Pharmaceutical giant Purdue Pharma is framing its bankruptcy filing as an opportunity to cut red tape and provide billions in settlement cash to curb the opioid crisis it’s accused of facilitating. But the OxyContin maker’s legal issues are far from over.

Purdue Pharma filed for bankruptcy in White Plains, New York, late Sunday night, days after announcing a tentative deal to settle claims with about half the states and more than 1,000 local governments. The deal could be worth up to $12 billion over time; about $3 billion will come from the Sackler family, owners of the privately held drugmaker.

The bankruptcy came as no surprise and was considered part of the settlement’s complex structure.

“This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis,” Purdue Chairman Steve Miller said in a statement.

Miller said the Connecticut-based company does not intend to admit wrongdoing, one of the sticking points for some plaintiffs who have not signed off on the settlement.

Thousands of lawsuits

Purdue Pharma is being sued by almost every state and more than 2,500 other plaintiffs, most of them local governments spending billions to treat opioid abuse and respond to life-or-death 911 calls. About half the states have agreed to the settlement, and now Purdue Pharma lawyers are working on bringing the rest into the fold. A federal bankruptcy judge will decide the fate of plaintiffs who balk at the deal.

Lawyers back bankruptcy, settlement

Lawyers leading the National Prescription Opiate Litigation Plaintiffs’ Executive Committee said they worked with Purdue Pharma lawyers in developing details of the bankruptcy protection filing. “As a result of these collaborative efforts … the bankruptcy filing will not prevent us from finalizing an agreement with Purdue to bring opioid recovery resources into the communities we represent,” the statement said.

Value of settlement questioned

Some experts question whether the plaintiffs will ever see $12 billion. With the wealthy Sackler family paying only a fraction of the settlement, the bulk of the money must come from the company. “Purdue is not worth much because it has few resources now,” Carl Tobias, a product liability expert and law professor at the University of Richmond, told USA TODAY. Tobias said the company’s continuing operation, and payment of the settlement, depends on “dubious contingencies” such as international holdings and developing new drugs the FDA has yet to approve.

Other reason for dissent

Lawyers for some plaintiffs say the proposed payouts, even if they are made, won’t be enough to fund needed opioid mitigation efforts. Others say the cost to the Sackler family is small compared to the riches the drug sales have given them. “A deal that doesn’t account for the depth of pain and destruction caused by Purdue and the Sacklers is an insult, plain and simple,” New York Attorney General Letitia James said.

Court filings show money trail

Court filings assert that members of the Sackler family were paid more than $4 billion by Purdue from 2007 to 2018. A court filing by James claims family members stashed $1 billion in foreign accounts. “This family is now attempting to evade responsibility and lowball the millions of victims of the opioid crisis,” James said. Pennsylvania Attorney General Josh Shapiro filed a lawsuit last week alleging that certain members of the Sackler family are personally liable for the devastation of the opioid crisis because they directed, controlled and participated in a “deadly campaign of deception.”

More: How to turn an opioid lawsuit settlement into a tax deduction

Sackler family in the fray

The Sackler family issued a statement expressing sympathy for victims of the opioid crisis that has claimed hundreds of thousands of lives over the past two decades. “Like families across America, we have deep compassion for the victims of the opioid crisis,” the statement said, calling the settlement a “historic step toward providing critical resources that address a tragic public health situation.” 

Meet the Sacklers

The Sackler saga with Purdue Pharma began in 1952 when Raymond and Mortimer Sackler, physicians and brothers, bought the company. Both have died, but several children and a grandchildren have served on the company’s board. Richard Sackler, son of Raymond, previously served as CEO. The family is well known in philanthropic and art circles, and the Arthur M. Sackler Gallery is a Smithsonian museum of Asian art on the National Mall in Washington.

Deal could end costly litigation

Miller says continued litigation “would rapidly diminish all the resources of the company and would be lose-lose-lose all the way around.” The Sackler family says it is hopeful that “in time, those parties who are not yet supportive will ultimately shift their focus to the critical resources that the settlement provides to people and problems that need them.” Key issues that could be decided include whether the suits against the Sacklers in state courts will be able to move ahead, and what will happen to the company itself.

Purdue Pharma could live, sort of

Purdue Pharma and the Sacklers have been a lightning rod for the opioid crisis not only because of leadership in the research and development of the drugs, but because of aggressive marketing efforts. “Their ruthless pursuit of profits destroyed other families and communities throughout Illinois and the nation,” Illinois Attorney General Kwame Raoul said. Still, the company could continue to operate, minus the Sacklers, with profits used to pay for the settlement. Another option could be for a judge to order it be sold.

Contributing: The Associated Press