Purdue Pharma L.P. Files Broadly Supported Plan of Reorganization
Purdue Pharma L.P. Files Broadly Supported Plan of Reorganization
– Plan will create National Opioid Abatement Trust
– Plan will make more than $10 billion in value available for opioid abatement programs across the country
– 100% of Purdue’s assets will be transferred to a new company dedicated at its core to addressing the opioid crisis
– Plan has broad creditor support
– Sacklers to pay $4.275 billion into bankruptcy estate
STAMFORD, Conn.–(BUSINESS WIRE)–Purdue Pharma L.P. today 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. True to the vision articulated at the outset of the Chapter 11 proceedings, 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.
“Purdue has delivered a historic plan that can have a profoundly positive impact on public health by directing critically-needed resources to communities and individuals nationwide who have been affected by the opioid crisis,” said Steve Miller, chairman of Purdue’s Board of Directors. “The company has worked closely with a broad and diverse group of stakeholders to guarantee that billions of dollars will be used exclusively for abatement purposes and not diverted elsewhere.”
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 is unprecedented in scope and nature. First, it will transfer billions of dollars of value into trusts for the benefit of the American people. Second, it will dissolve Purdue and transfer its operating assets to a newly formed company with the public-minded mission of addressing the opioid crisis. State and local governments will neither own, nor operate the new company.
Creation of Trusts to Abate the Opioid Crisis Across America
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:
- An initial cash distribution from the company of more than $500 million immediately upon emergence from bankruptcy.
- 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.
- $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 (described in more detail below).
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.
Creation of A New Company Dedicated to Addressing the Opioid Crisis
After confirmation of the Plan, Purdue’s assets would be transferred to a newly formed company.
- Purpose – 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.
- Responsible Seller of Opioids – The new company would be subject to covenants to ensure that it provides all of its products, including all opioid products, in a safe manner that limits the risk of diversion. The new company will remain subject to a formal commitment to refrain from promoting its opioid products to health care providers. A Monitor will continue to ensure that the new company will comply with all applicable covenants and injunctions. The initial post-emergence Monitor will be the Purdue Monitor in place as of the Effective Date or otherwise selected by the Ad Hoc Committee of Governmental and Other Contingent Litigation Claimants and the Multi-State Governmental Entities Group, with the consent of Purdue and in consultation with the Creditors’ Committee.
- Governance – The new company would be overseen by new independent Managers, who will function as the board of directors. The Managers will initially be selected by the Ad Hoc Committee of Governmental and Other Contingent Litigation Claimants and the Multi-State Governmental Entities Group, in consultation with Purdue and the Creditors’ Committee, and subject to the Department of Justice’s discretionary right to observe the process. The Sacklers will have no role in the selection of the managers or in any other aspect of the new company’s governance or operations.
- DOJ Forfeiture Credit – Because it provides billions of dollars in funding for abatement, and it creates a new company dedicated at its core to abating the opioid crisis, the Plan satisfies the conditions for a full credit of $1.775 billion of the $2 billion forfeiture that the company would otherwise have to pay to the United States.
Public Health Initiatives – The new company will oversee the ongoing development and eventual distribution, at or below cost, of three potentially lifesaving medicines**:
- Buprenorphine naloxone tablets – 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. (For full prescribing information, click here; for the medication guide and warnings, click here.)
- Over-the-counter (OTC) naloxone nasal spray – 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.
- Injectable nalmefene – 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.
“Our teams of scientists are committed to developing and delivering medications and solutions to meaningfully address the opioid crisis,” said Dr. Julie Ducharme, vice president, chief scientific officer, and Public Health Initiatives co-lead. “We have the capability and the passion to make a substantial difference right away, and for years to come.”
The full terms of the Plan and the disclosure statement can be viewed here.
The Plan filed today may be amended or supplemented from time to time and is subject to confirmation by the Bankruptcy Court. A hearing to approve the disclosure statement is scheduled for April 21, 2021. Following the Bankruptcy Court’s approval of the disclosure statement, Purdue will distribute the Plan and disclosure statement to voting creditors for their consideration.
“With drug overdoses still at record levels, it is past time to put Purdue’s assets to work addressing the crisis,” said Steve Miller. “We are confident this plan achieves that critical goal.”
Plan of Reorganization Highlights
The vast majority of proceeds will be used to abate the opioid crisis; these funds cannot be diverted to other purposes.
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.
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.
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.
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.
* As specified in the plan, certain provisions remain open for final resolution and the support of the listed parties remains subject to the satisfactory resolution of those issues.
**This information discusses investigational uses of agents in development and are not intended to convey conclusions about efficacy or safety. There is no guarantee that the medications listed in this release will successfully complete development or gain FDA approval.
About Purdue Pharma L.P.
Purdue Pharma and its subsidiaries are physician-founded and physician-led companies that develop, manufacture and market medications and consumer health products to meet the evolving needs of healthcare professionals, patients, consumers and caregivers. Purdue Pharma is also committed to driving innovations in patient care while continuing our efforts to address the opioid crisis.
Purdue’s subsidiaries include: Adlon Therapeutics L.P., focused on treatment options for Attention-Deficit/Hyperactivity Disorder (ADHD) and related disorders; Avrio Health L.P., a consumer wellness company that provides over-the-counter products to fight infection, promote digestive wellness and provide health supplements; Imbrium Therapeutics L.P., established to develop and commercialize non-opioid pain medications and therapies for select oncology and CNS disorders; Rhodes Pharmaceuticals L.P., which develops and supplies primarily solid oral-dose and transdermal medications; and Greenfield Bioventures L.P., an investment vehicle focused on compounds in the early stages of clinical development.
For more information, visit www.purduepharma.com.