Purdue Pharma filed for bankruptcy protection Sept. 15 as part of a strategy to protect itself and its owners from thousands of lawsuits alleging it helped fuel the U.S. opioid epidemic.
Purdue Pharma's board approved the anticipated bankruptcy filing just a few days after the drugmaker reached a tentative deal to settle lawsuits with thousands of cities and counties. To date, 24 states and five U.S. territories have accepted the agreement.
With the proposed settlement and bankruptcy filing, a key question remains: What happens now?
A breakdown of some next steps:
1. Purdue Pharma is working to freeze lawsuits and shift claims into bankruptcy court. Purdue Pharma will soon ask a bankruptcy judge to freeze all of its lawsuits. Under a typical bankruptcy filing, lawsuits are halted and claims are shifted into bankruptcy court. The process is meant to protect a company's value while also letting it have more time to negotiate deals, according to STAT.
2. Purdue Pharma is prepping for states' arguments that the lawsuits can't be stopped. About half of the states suing Purdue Pharma have agreed to the tentative settlement, while others like New York, Massachusetts and Connecticut oppose the deal. Those states will likely argue that Purdue can't halt the lawsuits through a bankruptcy filing because their legal actions were brought to enforce public health and safety laws, exempting them from the usual bankruptcy rules that would pause them, according to STAT.
3. Purdue Pharma will be restructured under Chapter 11. Purdue Pharma would be restructured completely into a public benefit trust. Any profit the company makes from OxyContin and other drugs would go toward paying plaintiffs' claims and supporting research and development of drugs to treat addiction. Restrictions also would be placed on the new company's marketing and sale of opioids.
4. What about the other drugmakers in the first federal opioid trial? Purdue Pharma is just one of the defendants in a multidistrict opioid trial set to begin next month. While a bankruptcy judge could put the entire trial on hold, it may also just separate the claims against Purdue Pharma and push those into bankruptcy court, STAT reports.
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