U.S. judge urges parties to wisely use Purdue opioid settlement funds

By Tom Hals

(Reuters) – A U.S. bankruptcy judge on Thursday urged parties that will benefit from a proposed settlement with OxyContin maker Purdue Pharma LP to focus on addressing the opioid addiction crisis and avoid battling over the deal’s billions of dollars.

The outline of a proposed settlement that Purdue values at more than $10 billion was filed in the U.S. Bankruptcy Court in White Plains, New York on Tuesday.

The deal aims to resolve more than 2,600 lawsuits by states, local governments and other plaintiffs against Purdue and its Sackler family owners. The lawsuits accuse them of fueling a public health crisis by aggressively marketing opioids while downplaying their overdose risks, contributing to 400,000 deaths since 1999, according to U.S. statistics.

“No one can ignore the individual people affected by this crisis,” said U.S. Bankruptcy Judge Robert Drain at a Thursday hearing. “So I hope that you all will be able to work together to use the money as wisely as possible.”

Drain urged the parties to consider ways to distribute settlement funds quickly, rather than follow the usual pattern of a Chapter 11 bankruptcy, which involves evaluating each creditor claim before making payments.

He mentioned as examples the litigation settlements involving victims of Vietnam War herbicide Agent Orange, the Sept. 11, 2001 attacks and the BP (LON:) Plc oil spill. Those cases were resolved using compensation funds established to settle large numbers of lawsuits for personal injury and other claims.

The opioid litigation has been compared to the cases by states against tobacco companies that led to a $246 billion settlement in 1998. States have been criticized for redirecting some of the money toward budget shortfalls and other uses unrelated to preventing smoking or treating those who suffered from related illnesses.

Drain also said bankruptcy law could be used to bind permanently how the Purdue settlement funds were used.

Thursday’s hearing was scheduled to consider Purdue’s request to pay more than $30 million in bonus payments and severance for Purdue employees. The most controversial parts of that request were rescheduled for Nov. 6.

On Friday, Drain will consider a request by Purdue to pause all litigation against the company and the Sacklers, which has been opposed by 25 states.

Purdue said it needs to pause the litigation to preserve its cash and to try to settle with the hold-out plaintiffs.

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