Drugmaker Mallinckrodt aims to avoid paying an opioid settlement to victims

Transcript

JUANA SUMMERS, HOST:

Victims of the opioid crisis may lose a billion dollars in settlement money. The big Irish drugmaker Mallinckrodt is in negotiations to slash the amount paid to communities as part of an opioid deal reached last year. The money may go instead to hedge funds and other investors. NPR addiction correspondent Brian Mann has been following this story and joins us now.

And Brian, I mean, there is a billion dollars on the line here. What was this money supposed to be used for?

BRIAN MANN, BYLINE: Yeah. Mallinckrodt is one of the companies accused of flooding communities with generic opioid pain medications. And like a lot of corporations involved in the opioid trade, they were swamped with lawsuits. So last year, as part of a bankruptcy proceeding, they promised to pay communities a total of $1.7 billion to settle all those cases. They have paid some of that money, but now the rest is in question.

SUMMERS: I mean, that's a pretty big shift. What's changed with the situation that could let Mallinckrodt off the hook?

MANN: Well, Mallinckrodt is still struggling financially, and the company's executives have acknowledged they may be forced to file for bankruptcy again. So when investors and the company's debtors caught wind of that possible second bankruptcy, they began clamoring to have Mallinckrodt put them at the front of the line so they would be paid out before all these opioid victims. The Wall Street Journal reported this week that a group of hedge funds wants a new bankruptcy plan that would effectively leave them in control of the firm while cutting the company's total opioid payout by roughly a billion dollars. If approved by the court, it would apparently still block all those opioid lawsuits faced by Mallinckrodt.

SUMMERS: Wow. OK, and what is the company saying about this possibility?

MANN: Yeah, they sent a statement to NPR this afternoon saying they're still negotiating with everyone involved - with debtors and stakeholders and opioid victims - and they say they're trying to find, and I'm quoting here, "the best path forward in light of our debt and opioid settlement obligations."

SUMMERS: You mentioned the victims. And I have to imagine this is unwelcome news for people whose families were impacted by the opioid crisis. What have you heard?

MANN: Yeah, there's a lot of anger. Communities all over the U.S. say they desperately need this money. You know, it's a time when record numbers of Americans are still dying from opioid overdoses - roughly 110,000 deaths last year alone. The hope is that corporate payouts will fund programs that just keep people alive. And there is also the question of corporate accountability. You know, these companies agreed - all these companies involved in the opioid trade agreed to pay more than $50 billion in compensation. Joseph Steinfeld, one of the attorneys representing opioid victims, told me that if Mallinckrodt withholds a billion dollars of that money, it would be devastating.

SUMMERS: Before I let you go, I do want to ask you about new developments in a different opioid case. That's the case involving Purdue Pharma, which is the maker of OxyContin. What's going on there?

MANN: Yeah. So a bit of history - Purdue Pharma went bankrupt. And in 2021, a federal court did something controversial. They allowed the members of the Sackler family, who owned the firm, to effectively piggyback on the bankruptcy process. It was really controversial at the time. Members of the Sackler family aren't bankrupt. They're quite wealthy. But they agreed to pay a lot of money in exchange for sweeping immunity from opioid lawsuits.

What's happened now is a division of the Justice Department is appealing that bankruptcy deal again, and this time all the way to the Supreme Court. We don't know whether the high court will take up that case. What is clear is that billions of dollars of this opioid money hangs in the balance as these big cases involving Purdue Pharma and Mallinckrodt play out.

SUMMERS: NPR addiction correspondent Brian Mann. Brian, thank you.

MANN: Thanks so much. Transcript provided by NPR, Copyright NPR.