A pharmacist holds prescription painkiller OxyContin, 40 mg pills manufactured by Purdue Pharma LD at a community pharmacy, in Provo, Utah, U.S., April 25, 2017. REUTERS/George Frey/File Photo Acquire Licensing Rights
WASHINGTON, Dec 3 (Reuters) – The U.S. Supreme Court will hear arguments on Monday about the legality of a roughly $6 billion bankruptcy settlement involving Purdue Pharma, maker of the powerful and highly addictive pain drug OxyContin, which played a key role in opioid epidemic in the country.
If judges allow the deal to go forward, it could pour billions of dollars into addiction treatment and other relief efforts. The settlement will also protect the wealthy Sackler family owners of the Stamford, Connecticut-based drug company from lawsuits brought by opiate victims.
Here’s an explanation of the agreement and its implications.
HOW WILL THE SETTLEMENT HELP PEOPLE AFFECTED BY OPIOIDS?
An opioid epidemic has caused more than half a million overdose deaths in the US over a period spanning more than two decades. Purdue introduced OxyContin in 1996 and advertised and promoted it aggressively. OxyContin helped start the epidemic, claim various plaintiffs in thousands of lawsuits against Purdue. The litigation prompted Purdue to file for Chapter 11 bankruptcy in 2019 to deal with its debts.
Purdue reached a bankruptcy settlement with creditors, including various state attorneys general, local governments, and the criminal and civil divisions of the U.S. Department of Justice. Under the deal, Purdue will transform into a nonprofit organization and dedicate its assets to addressing the harms of opioid addiction in the United States.
A U.S. Bankruptcy Court approved that restructuring plan in 2021. It was revised in 2022 to include more money from Sackler after the attorneys general of eight states and the District of Columbia successfully appealed the Bankruptcy Court’s approval.
The revised deal is supported by all financial stakeholders in the case, including all state attorneys general, but is opposed by the Justice Department’s bankruptcy watchdog and some individual opiate plaintiffs.
Under the deal, Sackler will pay up to $6 billion to a trust that will be used to settle claims filed by states, hospitals, people who have become addicted and others who have sued Purdue.
A group of more than 60,000 people who have filed claims for personal injuries stemming from their exposure to Purdue’s opioid products told the Supreme Court they support the settlement, including legal immunity for Sackler family members.
WHAT ROLE IS THE SACKLER FAMILY PLAYING IN THE OPIOID CRISIS?
Lawsuits against Purdue and Sackler family members accuse them of fueling the opioid epidemic by fraudulently marketing their pain medications. The company pleaded guilty to misbranding and fraud charges related to its marketing of OxyContin in 2007 and 2020.
Sackler’s conduct allegedly “contributed to the massive overuse of OxyContin and other opioids in this country,” according to University of Arkansas at Little Rock law professor Joshua Silverstein.
Members of the Sackler family have denied wrongdoing, but expressed regret that OxyContin “unexpectedly became part of an opioid crisis.” They said in May that the bankruptcy settlement would provide “significant resources for people and communities in need.”
HOW DO THE JACKALS TRY TO USE BANKRUPTCY AS A SHIELD?
Purdue’s Sackler family owners will receive immunity under the settlement in exchange for paying up to $6 billion to settle thousands of lawsuits, even though they themselves are not bankrupt. They will achieve this through what is known as a non-debtor discharge, also called a third party discharge.
“The basic idea is that the Sacklers are providing a lot of money to Purdue Pharma in exchange for paying off their own liability for opioid harm without having to file for bankruptcy,” Silverstein said.
Congress initially provided non-debtor relief in the context of asbestos litigation. Their use was expanded by companies wanting to use such versions as a bargaining chip.
President Joe Biden’s administration has argued that Purdue’s settlement is an abuse of bankruptcy protection intended for debtors in “financial difficulty,” not people like the Sacklers. The administration also said Sackler family members withdrew $11 billion from Purdue before agreeing to contribute $6 billion to the opioid settlement.
WHY IS THE US BANKRUPTCY AGREEMENT OPPOSED TO THE BANKRUPTCY AGREEMENT?
The US Trustee is an office within the Department of Justice that performs an administrative function, acts as a watchdog, and in some cases, such as in the case of Purdue Pharma’s bankruptcy, holds political positions.
The guardian, who appealed a lower court ruling approving the settlement, opposed using bankruptcy law to provide sweeping legal protections like those the Sacklers sought. The trustee told the Supreme Court: “The appeals court’s decision is a road map for corporations and wealthy individuals to abuse the bankruptcy system to avoid liability for mass injury.”
Purdue accused the US trustee of managing to “single-handedly delay billions of dollars worth of money that should be used for victim compensation, opioid crisis relief for communities across the country, and overdose rescue drugs.”
Reporting by John Kruzel; Additional reporting by Dietrich Knauth in New York; Editing by Will Dunham
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