Healthcare Economy

Why Is Purdue Settling Oklahoma Opioid Lawsuit for $275 Million?

Paul Ausick

In 2017, more than 28,000 Americans died from overdoses of semisynthetic opioid drugs like oxycodone, nearly twice as many as died from heroin (a natural opioid) overdoses. Between 1999 and 2016, more than 350,000 Americans have died from opioid-related causes.

One company identified with the U.S. opioid epidemic is Purdue Pharma, a privately held company based in Connecticut and controlled by the Sackler family. Tuesday afternoon, the attorney general of Oklahoma is expected to announce that the state has reached a settlement with Purdue Pharma that will see the state receive a $275 million payout from the company it accused of heavily promoting its oxycodone drug, OxyContin, while downplaying the addictive properties of the drug.

The settlement between Purdue and Oklahoma is the largest by far in state-brought charges against the company. West Virginia settled a 2004 lawsuit for $10 million and Kentucky settled a 2015 lawsuit for $24 million.

And both West Virginia and Kentucky have been much harder hit than Oklahoma by the opioid crisis. Last month the American Medical Association journal JAMA Network Open published a study of the states with the highest death rates per 100,000 population from all opioids. Kentucky’s rate was 25.4 and West Virginia’s was 43.8. Oklahoma’s death rate was 11.5 per 100,000 population.

Earlier this month The Wall Street Journal published an opinion piece stating that 36 state attorneys general have either begun investigations or filed suits targeting opioid makers and distributors. More than 1,700 cities and counties also have sued Purdue and the others for billions of dollars. The opinion article suggests that most of the defendants “want to explore a settlement as long as they can achieve close to complete global relief from civil litigation.”

That’s a reference to a global settlement the tobacco industry reached with the states in 1998 that cost the companies $246 billion. Purdue was reported to be considering a similar deal in 2017, but other defendants would not get on board with the idea.

So why did Purdue reportedly settle with Oklahoma for an amount 10 times the amount it paid Kentucky just four years ago? Just speculation, but it’s likely that Oklahoma was able to roll all the state’s local government cases into one. The New York Times cited a source who said that of the $275 million settlement, more than $70 million will be paid to local jurisdictions (including Native American tribes) and as reimbursement to the state for litigation costs.

While costly, such a settlement would eliminate further trials or settlements with local governments in the state. Purdue also would avoid having to testify in open court about its marketing practices. It also gives the company some leverage to bring other states to the bargaining table. Whether the deal was worth the money remains to be seen.