US drug-maker Purdue Pharma has filed for bankruptcy protection, as part of efforts to deal with thousands of lawsuits that accuse the firm of fuelling the US opioid crisis.
The company’s board approved the Chapter 11 filing on Sunday, a section of the US Bankruptcy Code which postpones a US company’s obligations to its creditors, giving it time to reorganise its debts or sell parts of the business.
The move is designed in part to resolve more than 2,600 lawsuits filed against Purdue over its alleged role in the opioid epidemic.
Under the terms of the deal, Purdue is to be dissolved and the money raised estimated to be about $10bn-$12bn (£8bn-£9.7bn), including a minimum cash contribution of $3bn from the Sackler family – will go towards settling the lawsuits. The Sacklers have also offered an additional $1.5bn from the eventual sale of Mundipharma, another pharmaceutical firm owned by the family.
Last week, the firm reached a tentative deal to settle most of those lawsuits.
Purdue had been facing legal action from thousands of cities and counties across the US. The lawsuits claimed that Purdue and its owners, the billionaire Sackler family, had aggressively marketed the prescription painkiller OxyContin, while at the same time misleading doctors and patients over addiction and overdose risks.
The drugmaker has reached a deal with 24 states and five US territories, but several states oppose the deal, such as New York, Connecticut and Massachusetts questioning how Purdue came up with the contribution figure.
The states want the Sackler family to put in more of its own money into the deal.
New York state prosecutors have alleged that the Sacklers had been moving billions of dollars offshore to different banks, including accounts in Switzerland.
The New York Attorney General’s office has requested records from 33 financial institutions. However it found $1bn in wire transfers in records from just one institution.
In a statement reported by Reuters, members of the Sackler family said: “It is our hope the bankruptcy reorganisation process that is now under way will end our ownership of Purdue and ensure its assets are dedicated for the public benefit.”
Purdue however argued the US regulator, the Food and Drug Administration, had approved labels for OxyContin that had warnings about the risks.
Firms including Purdue are accused of using deceptive practices to sell opioids, including downplaying their addictive quality.
Opioids are a group of drugs that range from codeine to illegal drugs such as heroin. Prescription opioids are primarily used for pain relief but can be highly addictive.
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