler in May 2019. The lawsuit alleges Purdue Pharma created a false narrative to convince prescribers that opioids are not addictive and that its opioid products were safer than they actually were.
 
The lawsuit contends Purdue Pharma proliferated a deceptive marketing strategy with reckless disregard for compliance enforcement. It also alleges company sales representatives routinely claimed that OxyContin had no dose ceiling, despite assertions by federal regulators that OxyContin’s dose ceiling was evident by adverse reactions.

The lawsuit marked West Virginia’s second against Purdue Pharma, the release explains. The first, filed in 2001, resulted in a $10 million settlement in 2004. However, that case involved an earlier version of the opioid than the reformulated, so-called tamper-resistant OxyContin that debuted in 2010.

Read a copy of the attorney general’s objection here. Read the Denver Plan disclosure here.

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