Drug manufacturer Purdue Pharma’s owners, the Sackler family, will relinquish control of the company and fork out up to $6bn in settlement money to help ease the US opioid crisis, after a federal appeals court this week cleared the way for the company to settle thousands of lawsuits regarding its role in fuelling the opioid epidemic.
In the mid-1990s and early 2000s, the company manufactured and aggressively marketed OxyContin, the potent – and lucrative – opioid painkiller that helped spark the US' unprecedented addiction crisis, reports The Washington Post.
Tuesday’s ruling comes as the US continues to grapple with overdoses killing more than 100 000 Americans each year, most now from illicit fentanyl, not prescription painkillers.
Drug manufacturers, distribution companies and pharmacy chains have faced waves of lawsuits, with proposed or final settlements tallying tens of billions of dollars – money that local and state governments are supposed to use to fight addiction and save lives.
After the lawsuits, Purdue Pharma filed for bankruptcy in 2019, while members of the Sackler family did not. In September 2021, New York US Bankruptcy Judge Robert Drain approved a deal, supported by creditors, calling for the Sackler family to contribute more than $4bn to the settlement while affording family members sweeping legal protections, angering critics.
The Department of Justice and nine states objected, arguing that the family, which had received more than $10bn in payouts from the company, was getting protection without having to declare bankruptcy themselves. The Sacklers said nearly half that sum went toward taxes.
Then in December 2021, US District Judge Colleen McMahon threw out the proposed settlement, saying the law did not allow the Sackler family members, who were not direct parties in the bankruptcy, to be released from legal claims stemming from the opioid crisis.
But the three-judge panel ruled this week that the Sacklers could be shielded, despite not having declared bankruptcy. The court ruled they needed to be shielded from future lawsuits to “ensure the fair distribution” of the settlement money.
As part of further negotiations, the family agreed to pay up to $6bn over 18 years to victims, survivors and governments, including states that had objected to the earlier deal. The family had long insisted on shields from civil lawsuits in exchange for making payments toward the settlement.
Connecticut, which first sued Purdue Pharma in 2018 and objected to the original deal, said it still believes the Sacklers were hiding behind the nation’s broken bankruptcy code “to escape justice and shield their blood money”.
“There will never be enough justice to match the depths of pain and suffering caused by the Sackler family,” said Connecticut Attorney-General William Tong on Tuesday. “…but it was necessary to get communities, victims and their families the resolution and billions of dollars (of) funding desperately needed to save lives and fight the opioid epidemic.”
Under the settlement, Connecticut will receive about $95m, which will be used for opioid treatment and prevention, and to fund a survivors trust to help survivors of the epidemic.
The Justice Department has declined to comment on the ruling, or say whether it plans to appeal. An appeal could be made to the Supreme Court.
See more from MedicalBrief archives:
Pause in opioid litigation against Purdue Pharma and Sacklers
Sacklers would lose Purdue Pharma, $3 billion in opioid settlement
Opioid addiction crisis lawsuits target billionaire family and Purdue Pharma