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Opioid Drugs

Nearly All Parties Agree with Deal, Purdue Announces

— August 12, 2021

Most of Purdue’s creditors agree with bankruptcy plan.

Members of the Sackler family who own Purdue Pharma will pay $4.5 billion under a settlement plan centered around the company’s bankruptcy.  In doing so, however, they will be protected against future financial responsibility brought by parties for the opioid epidemic. Purdue is one of the major players with many insisting the drug maker and family who owns it helped to fuel the crisis with OxyContin sales.

The settlement appears likely to be approved by Judge Robert Drain of the New York federal bankruptcy court.  Critics of the proposal and relevant bankruptcy court provision feel this allows large companies like Purdue to take advantage of the system without having to admit accountability.  In 1990, Congress passed legislation shielding insurance companies in the bankruptcy court from facing liability.

The proposal includes the creation of a new business that would develop opioid addiction treatments and drugs unrelated to pain management.  The cash would be used to fund “abatement trusts.”  Members of the Sackler family would avoid future civil lawsuits from third parties even though they were not debtors.

Nearly All Parties Agree with Deal, Purdue Announces
Photo by Andrea Piacquadio from Pexels

The U.S. Trustee, a division of the Department of Justice (DOJ, wrote in a recent filing that “the Sackler family release violates the United States Constitution,” and adding that the “Sackler family will be authorized to buy hundreds of individual discharges for their role in the opioid crisis without actually filing for bankruptcy relief and subjecting themselves to the same rules of transparency and creditor protections that every consumer and business debtor who files bankruptcy must follow.”

Audrey Strauss, the U.S. attorney for the southern district of New York, submitted a letter to the court stating, “The release violates due process, depriving opioid victims of their property rights.”  William Tong, Connecticut’s Attorney General voiced concerns that the settlement would “void the state’s sovereign police power” should parties want to come forward later on.

Purdue said the bankruptcy reorganization plan “enjoys the support of over 95 per cent of voting creditors, and nearly 97 per cent of state and local government creditors,” calling the level of support “unprecedented in scope.”  A spokesperson for the Sackler family said, “The proposed resolution enjoys overwhelming support from governmental and private creditors and is an important step toward providing substantial resources for people and communities in need.  The Sackler family hopes these funds will help achieve that goal.”  A letter from the descendants of Mortimer Sackler added, “The Sackler families firmly believe that, if litigation were to proceed to conclusion, they would ultimately be vindicated.  But the burden of defending that litigation would be unrelenting; the cost of defense would be enormous; and it is impossible to overstate the chaos that would ensue as 750 current plaintiffs and untold other future plaintiffs raced to beat each other to judgment.”

Letitia James, New York state’s Attorney General, said that the “Sackler family have used every delay tactic possible and misused the courts all in an effort to shield their misconduct.”  In July, however, New York ultimately signed onto a revised plan in which the members of the family agreed to release control of family foundations as well as not pursue any naming rights at cultural institutions.  At that time, James explained, “While this deal is not perfect, we are delivering $4.5 billion into communities ravaged by opioids on an accelerated timetable.”

Members of the Sackler family have not been criminally charged for selling OxyContin, and the current settlement would not prevent the government from bringing criminal charges in the future.


Purdue’s bankruptcy deal shields Sackler family owners from future opioid liability

Purdue Pharma settlement plan approved by 95% of creditors, but CT still opposed

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