Opioid Lawsuits Could Force Purdue Pharma Into Chapter 11; Are Prescribers, Pharmacies and PBMs Next?

News that Purdue is exploring filing for Chapter 11 bankruptcy suggests the company might be trying to avoid financial liability in opioid-related suits.
By: | March 21, 2019

It’s no secret that opioids are wreaking havoc on communities across America. With staggering increases in opioid-related overdose deaths in recent years and an estimated 2 million people in the United States suffering from substance use disorders related to prescription painkillers, the country has a true epidemic on its hands.

Now the question is, who will pay for the destruction — lives lost, families shattered, careers crumbled — that opioids have left in their path as they’ve traipsed through towns all across the country?

Facing Opioid Liability Litigation

On March 4, Reuters reported that oxycontin maker Purdue Pharma, largely recognized as the catalyst for the country’s current opioid crisis, was exploring the option of filing Chapter 11 bankruptcy in the face of roughly 2,000 liabilities-related lawsuits.

Plaintiffs allege that Purdue was misleading in its communications to doctors and patients when it came to the risks of opioids. They stated the company knew the drugs were being misused.

Two months later, Insys Therapeutics Inc., the maker of fentanyl spray Subsys, announced it could also be headed for a bankruptcy filing. Insys shares sold for nearly $45 at its peak in 2015, but a series of probes into its marketing tactics for Subsys have taken a toll. Insys closed May 13 in penny-stock territory at 95 cents for a $72.1 million market capitalization.

But, while on the topic of opioid liability litigation, Purdue and Insys aren’t the only entities facing legal repercussions in regard to the opioid epidemic. Prescribers and pharmacy benefit managers may also face liability-related litigation, and health care providers could be thrown into the mix for failing to control the epidemic.

An Unprecedented Health Care Disaster

Suits being brought against the creators and distributors of opioids have been likened to suits brought against tobacco companies, but there is a key difference: Opioids were prescribed to patients by trusted doctors whereas tobacco was not.

Since this is seemingly an unprecedented health care disaster, it’s provided a steady stream of lessons that health care providers, risk managers and insurance underwriters can look to as they move forward. After all, while prescriptions for opioids have dropped significantly, they are still prescribed — and totally necessarily in some cases.

It’s important to consider what systems can be put in place to protect reasonable prescribers, health care providers and insurers from liability-related suits in the future, however.

As Leo Carroll, SVP and head of health care for BHSI, told Risk & Insurance®, he’s recognized an uptick in health care systems’ implementation and execution of clear plans put in place to halt the opioid crisis, with clear-cut repercussions for staff who do not comply.

As he noted, insurers and insureds having transparent communication surrounding these protocols is crucial. “The more information that is shared, the more efficiently we as a marketplace can move toward solutions that support health care organizations in their mission to provide safe pain management in patient care.”

Increasing Focus on Opioid Risk

As a result of the devastation the opioid epidemic has caused — and the accountability that’s being sought — insurance underwriters have also increased their focus on this risk.

As Carroll put it: “Many have been gathering as much information as possible around risk management practices, loss data and government regulations (which again, vary by state). It’s important to avoid the temptation to overreact or broad-brush health care risks. Carriers need to distinguish between health plans, physicians, hospitals and senior care operators. Each represents a distinct role in the delivery of care, and each may have a distinct role in addressing opioid abuse.” 

While insurance and health care providers look to prevent future fall-out that could be avoided with proper protocol in place, it will be crucial to keep an eye on how the current suits against Purdue play out.

The Reuters article found that a judge recently denied the company’s bid to delay trial for a multibillion-dollar lawsuit being brought against them by Oklahoma’s attorney general (many states and local governments have brought suits against the company), seeking to hold them accountable for helping to fuel the state’s opioid epidemic.

It’s been theorized the company’s exploration of filing Chapter 11 bankruptcy is related to this suit.

As Fast Company further noted, Chapter 11 is a common refuge for corporations in the midst of legal peril and would allow Purdue to avoid taking quite as much financial accountability for the crisis.

“The problem lies in the fact that while each victim may get some relief or restitution from the court, usually it’s not as much as what they would get if they took the corporation in front of a jury,” said Fast Company.

So, if that happens, the question remains: Who will be held financially accountable for the devastation of the opioid epidemic? &

Adjua Fisher is a freelance writer, editor and business owner living in Philadelphia. She is a former health and fitness editor at Philadelphia magazine. Adjua can be reached at [email protected]

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