Proposed Purdue Pharma Bankruptcy Settlement Creates Uncertainty in Md.

The Purdue Pharma headquarters in Stamford, Conn. Photo by John9474, Wikimedia Commons.

As one of the largest opioid manufacturers moves toward settlement with more than 2,000 counties and municipalities across America – including dozens in Maryland – Attorney General Brian E. Frosh (D) and local governments want to be able to pursue separate cases.

Frosh charged members of the Sackler family – leaders of Purdue Pharma – with violating Maryland’s Consumer Protection Act earlier this year, arguing that the company and family members engaged in unfair and deceptive practices to market opioids, enriching themselves along the way.

Purdue filed for bankruptcy protection last week, with members of the Sackler family proposing to contribute $3 billion in assets to a $10 billion to $12 billion settlement.

Frosh has expressed doubt that such high figures could be achieved through reorganization of the company. And he thinks the family’s contribution is not sufficient. Various members of the Sackler family were estimated to be worth more than $13.5 billion, according to Forbes magazine.

“We don’t think that this $3 billion guarantee is sufficient. They’ve left a trail of addiction and death in Maryland and all over the country,” Frosh said. “There are families who are still suffering from the deaths of their family members. And there are lots of folks who were still struggling with the addiction that taking these prescription painkillers has brought.”

Purdue attorneys will ask the federal bankruptcy judge to stay all pending lawsuits against the company – and release the family of further financial obligations.

Frosh also opposes that.

“Our view is we should be allowed to go forward against [the Sackler family members],” Frosh said of the consumer protection claims still pending at Maryland’s Office of Administrative Hearings. “They’re not seeking bankruptcy protection individually … and we don’t think the bankruptcy court should release them from the claims that we’ve made against them.”

Twenty-three attorneys general in the country have supported the proposed bankruptcy settlement, along with the lead plaintiffs’ attorneys in a sprawling multi-district lawsuit in Ohio that could govern settlement agreements by several drugmakers with all counties, cities and towns in the country. In Maryland, Prince George’s County was included as a class representative when a class action was certified in that case last week.

Many supporting the settlement say it’s a way to guarantee at least some payment from the company and bring an end to litigation that could go on for years.

In court filings, Purdue says it costs millions of dollars a week to defend itself against various lawsuits, which could drain the company’s assets unless a settlement in bankruptcy court is reached.

Carroll County filed a lawsuit against Purdue and other opioid manufacturers in Carroll County Circuit Court in July. The case was removed from the county courts to the multi-district litigation in Ohio at the request of the drug companies. But just before the class certification was announced, the county withdrew its case, with plans to refile.

Jeffrey H. Reeves, a California-based attorney representing Carroll County and others, said the best course of action for Carroll County is to continue to seek “local justice” against drugmakers.

“When you’re talking about a community that’s been harmed – additional health care costs, police costs, loss of life, loss of contributors to the community – it’s better to have those claims assessed by a state judge,” Reeves said last week.

He also cautioned that settlements with Purdue and other drugmakers could be in the far distance.

Chapter 11 reorganizations require approval of creditors holding at least two-thirds of a company’s total debt amount. And the multi-district litigation against other defendants requires approval of three-quarters of all counties, cities and towns before an agreement could be reached.

Counties, cities and towns have until Nov. 22 to opt out of the national class action suit.

From 2006 to 2012 there were 1,165,084,559 prescription pain pills supplied to Maryland, according to Drug Enforcement Administration data obtained and distributed by The Washington Post. Almost 61 million of the pills supplied to Maryland were produced by Purdue, according to the Post data.

There have been about 10,000 opioid-related deaths in Maryland since 2007, according to state health data.

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Danielle E. Gaines
Danielle Gaines most recently worked for Bethesda Beat covering Montgomery County. Previously, she spent six years at The Frederick News-Post as the paper’s principal government and politics reporter for half that time, covering courts and legal affairs before that. She also reported for the now-defunct The Gazette of Politics and Business in Maryland and previously worked as a county government and education reporter at the Merced Sun-Star in California’s Central Valley.

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