Georgia to join $10B Purdue Pharma settlement deal

Georgia will agree to join a nationwide settlement deal with the maker of OxyContin, Purdue Pharma, state Attorney General Chris Carr said Monday evening in a statement to The Atlanta Journal-Constitution.

The state is still suing two dozen other drug companies that made or distributed opioids for Georgians as the crisis raged here, and on Monday the two sides in that case squared off for the first time in court.

Twenty-four states are reported to support the settlement deal, as well as the leaders of a group of some 2,000 local governments that have sued in federal court. If approved, the deal could be worth up to $10 billion or $12 billion nationwide over time, though opponents of the deal question those figures.

The deal is tentative. Some states oppose it, saying it allows the Sackler family, which owns Purdue Pharma, to keep too much of its personal fortune. The family would pay $3 billion to the plaintiffs and give up Purdue. The company would then put its profits toward researching drugs to treat addiction and overdoses, and those drugs would be donated to the public.

Most states have sued Purdue, as well as other companies involved in the opioid epidemic, saying they knew or should have known precisely what they were fueling and should help pay the costs to the governments in cleaning up the mess. Separately, well over 80 Georgia cities, counties and hospitals have joined about 2,000 tribes and local governments from across the nation in suits that have been consolidated under one judge in Ohio. All metro Atlanta counties have filed suit.

Georgia’s lawsuit against 27 drugmakers and distributors does not ask for a specific dollar amount. But it says 180,000 Georgians have an opioid use disorder, more than the population of Macon, and most of those cases have gone untreated. It points to a whole range of expenses to the state, such as increases in addiction treatment, the treatment of associated illnesses, the burden on policing and jails, and the increased need for foster care.

The state says the different companies engaged in a range of illegal activities, including misleading people about the addictive nature of the drugs and not taking the preventive action they were required to under law.

John Salter, an attorney working for the state, said the distributors, for example, knew about “hot spots” for opioid consumption and should have alerted government authorities. “And at the same time the distributors are telling the (Drug Enforcement Administration), ‘Gee this is really hard, what is a suspicious order anyway? It’s so hard to design a system that captures all that.’ ... They’re giving granular data and selling it to the manufacturers.”

The companies, for their part, say the state is taking the wrong path under Georgia law. They say they are not responsible for the downstream effects of selling drugs that turned into an epidemic.

“There’s not a debate over whether there are opioid problems related to addiction,” said Richard Gallagher, an attorney for Mallinckrodt, a company that makes generic opioids. “The issue today ... is whether or not traditional tort claims for money damages are the right tool for the job.” Drug companies aren’t responsible under that law for what individual drug abusers and unethical prescribers did with the drugs later in the pipeline, he said. “The government is seeking more money for its coffers as a result of downstream harm,” he said. “It’s not permissible.”

Gallagher and other attorneys likened the case against the drug companies to failed cases against gun manufacturers, where companies knew that some of their guns would be bought by people who cause “mayhem” but could not be held accountable for actions they didn’t intend.

Georgia's lawsuit noted that more than a decade ago, the health care costs alone to the state were estimated at $447 million.

The question at hand now is whether Gwinnett County Judge Randolph Rich will dismiss the lawsuit as the companies have asked. The judge agreed that until he makes that decision, he won't open up the companies to "discovery" where they must hand over private company documents to the state to research the case.

As part of the settlement deal, Purdue filed for bankruptcy late Sunday night in New York.

Carr noted in his statement that Purdue was expected to file for bankruptcy either way. He said agreeing to the settlement gains a measure of certainty for the state.

“Along with a majority of state attorneys general and localities pursuing litigation against Purdue Pharma and the Sackler family, we have agreed to a proposed framework that we believe holds them accountable while securing for Georgians the best possible chance to get the help they deserve,” Carr wrote.

Attorneys general of some other states, such as New York, are likely to oppose the bankruptcy court filing and the deal. The New York attorney general last week reported locating $1 billion in international wire transfers from the Sackler family, suggesting it was working to hide the money offshore. The family has said its dealings were legal.