NERA Expert’s Testimony in Bankruptcy Hearing of Purdue Pharma on Behalf of States’ Attorneys General

The Situation

Purdue Pharma and its subsidiaries developed, manufactured, and distributed pharmaceutical products, most notably OxyContin, an opioid. The company was founded by brothers Raymond and Mortimer Sackler. Purdue Pharma was sued by numerous parties—including the attorneys general of several states—for its opioid marketing and distribution practices. The litigation sought restitution from Purdue Pharma and various members of the Sackler family. In September 2019, Purdue Pharma LP LLC filed for Chapter 11 bankruptcy. In June 2021, Purdue Pharma filed a supplement to the plan of reorganization that would resolve outstanding litigation against the company and members of the Sackler family for their roles in the opioid crisis. The settlement required Sackler family members to make cumulative payments of more than $4 billion over approximately nine years.   

NERA's Role

A consortium of states’ attorneys general retained NERA in In re: Purdue Pharma LP, et al. to estimate the value of the Sackler family wealth at the completion of the payments and to estimate the present value of the Sackler payments.

NERA estimated the expected net value of the Sackler family assets at the end of the payment period after considering the amount and timing of the settlement payments. The net asset estimate used third-party estimates of expected returns by asset category and incorporated assumptions about the sale of certain Sackler assets. 

The Result

In September 2020, the US Bankruptcy Court for the Southern District of New York held a confirmation hearing for Purdue Pharma’s proposed plan, which was contested by some of the states with claims against the company and the Sackler family. The court qualified NERA economist William Hrycay as a financial expert and admitted his expert report and testimony into evidence on behalf of those states’ attorneys general who did not accept the proposed reorganization plan. The conclusions were not contested by expert testimony on behalf of Purdue Pharma.