As Purdue Pharma reportedly moved closer to bankruptcy on Wednesday afternoon, there was little stock market reaction, even among the other companies sued as part of the nationwide effort to hold corporations responsible for the opioid crisis.
The New York Times reported shortly before 3 p.m. that Purdue and its owners had “tentatively reached” a settlement with the thousands of cities and counties and 23 states that had sued it in connection with the opioid epidemic, and that the company was expected to file for bankruptcy “imminently.”
The news comes two weeks after Bloomberg reported the outlines of the deal. Investors appear to have already priced the deal into their calculations of the values of the public companies that are also facing opioid cases, even as details of the settlement continue to emerge.
In a statement, Purdue said: “Purdue Pharma continues to work with all plaintiffs on reaching a comprehensive resolution to its opioid litigation that will deliver billions of dollars and vital opioid overdose rescue medicines to communities across the country impacted by the opioid crisis.”
The back story. Purdue, which makes the pain reliever OxyContin, has been the corporate face of the opioid crisis. It faces thousands of lawsuits for its role in marketing and promoting its painkillers. The company has defended its conduct.
What’s new. According to The Wall Street Journal on Wednesday, under the terms of the tentative deal, the Sackler family, which owns the company, would step down, and the company would file for bankruptcy. The Sackler family would pay plaintiffs at least $3 billion. According to the New York Times, Purdue would donate some drugs as part of the deal. A new company would take over the sale of OxyContin, and money from those sales would go to the plaintiffs in the case.
While both newspapers report that 23 state attorneys general have signed on to the settlement, three of the largest and most powerful states have not: New York, Massachusetts, and Connecticut. That raises questions about what the deal means for other opioid defendants, and whether or not this indicates a new willingness for state attorneys general to play ball with the plaintiffs in the multidistrict litigation.
As of 3:15 p.m., there appeared to be little stock movement on the news. Shares of Endo International (ENDP) were up 1% on the day, while shares of Teva Pharmaceutical Industries (TEVA) were up 1.3%. Shares of Mallinckrodt (MNK) were down 13.7%, after rising 84% on Tuesday, and are in the midst of a particularly volatile stretch.
Looking forward. Investors should watch out for whether other opioid defendants reach their own large-scale settlements in the coming days, as a key trial date approaches in the multidistrict litigation in October.
Write to Josh Nathan-Kazis at email@example.com