Purdue to Pay $270M to Settle Okla. Opioid Lawsuit

Purdue Pharma LP and the Sackler family will pay $270 million to settle Oklahoma’s claims that illegal marketing of the Oxycontin painkiller devastated local communities, an accord that could influence the results of thousands of lawsuits faced by the company and others.

The settlement comes more than two months before the scheduled start of a trial against Purdue Pharma, Johnson & Johnson and Teva Pharmaceutical Industries Ltd. in Norman, Oklahoma.

Details of the settlement are scheduled to be announced by the state later Tuesday. A spokesman for Oklahoma Attorney General Mike Hunter declined to comment.

The settlement resolves a tiny sliver of the massive legal liability that has led Purdue to threaten bankruptcy as a way of managing its legal costs. The drugmaker is owned by the Sackler family, and states and local governments have recently explored pursuing the family’s wealth.

Other drugmakers facing litigation, including J&J and Teva, would have to make their own deals. Representatives for Purdue, Teva and J&J didn’t immediately respond to requests for comment.

“I see this as a one-off tied to Purdue’s limited financial resources,” said Richard Ausness, a University of Kentucky professor who teaches about mass-tort law. “I think these other companies will wait to see the outcome of some of these test trials before they get serious about settling.”

Oklahoma claims the three drugmakers understated the risks of prescription painkillers and overstated their benefits, fueling an epidemic that’s costing its communities tens of millions of dollars for treatment and policing. Oklahoma has also sued 10 other companies over opioid issues, though the presiding judge broke the trials into groups. Purdue, J&J and Teva were slated to be the first to come to trial.

The companies and others are battling claims by three dozen states and 1,600 U.S. cities and counties, but those suits are pending in another court and the first trial isn’t until the fall. Purdue’s settlement could help set the terms for other jurisdictions and companies looking to resolve the cases.

Shares of J&J rose 1.1 percent at 10:01 a.m. in New York. Drugmaker Endo International Plc, which is being sued elsewhere, rose 8.1 percent. Endo’s bonds rose as well; the company’s senior unsecured notes due 2025 rose almost 4 cents on the dollar to 73.75 on Monday morning in New York, according to Trace bond trading data.

In its suit, Oklahoma sought $25 billion in damages and penalties over Purdue’s push to lure doctors into prescribing Oxycontin for unauthorized uses to generate billions in profits for the company. While doctors have wide discretion to prescribe medicines beyond what they’ve been approved to treat, drugmakers are limited to marketing their products for just ailments approved by regulators.

The Sackler family is accused of making billions over the abuse of Oxycontin that the company’s marketing allegedly fueled. The family made more than $4 billion between 2008 and 2016, according to a recently unsealed opioid suit filed by the Massachusetts Attorney General.

The settlement will allow Stamford, Connecticut-based Purdue to avoid filing for bankruptcy at least for now, according to people familiar with the matter, who declined to speak publicly about the deal because they weren’t authorized to do so. Craig Landau, Purdue’s chief executive officer, confirmed in a March 8 interview with the Washington Post that “bankruptcy is an option” to deal with the wave of opioid suits that threaten the pharmaceutical company’s financial strength.

A Chapter 11 filing would shield Purdue from litigation by imposing a stay on all U.S. suits and allow the privately held drugmaker to consolidate its legal costs and expenses. Experts say taking the cases out of the regular court system and putting them before a single bankruptcy judge likely will allow Purdue to pay less in settlements.

No Delay

Lawyers for Oklahoma and Purdue have been in talks for months, according to the people. The settlement negotiations were overseen by a court-appointed mediator. Judge Thad Balkman refused requests by Purdue, J&J and Teva to delay the May 28 trial. On Monday, the state’s Supreme Court upheld Balkman’s decision to push ahead with the trial, making Oklahoma the first state in the nation to try claims against opioid makers.

In 2016, there were 444 opioid-related overdose deaths in Oklahoma, which left it ranked 28th in the U.S. for such deaths, according to data analyzed by the Centers for Disease Control and Prevention. The year before, the number of opioid prescriptions Oklahoma doctors wrote exceeded the state’s population of four million, according to government statistics.

The state’s suit sought millions in damages for the current costs of dealing with the opioid epidemic and billions in future costs tied to counseling, health-care and social services for children orphaned by overdoses, according to court filings in Oklahoma’s case.

The case is State of Oklahoma v Purdue Pharma LP, No. ZCJ-2017-816, Oklahoma District Court for Cleveland County (Norman).