Purdue Pharma L.P. files plan of reorganization
Purdue Pharma L.P. announced it has filed a Chapter 11 plan of reorganization (the Plan) and a related disclosure statement in the United States Bankruptcy Court for the Southern District of New York. The Plan charts a path for more than $10 billion of value, including 100% of Purdue’s assets, to be delivered to claimants and communities across the country affected by the opioid crisis.
The company believes there is broad and strong support for the Plan, including many state Attorneys General, the Ad Hoc Committee of Governmental and Other Contingent Litigation Claimants, the Multi-State Governmental Entities Group, and nearly every group of private creditors.
The Plan of Reorganization highlights:
1. The vast majority of proceeds will be used to abate the opioid crisis; these funds cannot be diverted to other purposes.
2. The Plan will deliver more than $10 billion in value, including providing, at cost, millions of doses of potentially lifesaving opioid addiction treatment and overdose reversal medicines.
3. Purdue will be dissolved. All its assets will be transferred to a new company after emergence from Chapter 11 that will be held to the highest standards of conduct, including a prohibition restricting the promotion of opioid products to healthcare professionals.
4. The new company will ultimately be owned by a new National Opioid Abatement Trust established for the benefit of the American people. State and local governments will neither own, nor operate the new company.
5. The Sacklers will have no involvement in the new company, will end their involvement in pharmaceutical companies worldwide, and have increased their contribution to the global settlement to a total of $4.5 billion.
The single largest recipient of funds under the Plan would be the National Opioid Abatement Trust (NOAT), a newly formed entity created to satisfy the claims of state and local governments. NOAT would receive billions of dollars, and those funds would be exclusively dedicated to programs designed to abate the opioid crisis. NOAT and an abatement trust established to satisfy claims asserted by Indian Tribes and Tribal Organizations (the “Tribe Trust”) would together indirectly own 100% of the new company.
In addition to NOAT and the Tribe Trust, the Plan contemplates the creation of several additional trusts, including:
· The Master Disbursement Trust (MDT), which would make payments to various private trusts
· Several private abatement trusts established to satisfy the claims of treatment providers, third party payors and insurance carriers, as well as legal guardians of children born with neonatal abstinence syndrome. Each would make distributions solely in the form of funding for programs designed to abate the opioid crisis.
· A personal injury trust, which will administer and make distributions on account of personal injury claims.
Each of these trusts established under the Plan will be required to consider the need to ensure that underserved urban and rural areas, as well as minority communities, receive equitable access to the funds.
Funding for the various trusts comes primarily from three sources:
1. An initial cash distribution from the company of more than $500 million immediately upon emergence from bankruptcy.
2. Approximately $1 billion expected to be generated by the assets and the operations of the new post-bankruptcy pharmaceutical company through the end of 2024, for a projected total of approximately $1.5 billion, plus substantial additional recoveries expected from insurance claims.
3. $4.275 billion in cash payments by the Sackler families.
In addition to this cash funding, the company estimates that approximately $4 billion in value could also be provided through the new company’s Public Health Initiatives.
Under the Plan, the Sackler families have agreed to pay $4.275 billion in addition to the $225 million previously paid to the United States to resolve civil claims against Purdue’s former shareholders, for a total settlement of $4.5 billion. This amount represents a $1.5 billion increase from the $3 billion agreement in principle reached in September 2019. Under the terms of the settlement, the money would be paid in cash on an agreed to schedule over nine years (or ten years if certain payments are made ahead of schedule). Additionally, the Sackler families will be required to sell their world-wide pharmaceutical businesses within seven years of the Effective Date, and not engage in the manufacturing or sale of opioid medications going forward.
After confirmation of the Plan, Purdue’s assets would be transferred to a newly formed company. The new company will exist for the purposes of funding trusts dedicated to abating the opioid crisis, developing and distributing medicines to reverse opioid overdoses and treat opioid addiction, and otherwise taking into account long-term public health interests relating to the opioid crisis.
Purdue can manufacture a generic version of buprenorphine and naloxone sublingual tablets CIII, a treatment for opioid dependence. The FDA approved a generic version of buprenorphine and naloxone tablets developed by Rhodes Pharmaceuticals, a subsidiary of Purdue, in 2020.
Purdue has been supporting the development of a low-cost, OTC naloxone intranasal spray through collaboration with Harm Reduction Therapeutics that will be sold over-the-counter without need of a prescription or request from a pharmacist, and for a fraction of the cost of the existing naloxone nasal spray therapy, making it easier for more people to afford and access.
Purdue is developing injectable nalmefene, an opioid antagonist designed to reverse opioid overdose, in three dosage forms: vial, prefilled syringe and autoinjector. The FDA previously granted Competitive Generic Therapy designation for the vial and prefilled syringe, and Fast Track designation for the autoinjector. Nalmefene may be another treatment option to help address the growing and continuing crisis of opioid overdose deaths, including those due to fentanyl and other synthetic opioids.
