Judge Releases Sacklers from Future Opioid Lawsuits, Approves Purdue Settlement

Judge with Gavel

The U.S. Bankruptcy Court's decision to approve Purdue Pharmaceutical's reorganization plan met huge backlash from opposing parties who are seeking greater accountability from the Sackler family, the company's owner.

The firm had been at the center of a massive lawsuit calling out its direct participation in the United States' opioid crisis, specifically for its OxyContin medication. According to a statement on its website, Purdue Pharma's bankruptcy plan is a product of a series of intense closed-door negotiations over the last two years. 

The Sacklers did not admit to any wrongdoing and have never been charged directly for the issue. Still, Purdue Pharma has pleaded guilty twice in its erroneous marketing efforts for OxyContin — first in 2007 and the second in 2020.

In his ruling, which took some six hours to be read from the bench, Bankruptcy Judge Robert Drain approved Purdue's plan to dissolve the company and shift its assets to a new entity that does not involve the Sackler family in any way. 

The new firm will be primarily owned by the National Opioid Abatement Trust (NOAT), which operates to battle the nationwide opioid epidemic. The Native American Tribes trust will be a minority shareholder. 

Judge Drain's approval also releases all members of the Sackler family for any future liability for any harm the OxyContin and other opioids caused, along with their other associates and remaining trusts and companies. 

In exchange, the Sacklers agreed to pay around $4.325 billion in settlements to various locations and forfeit ownership of the drug firm. It has also already spent $225 million to the United States Department of Justice to settle separate civil allegations, where the family has also denied wrongdoing. 

The plan did not sit well at all with opioid activists, some public and private entities, and legal scholars who told industry reporters that it was a "miscarriage of justice." 

Speaking to journalists right after the ruling was announced, Washington Attorney General Bob Ferguson said the order is "insulting to victims of the opioid epidemic who had no voice in these proceedings." Ferguson added his office would appeal the decision. He is one of the many who had expressed plans to file an appeal or a motion for a stay of the order. 

In its reorganization plan, Purdue said that its proposal had the approval of over 95% of its more than 120,000 voting creditors, which included state and local government creditors, bi-partisan state attorneys general from 43 states and territories, and other organizations. 

"While there is historically broad support for the plan, we also know that there have been deeply held views on the other side. We are hopeful that this is the moment where all parties will join the overwhelming majority so that the billions of dollars can begin to flow on day one," Steve Miller, chairman of the Purdue Board of Directors, said.

Purdue filed for Chapter 11 protection in September 2019 in the face of 3,000 lawsuits.

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