Purdue Pharma has filed for bankruptcy, following increasing blame for its role in fuelling the opioid epidemic in the US.
The company made vast amounts of profits from its prescription painkiller OxyContin, which has since famously become the focal drug for the opioid epidemic.
The bankruptcy filing comes on the heels of a settlement made between the pharma company and the state and local governments which were seeking legal action against it.
The filing comes as no surprise, with the original deal estimated to provide more than $10bn of value to address the opioid crisis.
Other contributions include the formation of a new company called NewCo, which will be governed by a new board selected by the claimants and approved by the bankruptcy court.
This new company will provide opioid overdose reversal medication, as well as addiction treatment medications at no or low cost.
The company will also be permanently bound to injunctive relief, which includes marketing restrictions on the sale and promotion of opioids.
The Sackler families, who privately owned the company, will not only give over 100% of Purdue but will also contribute a minimum of $3bn from the sales of their ex-US pharma businesses.
“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,” said Steve Miller, chairman of Purdue’s board of directors.
“We will continue to work with state attorneys general and other plaintiff representatives to finalise and implement this agreement as quickly as possible,” he added.
In August, Johnson & Johnson became the first company found liable for opioid medication mis-marketing, and was ordered to pay $572m by the US state of Oklahoma. Purdue was also subject to a lawsuit by the state, but settled out of court for $270m.
However, Purdue is not at the end of this road, as it is facing lawsuits from over 2,000 government and other entities. This means it is likely that several states which are still pursuing legal action will object to the settlement, with continued litigation against the company expected.