Opioid Victims Object to Supreme Court Review of Purdue Pharma’s $6 Billion Settlement
The federal government has taken issue with the settlement because it would shield members of the billionaire Sackler family from opioid-related lawsuits Lawyers for the plaintiffs argue that if the Supreme Court agrees to review the opioid settlement it would further delay any disbursements. Photo: george frey/Reuters By Alexander Saeedy July 18, 2023 2:42 pm ET | WSJ Pro Victims of opioid addiction are objecting to the U.S. government’s request to send Purdue Pharma’s pending bankruptcy plan for review before the Supreme Court, which would delay long-awaited disbursements under a $6 billion settlement for addiction victims and state governments. Purdue and tens of thousands of addiction victims, state governments and municipalities last year reached a gl
Lawyers for the plaintiffs argue that if the Supreme Court agrees to review the opioid settlement it would further delay any disbursements.
Photo: george frey/Reuters
Victims of opioid addiction are objecting to the U.S. government’s request to send Purdue Pharma’s pending bankruptcy plan for review before the Supreme Court, which would delay long-awaited disbursements under a $6 billion settlement for addiction victims and state governments.
Purdue and tens of thousands of addiction victims, state governments and municipalities last year reached a global settlement worth $6 billion over the pharmaceutical company’s alleged role in fueling the nation’s opioid crisis. The settlement would help end a yearslong legal battle that led to Purdue’s bankruptcy and would shield members of the Sackler family, who own the company, from future opioid-related liabilities.
Earlier this month, the federal government filed an appeal to the Supreme Court to review the $6 billion settlement, suggesting that the legal waivers for the Sacklers may not conform with U.S. law. If the court agrees to hear the case, it could take until the end of next year for a decision to be made, and even longer for funds to flow from the settlement.
Victims and state governments, who have sued Purdue over damages caused by its prescription opioid OxyContin, are objecting to the delays, saying they are in need of immediate receipt of the settlement funds promised by Purdue and the Sacklers.
“Any further delay presents a clear and immediate harm to personal injury victims and opioid-affected communities,” said lawyers representing a group of more than 60,000 individuals who sued Purdue for damages caused by their prescription drugs, in court papers filed late Monday.
A group of state governments that have sued Purdue also argued that the federal government is putting lives in danger while it focuses on whether the U.S. bankruptcy code allows releases for members of the Sackler family, who haven’t filed for bankruptcy themselves.
“Against the dire public health consequences of delay, [the federal government] advances objections that go not so much to Purdue’s plan … but to abstract principles of bankruptcy law,” representatives of the state governments said in their objection. “Those principles, whatever their importance, should not stand in the way of creditor distributions.”
If the Supreme Court decides to review the settlement, its nine justices will determine whether immunity for the Sacklers through Purdue’s bankruptcy is legally sound. The federal government argued earlier this month that “the Sackler release is not authorized by the bankruptcy code” and “constitutes an abuse of the bankruptcy system.”
Approving the settlement would also “leave in place a road map for wealthy corporations and individuals who are not in financial distress to misuse the bankruptcy system to avoid mass liability,” representatives of the Justice Department said.
Whether or not to allow a shield for members of the Sackler family has been a thorny issue in Purdue’s bankruptcy. Judge Robert Drain
of the U.S. Bankruptcy Court in White Plains, N.Y., approved a deal in 2021 that included legal releases for them. Later that year, however, a district court judge threw out the proposed settlement, saying that legal releases for the Sacklers weren’t permitted by the bankruptcy code.Purdue then appealed that decision, and in May the Second Circuit Court of Appeals reversed the district court’s ruling, reinstating the releases, saying they didn’t cover all the Sacklers’ liabilities, only those related to Purdue’s bankruptcy case.
Victims of prescription opioid addiction and local governments looking to pay the trillion-dollar costs of drug abuse have been suing Purdue for years. Most of their lawsuits center on the misleading marketing of its flagship painkiller OxyContin, a prescription opioid first marketed in 1996, that Purdue said resulted in addiction in less than 1% of those who used it, according to court papers.
That claim, however, was based on incomplete research, and as addiction to OxyContin grew and overdose deaths began to ravage communities across the U.S., many state governments and victims of addiction began to sue the company and the Sacklers.
Facing thousands of lawsuits seeking trillions of dollars in damages, Purdue Pharma filed for bankruptcy in 2019, at first reaching a $4.5 billion settlement agreement with 43 states and territories, funded largely by Sacklers’ own wealth. Nine states abstained from the agreement, arguing that the Sacklers shouldn’t receive immunity from wrongdoing related to the sale of OxyContin. Purdue later increased the settlement amount to $6 billion, and the holdouts eventually agreed to the plan.
As part of the global settlement, the Sackler owners agreed to pay billions of their own money into a trust over 18 years. In exchange, the Sacklers would receive immunity from all current and future civil litigation related to their company’s prescription opioid business. The Sacklers would relinquish their ownership stake in Purdue and the company would be renamed Knoa Pharma, owned by its creditors.
Write to Alexander Saeedy at [email protected]
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