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AG Derek Schmidt: Bankruptcy settlement reached with Purdue Pharma will provide resources to combat opioid crisis

Release Date: Sep 02, 2021

TOPEKA – (September 2, 2021) – Proceeds from a bankruptcy settlement with opioid manufacturer Purdue Pharma will provide Kansas resources to help prevent and treat addiction, Attorney General Derek Schmidt said today.

A federal bankruptcy judge yesterday approved a settlement worth as much as $10 billion with Purdue Pharma to resolve ongoing litigation concerning the manufacturing and marketing of painkillers that have contributed to an overdose epidemic over the past two decades.

Schmidt sued Purdue in May 2019, and the company soon after declared bankruptcy. The settlement approved yesterday will resolve the Kansas claims against the company. Kansas expects to receive an estimated $35 million over 10 years from the settlement. The final amount will be known after Purdue assets are liquidated over the next few years and the distribution formula finalized. The settlement will end litigation against Purdue Pharma brought by state, local and tribal governments across the United States. 

“We remain committed to holding accountable those who hurt so many Kansans by peddling addiction for profit,” Schmidt said. “Thanks to the work of the Kansas Legislature in dedicating these funds we are now recovering, these companies will pay to help break the cycle of addiction for many more Kansans going forward.”

The settlement requires the Sackler family, which owned the company, to leave the opioid business but contribute $4.5 billion to the overall settlement fund to establish prevention and treatment programs. Purdue Pharma will be reorganized with a board appointed by public officials and will direct its profits into government-led programs to prevent and treat addiction. A compensation fund will be established that will pay some victims of opioid addiction and families of those who died of overdoses between $3,500 and $48,000 each.

Kansas has also formally joined a separate settlement previously announced on July 25 with Cardinal Health Inc., McKesson Corporation and AmerisourceBergen Corporation, the nation’s three major pharmaceutical distributors, as well as pharmaceutical company Johnson & Johnson. In addition to financial terms, the distributors have also agreed to changes in the pharmaceutical industry to help prevent a similar prescription-drug crisis from happening again. Johnson & Johnson will stop selling opioids, will not fund or provide grants to third-parties for promoting opioids and will not lobby on activities related to opioids.

Overall, Kansas expects to receive between $90 million and $190 million over 17 years from the four settlements announced in July. The range is wide because several variables will affect the amount each state will receive. The two biggest variables are how many local jurisdictions in Kansas join in settling their claims and how much must be paid in attorney fees to the many private attorneys involved in the litigation representing local governments and other plaintiffs besides the state. The attorney general's office has handled these cases without hiring outside counsel.

Earlier this year, Schmidt also announced a settlement with McKinsey & Company, totaling $4.8 million for Kansas to be used for drug treatment and addiction abatement. That settlement resolved allegations the company violated the Kansas Consumer Protection Act by helping opioid companies illegally promote their drugs and profit from the opioid epidemic.

Schmidt has also reached a separate agreement in principle to resolve the state’s opioid-related claims against Mallinckrodt Pharmaceuticals plc. Like Purdue, the company filed for bankruptcy and negotiations through bankruptcy court continue. Kansas also is engaged in ongoing negotiations with other companies the state believes played a role in fueling opioid addiction.

Earlier this year, Kansas legislators approved Schmidt’s proposal to ensure funding recovered through these settlements is used to address addiction and help ensure services are provided throughout the state. Funding will be available through a grant review board created by the statute. State agencies, local governments and not-for-profit entities may seek funding for addiction treatment and abatement through the board, which is currently being formed.

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News releases issued prior to 2011 are available through an archive hosted by the Kansas State Library.