Democratic senators call on DOJ to not make Purdue Pharma a public benefit company

Democratic senators call on DOJ to not make Purdue Pharma a public benefit company

Calling the terms of a settlement between the U.S. Department of Justice and Purdue Pharma “inappropriate use of federal authority,” four Democratic Senators Tuesday urged U.S. Attorney General Bill Barr to reconsider the agreement.

U.S. Sens. Tammy Baldwin (D-WI), Sheldon Whitehouse (D-RI), Maggie Hassan (D-NH), and Elizabeth Warren (D-MA) took issue with a provision in the $8 billion settlement that would turn Purdue’s business into a public benefit company after it emerges from bankruptcy.

The senators said they, along with 25 attorneys general from across the country, object to the idea that local and state governments would-be owners of a company that continues to produce a drug that has killed thousands of their constituents.

“We write to raise concerns about a key element of the Department of Justice’s (DOJ) settlement agreement with Purdue Pharma (Purdue) announced on Wednesday, October 21, 2020. We ask that you defer court approval of the proposed agreement until the appropriate stakeholders have addressed public policy concerns associated with the agreement, which all but requires Purdue to emerge from bankruptcy as a public benefit company (PBC), to function “entirely in the public interest,” with proceeds directed toward State and local governments. This arrangement ignores the objections of many of the States themselves, who have no interest in owning or operating a company that has devastated their communities with dangerous opioids, and raises significant public policy concerns,” the Senators in their letter.

The senators said the idea, generated by Purdue and the Sackler family, would give the company protection.

“Purdue and the Sackler family are the driving force behind the inclusion of the PBC in the agreement and had proposed that it be included during the company’s ongoing bankruptcy proceedings. Allowing Purdue to emerge from bankruptcy as a PBC would enable it to shed its liability while continuing to manufacture and sell opioids, with its creditors—including state and local governments who have sued Purdue for the harms it caused—owning a stake in its profits,” the senators wrote.

The senators also questioned the efficacy of the deal, writing that the agreement would allow Purdue to give states less money upfront and promise to pay the remaining terms of the settlement out of future profits that are uncertain and may never cover the full value of the settlement.

“States would get less money immediately and, because these profits are uncertain, may never recover the full value of the settlement. At a minimum, the PBC also creates the appearance of a conflict of interest, as citizens may wonder whether their government will effectively regulate a company in which it has a financial interest. In a worst case, aligning the financial interests of States with the increasing sale of opioids, which is the very reason the lawsuit was brought against Purdue in the first place, could significantly and negatively impact public health,” they wrote.

The senators called on Barr to defer court approval of the settlement until states and local governments and other stakeholders have addressed the issues.