WASHINGTON — Drugmaker Purdue Pharma is negotiating a multibillion-dollar settlement with lawyers for local and state governments that would resolve about 2,000 lawsuits against the company, which would declare bankruptcy as part of the deal.

The Sackler family, which owns the company, would relinquish control and contribute at least $3 billion in personal funds to the settlement, which could total as much as $12 billion, according to three people familiar with the talks.

Leaders of the 2,000 plaintiffs in a consolidated lawsuit pending in federal court are seriously considering the offer, according to one person with knowledge of the negotiations. Another person familiar with the discussions said: “I think this is a last effort. If they don’t take this deal, [Purdue is] going to bankruptcy very quickly.”

The proposed deal, first reported Tuesday by NBC News, has been in the works for months, according to one person familiar with it, and was discussed at a meeting in Cleveland last week called by U.S. District Judge Dan Aaron Polster, who oversees the sprawling federal lawsuit scheduled to get underway in mid-October.

Polster, who has encouraged the parties to settle rather than go to trial, told the parties to report back to him Friday, the person said.

Details about the talks came a day after an Oklahoma judge found health-care giant Johnson & Johnson responsible for fueling the state’s opioid epidemic and ordered it to pay $572 million to help abate the crisis.

In addition to Oklahoma, more than 40 other states have filed lawsuits in their own courts against Purdue and other companies in the pharmaceutical industry. The deal under discussion would cover the federal and state lawsuits, according to the people familiar with the proposal.

Purdue settled separately with Oklahoma for $270 million in March. In May, a North Dakota judge threw out that state’s lawsuit against the company.

Purdue is widely blamed for sparking the prescription opioid crisis in the United States with the introduction of OxyContin in 1996, followed by an aggressive marketing effort that persuaded doctors to prescribe it more widely and at higher doses.

In 2007, the company and three executives pleaded guilty to federal charges of misleading doctors and the public about the drugs. Purdue paid a $635 million fine.

Asked for comment Tuesday, Purdue said in a statement: “While Purdue Pharma is prepared to defend itself vigorously in the opioid litigation, the company has made clear that it sees little good coming from years of wasteful litigation and appeals.

“The people and communities affected by the opioid crisis need help now. Purdue believes a constructive global resolution is the best path forward, and the company is actively working with the state attorneys general and other plaintiffs to achieve this outcome.”

The company has made clear for months that it was considering bankruptcy in light of the liabilities it faced from hundreds of lawsuits. Another signal came in an Aug. 19 letter to former sales representatives, warning that “there exists the possibility that Purdue may not, or may not be able to, contribute enough to fully fund all of the retirement benefits that will become payable in the future under the Plan.”

The federal case is set to begin with two Ohio counties proceeding to trial as test cases. Polster has encouraged the plaintiffs to settle with some two dozen drug companies named in the lawsuits, and negotiations have occurred even as both sides readied for trial. State attorneys general were present, along with lawyers for the federal plaintiffs, at last week’s meeting, according to people familiar with it.

They said the company’s $7 billion in payments toward the settlement would come from a combination of sources, including insurance policies, cash, assets and Purdue’s remaining product inventory.

The company would declare Chapter 11 bankruptcy and restructure as a for-profit “public benefit trust,” with the Sacklers, who have owned Purdue since 1952, no longer in control, two people said. That trust would contribute to the settlement over a number of years by selling drugs such as OxyContin and non-opioids. A bankruptcy judge would choose the trustees.

The company also would provide anti-addiction medications such as buprenorphine, naloxone and nalmefene, a medication that has not been approved but has been fast-tracked by the FDA.

The Sacklers also would contribute $3 billion in personal funds to the settlement. That could grow by $1.5 billion if the family sells Mundipharma, an international drug company that it also owns.

The Sackler family paid itself nearly $4.3 billion from the sale of its drugs between 2008 and 2016, a Massachusetts lawsuit against the company claims.

Hostility toward the Sacklers has grown as emails and other documents released by Massachusetts Attorney General Maura Healey and others portray a company that pushed sales representatives to persuade doctors to prescribe more drugs to a wider group of people at higher doses, seemingly with little regard for patient safety. The company was led at the time by Richard Sackler.

The company has denied the allegations against it, and the Sackler family has said the Massachusetts lawsuit contains “misleading and inflammatory allegations” that took internal emails out of context.

But public protests against the Sacklers have been staged outside a number of cultural institutions bearing their name. The Louvre Museum in Paris said in mid-July that it had removed the Sackler name from its Sackler Wing of Oriental Antiquities as a result of outrage. Earlier, the Metropolitan Museum of Art and the Solomon R. Guggenheim Museum, both in New York, and the Tate Modern in London announced they would no longer accept gifts from the family.

Related Headlines


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.