Big Law Forces Big Pharma Bankruptcy

Purdue Pharma struggles under the weight of massive settlements with several states.

Lewis Morris · Sep. 17, 2019

Purdue Pharma, maker of OxyContin, one of the most widely prescribed opioids, filed for Chapter 11 bankruptcy protection this week after buckling to 2,600 state and local lawsuits alleging the company deliberately fueled the opioid epidemic.

Overdose deaths due to this class of drugs has devastated families and communities across the country, claiming the lives of hundreds of thousands of people between 1999 and 2017. Municipalities, states, and individuals have filed thousands of lawsuits against drug companies that manufactured these drugs, claiming that Big Pharma is ultimately responsible for the damage done.

Blaming pharmaceutical companies for this crisis is a gross oversimplification. Yes, they developed, manufactured, and ultimately marketed these drugs; thus they do bear some of the blame. But what about the Food and Drug Administration (FDA), which is supposed protect American consumers from just this sort of dangerous drug? Or all the state and federal lawmakers who pushed for reduced regulation and greater insurance coverage of opioids when they first hit the market? Or the millions of people who knowingly engaged in risky behavior with these drugs and found themselves addicted?

Then there are the doctors who prescribed opioids — often for 30 days when five would have done the trick. Some make the case that drug companies persuaded medical professionals to prescribe and over-prescribe opioids. But at some point, when the rise in addictions could no longer be ignored, doctors continued to prescribe opioids, despite having numerous pharmaceutical alternatives, including good old-fashioned, over-the-counter painkillers.

There’s no money in suing individual doctors, though, or even hospitals. Suing a federal government agency never goes anywhere. And good luck holding an elected official accountable for their legislative activity. But Big Pharma is loaded with cash. Or at least that’s what Big Law wants you to think.

Pharmaceutical companies operate on slimmer profit margins than most people realize. For every drug that makes it to market after years of testing and millions of dollars in research, there are several drugs that fall flat, costing companies millions in research and development that isn’t recouped in a marketable drug. This is not to say that we should weep for Big Pharma, but we should not just take what Big Law is telling us at face value.

Trial lawyers are in business to make money, just like pharmaceutical companies. In large class-action settlements, they usually pocket up to a third of whatever dollar amount is reached, so it’s in their interest to go after the biggest award they can get. It’s easy to see why they are eager to get involved in the opioid crisis, and why they want to paint pharmaceutical companies as evil.

Suing companies like Purdue Pharma and Johnson & Johnson, which was recently ordered to pay a half-billion dollar settlement to the state of Oklahoma, will not solve the nation’s drug-addiction problem. The Sackler family, which controls Purdue Pharma, knows this, and that’s why they sought a bankruptcy filing. They believe that restructuring the company into a business/charity hybrid will allow it to most effectively contribute to aiding those harmed by its products.

The filing has been dismissed by several states in the Northeast and on the West Coast (it’s no coincidence that these states are controlled by Democrats) as an attempt to duck justice. Purdue maintains that its plan will provide up to $12 billion in relief to state and local governments to clean up the damage done by OxyContin and turn the company into a “public benefit trust.” The Sackler family would give up control of the company and contribute $3 billion toward the settlement.

Several states have agreed to this deal because the alternative means many more years of litigation in which money that could go toward fixing the problem will instead go toward more legal battles. These battles will ultimately mean more expensive drugs and fewer pharmaceutical options for consumers.

But Big Law will still get its slice. That’s one thing we can all count on.

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