Opioid crisis - Bancruptcy

Purdue Pharma (aka the creator of OxyContin) is reportedly chewing over a bankruptcy filing in the face of what could become significant liabilities stemming from about 2,000 lawsuits against the company. What are the accusations? The suits have targeted Purdue’s aggressive marketing of prescription drugs, accusing it of fueling the deadly opioid crisis and misleading the public about associated health risks. For its part, Purdue has denied the claims, arguing that FDA-approved labels on its opioid drugs carry plenty of warning about the risk of misuse. Running the numbers: Opioids (including prescription painkillers like OxyContin) were involved in 47,600 overdose deaths in 2017. That’s an increase of 6x from 1999, per the CDC. From 1999 to 2017, more than 700,000 people died from drug overdoses in the U.S. President Trump last year threatened to sue drug companies over their roles in the opioid crisis, which he declared a national health emergency in October 2017. Zoom out: While today’s opioid crisis is heavily centered on abuse of heroin and fentanyl, its roots are in the epidemic of prescription pill addiction. Purdue and other drugmakers say they’re not to blame, but the more than 1,500 cities, states, and local governments suing them say otherwise. So why bankruptcy? It’s not uncommon for a company facing intimidating litigation liabilities to turn to bankruptcy court (we saw this with PG&E). Filing for Chapter 11 protection would halt lawsuits and give Purdue time to settle legal claims with a bankruptcy judge. Reminder: Purdue was founded in the 1950s by the Sackler family. A Massachusetts lawsuit last June accused the Sacklers of spearheading deceptive marketing of opioids while amassing a fortune of $4.2 billion. Purdue’s take? “We are...committed to ensuring that our business remains strong and sustainable. We have ample liquidity and remain committed to meeting our obligations…”