Provinces plan legal push against Purdue Pharma in wake of U.S. opioid deal

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The provincial governments are seeking a court order that would lift an injunction that had temporarily halted all legal proceedings against Purdue Pharma, and clear the way for them to pursue billions of dollars in opioid-related claims.

Under a wide-ranging settlement approved by a U.S. federal bankruptcy judge this week, Purdue Pharma will reorganize into a new company under different ownership. Lawyers representing the provinces will appear in an Ontario court on Sept. 21 to ask for the go-ahead to proceed with their claims against the company in Canada.

Purdue had sought injunctions in the United States and Canada after it filed for bankruptcy protection in September, 2019, which paused all lawsuits against the company. A U.S. judge gave conditional approval to the bankruptcy settlement on Wednesday to resolve thousands of U.S. claims against the company, which has been blamed for fuelling North America’s deadly opioid epidemic.

The settlement requires the company’s owners, members of the Sackler family, to turn over US$4.5-billion of their fortune to address an epidemic that has led to the deaths of more than 500,000 people in the United States.

Deal with OxyContin maker Purdue Pharma leaves families angry, conflicted

The provinces had filed claims totalling US$67.4-billion in the U.S. bankruptcy court in an attempt to recover public health care costs associated with the addiction and overdose crisis, which traces its roots 25 years ago to Purdue’s introduction of the prescription painkiller OxyContin.

Purdue pulled OxyContin from the market in 2012, shortly before the patent was to expire. A host of other, stronger drugs filled the void, including illicit fentanyl, which is responsible for a majority of overdose deaths.

An increasingly toxic supply of illicit drugs has contributed to a worsening crisis in Canada, with 21,174 opioid deaths between January, 2016, and December, 2020.

The claims filed by the 10 provinces were among thousands of lawsuits brought in the United States by state and local governments, hospitals and individuals against Purdue. As part of an agreement that U.S. Bankruptcy Judge Robert Drain approved in August, the provinces will pursue their claims in Canada instead of in the United States.

Reidar Mogerman, a Vancouver lawyer representing the British Columbia government, said the provinces gave up their claims in the United States to protect lawsuits they filed against Purdue’s entities in Canada. The agreement, he said, provides certainty that the bankruptcy would not interfere with the provinces’ claims against their main target – Purdue and its marketing and sales practices in this country.

“We didn’t want to get swallowed in competition with the U.S. claims and lose our Canadian claims,” he said in an interview.

Lawyers for the provinces plan to ask a judge in Ontario Superior Court of Justice to remove the injunction at the hearing later this month.

If the injunction is lifted, a class-action lawsuit in Canada that was launched in 2007 could be revived.

The provinces were at one time part of the class-action case. In 2017, they agreed to a settlement offer from Purdue that earmarked $2-million for them and $18-million for families whose loved ones were victims of the opioid crisis.

But the provinces withdrew their support and launched their own legal action for a bigger payout after Canadian court judges refused to approve the proposed settlement and raised concerns that accepting such a tiny amount of compensation failed to protect the public purse.

In 2018, the B.C. government sued more than 40 companies that were making opioids or distributing them, including Purdue, on behalf of all the provinces. That lawsuit alleged the companies knew or should have known opioids were addictive and seeping into the illicit market.

Several provinces also took direct aim at the class-action by introducing health care cost recovery legislation with a clause that extinguished any prior opioid-related agreements in Canada.

“That put us in a very difficult position,” Ray Wagner, one of the class-action lawyers, said in an interview. “It put us in a holding pattern. There was not much we could do.”

Mr. Wagner’s Halifax firm had sued Purdue in 2007 on behalf of individuals in Atlantic Canada who got hooked on OxyContin after their doctors prescribed it, and later joined forces with firms in Ontario and Saskatchewan to include people there.

The proposed settlement of the class action with Purdue, which needed court approval in four provinces, was on its way to becoming a done deal after getting the nod in Ontario, Nova Scotia and Quebec in 2017.

But once it reached the courts in Saskatchewan, judges there considered the role of the provinces for the first time and why they accepted just $2-million in compensation. In 2018, the provinces revoked their prior consent.

Mr. Wagner said he plans to ask a judge in Saskatchewan to reconsider the proposed settlement if the injunction is lifted. Meanwhile, he said, Purdue has set up a trust account for the $20-million.

“We never really did want to be involved in the matter between the provinces and Purdue,” he said. “Hopefully, this is a window now for us to get extracted from that fight between them and allow us to be able to access the funds and distribute them to our class members.”

Purdue Pharma (Canada) declined to comment.

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