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US companies use insolvency process to avoid litigation risk

Publication: 
Editorial Staff
chiefofficersnet

A report in Canadian media says that privately held Purdue Pharma LP, a pharmaceutical company registered in Connecticut, USA, is "exploring" the possibility of using what the USA calls "bankrupty" (a term it uses for both corporate and personal insolvency) to manage the risk of litigation arising from the drug OxyContin. But the company is not even a little bit insolvent. Using insolvency processes to manage risks in litigation is a strategy that isn't new.

Everyone is sure of one thing: the "opiod crisis" is real. There are, it seems, no deniers. OxyContin is only one of the drugs that have been numbing, creating addiction amongst and killing people the world over. Opiods are synthetic opiates, morphine substitutes. There are many different types, each with several different names. Opiate addition, morphine and its derivative heroin for example, is well documented. As a pain-killer, morphine works not be acting at the source but by modifying the way the brain responds to pain. it is the change in brain function that leads to recreational use but there is another effect: even moderate use can lead to addiction simply because the mind creates a "new normal" so that ceasing consumption feels abnormal.

Synthetic alternatives are big business. They generate the revenue of small states. And they do the same job as morphine: they change the way the brain works. Some people like it: let's leave them on one side for the purposes of this article by adopting the principle volenti non fit injuria (if you volunteer, don't complain if you get hurt). The really big problem is people who were prescribed Vocadin and its rivals and successors. Vicodin is said by many to be one of the most addictive drugs available, both legal and illegal. Its primary active ingredient, hydrocodone, is very close to heroin. There is general agreement that, for short term use, it is a highly effective and safe painkiller but more than a few days, a common situation for chronic or post-operative pain, can cause addiction. Its closeness to heroin has also led it, and some of its rivals, to be a relatively easily obtained substitute when heroin is hard to come by. OxyContin, in particular, has a history of being crushed and snorted. That has led to crime including black market dealing (with all that entails) and alleged mark-ups of 2,000%, robberies at pharmacies and prescription fraud. Like heroin, the demand for the drug increases as the brain comes to terms with its adjusted state and says "hey, there's pain, increase the dose," even when the pain has, in fact, subsided. A report in the New York Times (https://www.nytimes.com/2018/0...) says that the illicit use of OxyContin was well known as early as 1999 and it was alerady supplanting Vicodin as a drug of choice.

The "oxy" crisis is more visible than normal drugs problems: for one thing, it affects the middle classes (they have health insurance or can afford to pay for drugs that doctors prescribe) and for another it affects the middle aged. In short, exactly the people who are least likely to be drug addicts, with all the problems that brings, are exactly the people who are affected by it. They, too, are the most visible to the media and opinion formers. Reporters don't like seeing their colleagues prosecuted for offences relating to the allegedly illegal purchase of otherwise legal drugs

Reports, which may or may not be accurate, say that there are now more than 2,000 cases against Perdue and other manufacturers of opiods in the USA alone. Some are class actions and some are US States. The states say that the manufacturers have contributed to the rising number of deaths associated with the use (users often have no idea they are abusing) the drugs. Overdoses are worryingly common - and in the vast majority of reported cases accidental i.e. the person taking the drugs was unaware that his dose had reached fatal levels, not that he sat with a box of pills and swallowed them all at once for suicide.

The states say that the manufacturers falsely claimed that the drugs were safe. the manufacturers say that labelling and notes, approved by the FDA, proved that the companies did in fact issue warnings about side effects with prolonged use.

is there a crisis? Hell, yeah. The latest figures from the USA's Centers (sic) for Disease Control and Prevention compare 1999 and 2017: the number of opiod related deaths increased 600%. In 2017, the drugs, including heroin and fentonyl, were implicated in more than 47,500 deaths. IN the past twenty years, CDD says, more than 200,000 have died from overdoses of prescription opiods (https://www.cdc.gov/drugoverdo...)

In 2007, Perdue and three executives pleaded guilty to criminal charges relating to "misbranding" and misrepresenting Oxycodin by understating its risk of addiction and the risk of abuse. Together they paid fines totalling more than USD600 million. The New York Times article published in May 2018 contains damning evidence, some of it from a supposedly confidential Department of Justice document, of the knowledge at the highest levels within Purdue of the abuse of "Oxy" and how MS Contin, a related product, was widely discussed in internet drug fora as a source for extracting morphine for snorting and injecting. Win or lose in litigation, Perdue has a problem.

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