SCOTUS Blocks $6B Purdue Pharma Bankruptcy Settlement

Pictured: Oxycontin bottles on a shelf/iStock, Pureradiancephoto

Pictured: Oxycontin bottles on a shelf/iStock, Pureradiancephoto

The Supreme Court of the United States on Thursday granted the Department of Justice’s application for a stay on Purdue Pharma’s $6 billion bankruptcy settlement plan shielding the Sackler family from lawsuits related to the opioid epidemic.

In the short order, SCOTUS also put any other bankruptcy proceedings against Purdue on hold. The court will schedule a hearing in December 2023 to discuss the legality of a bankruptcy settlement plan reached with state and local governments that traded the Sacklers’ immunity from civil lawsuits for a contribution of up to $6 billion.

The issue at hand is whether U.S. bankruptcy laws provide protections for the Sackler family, even though they had not personally declared bankruptcy themselves. The Sacklers were previously the owners of Purdue who are alleged to have fueled the opioid-addiction crisis and required a release from liability as a condition of paying the settlement.

Purdue first filed for bankruptcy in September 2019, days after it reached a tentative agreement with approximately half of the states to pay up to $12 billion to settle thousands of lawsuits. At the center of the cases is OxyContin (oxycodone), Purdue’s semi-synthetic opioid painkiller that the company marketed aggressively, leading to a spike in addiction throughout the country.

In its Chapter 11 filing, Purdue outlined the terms of its settlement deal noting that it will form and contribute all its assets to a new trust, which will primarily be for the benefit of claimants. Purdue also pledged to contribute “tens of millions of doses” of opioid overdose treatments at little or no cost.

The Sacklers have since tried to shirk responsibility for the opioid epidemic. In December 2020, the family appeared in a virtual hearing and apologized to victims of the crisis but deferred the blame to Purdue’s management. Three weeks earlier, the company had pleaded guilty to three criminal charges related to the crisis.

In August 2021, David Sackler, heir to the family, said that while they believe they have a “moral responsibility” to help in the fight against the opioid epidemic, they will not give billions of dollars to settle lawsuits unless they are afforded legal protections.

A month later, the U.S. Bankruptcy Court approved Purdue’s bankruptcy plan of dissolving the company and transferring its assets to a new trust, which has no involvement from the Sacklers whatsoever. Critics of the decision say that it will protect the Sackler family from any future liability related to the opioid crisis.

The Department of Justice has also stepped in and in September 2021 filed an appeal to block the bankruptcy plan.

Tristan Manalac is an independent science writer based in Metro Manila, Philippines. He can be reached at tristan@tristanmanalac.com or tristan.manalac@biospace.com.

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