America’s massive opioid crisis was highlighted this week in the US Supreme Court when arguments were heard in a challenge to the multi-billion-dollar bankruptcy deal meant to compensate victims of the highly addictive pain killer OxyContin.
The justices struggled to decide whether to give a thumbs up or thumbs down to the deal, reports NPR.
Basically, the issue amounts to a battle between money and principle. On the money side is a bankruptcy deal approved by two lower courts that would provide $8bn to state and local governments in dealing with the consequences of opioid addiction, as well as providing individual compensation to victims.
Funding most of that settlement would be the Sackler family, which owned and ran Purdue Pharma, and which had agreed, under the terms of the deal to pay the money into the compensation pot.
In exchange, the deal would shield the Sacklers from personal liability, despite the fact that they both owned and ran the company.
On the principle side are a relatively small number of victims, and the governmental US Trustee progamme, which oversees bankruptcies.
They object to the deal because it shields the Sacklers from any further lawsuits, and leaves the family with more than half their wealth, even though they were intimately involved in the aggressive and false marketing of OxyContin.
Representing the bankruptcy trustee and other objectors, Deputy Solicitor-General Curtis Gannon said the Sacklers withdrew large amounts of their money from Purdue before the bankruptcy, and he argued that federal law does not authorise bankruptcy judges to approve a release from liability for third parties like the Sacklers.
Stealth and deception
Just what happened at Purdue Pharma, and what the Sacklers did, was not known for a long time.
Now, however, their role and the company’s have been well-documented, in court and movies, books and documentaries.
“Within the past 20 years, more than 500 000 Americans have been killed by overdoses,” the documentary Crime of the Century recounts. “This was a new drug cartel. They were drug dealers wearing suits and lab coats.”
By 2020, Purdue Pharma had pleaded guilty to three criminal charges, agreeing that it owed $8bn in criminal and civil fines, most of it to be paid to state and local governments handling the fallout of the opioid crisis.
Most of the money was conditioned on the company reaching a deal in bankruptcy court that would reimburse victims, including state and local governments, as well as individuals who were harmed.
That deal was at the centre of Monday’s case because it releases the Sacklers from personal liability, despite the fact that all three of the original Sackler brothers who bought Purdue and ultimately developed OxyContin were doctors.
And, six Sacklers sat on the board of the company, including chairman Richard Sackler, who closely directed the firm’s aggressive and deceptive marketing strategy of OxyContin as not causing addiction.
Under the original bankruptcy deal with the company, the Sacklers kicked in $4bn to be divided among the state and local governments, and others. But at the same time the family was to be released from any further liability.
When eight states and the District of Columbia balked at the amount, the Sacklers upped the ante to $6bn, with the remaining $2bn coming from the assets and future earnings of a new non-profit company formed after Purdue’s dissolution.
After the Sacklers increased their contribution to $6bn, the objecting states withdrew their opposition, and 95% of the state, local and tribal governments, as well as groups of individuals, voted to approve the settlement.
What critics say
However, US trustee William Harrington, who oversees bankruptcy cases in New York, Connecticut and Vermont, objected to the deal. Representing him in the Supreme Court, the Biden administration argued that the bankruptcy law does not authorise bankruptcy courts to approve a release from liability for third parties like the Sacklers.
Georgetown University law professor Adam Levitin said that the Sacklers’ $6bn – to be paid over eight years – is buying them not only a release from liability, but ensuring they will not have to testify about their misdeeds in future litigation, and they will be able to keep about half of their money and other assets.
“The Sacklers do not want to have to be in the bankruptcy fishbowl,” he said. “They’re wanting to get bankruptcy at half price.”
Levitin added that the release from liability covers more than just the Sacklers. It also includes other Sackler acolytes, from their lawyers to consultants, doctors, and even a former senator.
“None of them has to pay a dime,” he observed, but all of them would be released from liability in the deal.
“Bankruptcy is supposed to provide relief for honest but unfortunate debtors. And those are people who file for bankruptcy and pay the price. They come clean about their assets and give up all of their assets to their creditors.
“The Sacklers are not doing either of those things.”
At the end of the day, it was unclear where the majority of the court was going, and whether the bankruptcy plan would survive.
NPR article – Purdue Pharma, Sacklers’ OxyContin settlement lands at the Supreme Court (Open access)
NPR article – It's money v. principle in Supreme Court opioid case (Open access)
See more from MedicalBrief archives:
Sackler family to pay $6bn for its role in OxyContin opioid crisis
US Bill to prevent Sackler family from evading Oxycontin responsibilities
Pause in opioid litigation against Purdue Pharma and Sacklers
Sacklers would lose Purdue Pharma, $3 billion in opioid settlement