Purdue Pharma, the US drug maker behind opioid painkiller OxyContin, has filed for bankruptcy.
The Chapter 11 filing, announced late Sunday, is part of a proposed $10bn settlement of legal cases alleging the company profited from the US opioid addiction epidemic.
Purdue said in a statement that it has filed for bankruptcy as part of efforts to settle thousands of lawsuits against it across the country, including 24 cases bought by state attorneys general.
Purdue’s assets will be placed into a trust “for the benefit of claimants and the American people”. The company said the trust’s assets should reach $10bn, including up to $4.5bn from the Sackler family, which owns Purdue.
The remains of the privately held company will be restructured into a new business providing low or no cost opioid overdose reversal treatments.
“This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis,” Purdue’s chairman Steve Miller said in a statement.
“We will continue to work with state attorneys general and other plaintiff representatives to finalise and implement this agreement as quickly as possible.”
The settlement and bankruptcy filing, made in New York, must still be approved by the courts.
The agreement would settle around half of the more than 2,000 laws suits facing the company and its owners. Purdue still faces a civil and criminal probe by the US Justice Department.
Purdue and its owners, the Sackler family, have faced a wave of claims that they fuelled the opioid crisis currently raging in the US. Critics claim Purdue contributed to the crisis through the aggressive marketing of its pain killer OxyContin.
The drug, introduced in 1996, provides powerful 12 hour pain relief and is highly addictive. Public health campaigners claim liberal prescription of the drug in the 2000s led to the recent surge in heroin and synthetic opioid use in the US.
Last week, the New York Attorney General Letitia James said the Sacklers were trying to “evade responsibility and lowball the millions of victims of the opioid crisis.” She attacked “the carnage left by the Sacklers’ greed.”
The Sacklers, the family who founded Purdue in the 1950s, had consistently denied the claims they were responsible for the addiction epidemic. They had resisted calls to pay out to victims but have recently moved to try and settle cases against them.
The Sackler family are worth an estimated $13bn, according to Forbes.