Sacklers agree to $6 billion Purdue bankruptcy settlement over opioid crisis

The Sackler family members who own Purdue Pharma have agreed to pay up to $6 billion to settle a hotly contested bankruptcy plan, which will allow state governments and tens of thousands of people to be compensated for the company’s role in the opioid crisis.

The deal comes after years of litigation over the marketing of the OxyContin painkiller, which was a cash cow for the drugmaker and became a poster child for the nationwide epidemic. The company was blamed for helping to trigger these events by downplaying the risk of addiction while improperly encouraging physicians to write prescriptions.

The settlement follows furious objections to an earlier version of the plan that called for a $4.3 billion payout. But several states balked at a provision that granted immunity to some of the Sacklers as well as hundreds of their associates. The immunity would shield them from future lawsuits, even though — unlike Purdue — they did not file for bankruptcy protection.

The Sackler family members had insisted that a bankruptcy deal would not be possible unless they were released from all future liability related to the harm caused by Purdue’s OxyContin painkiller.

This proved to be a key sticking point as the plan took shape, even though court documents revealed the extent to which some Sackler family members withdrew an estimated $10 billion from 2008 to 2017. More than half of that money was either invested in offshore companies owned by the Sacklers or deposited into trusts that could not be reached in bankruptcy and offshore locations. About $4.6 billion was used to pay pass-through taxes.

Consequently, a federal court judge overturned the deal, prompting the most recent round of talks.

The settlement calls for the payout to be spread over 18 years, with larger initial installments. The amount of compensation for individuals – ranging from $3,500 to $48,000 – does not appear to be changing.

As part of the arrangement, the Sacklers issued a statement regretting their role in the crisis to the victims — including people who developed opioid use disorder or lost loved ones to overdoses — and may be required to do so at a court hearing. It is a notable step, given that the Sacklers spurred outrage when they denied responsibility for the opioid crisis during congressional hearings.

The deal also requires the Sacklers to allow institutions to remove the family name from buildings, scholarships, and fellowships. This builds on the growing list of universities, museums, and other institutions have disassociated themselves from the family in response to OxyContin marketing that sullied the family name.

“After years of lies and denial, the Sackler family must now directly apologize for the pain they have caused. They must reckon face-to-face with the survivors of their reckless greed. … Museums and universities may now scrub the tarnished Sackler name from their walls — ensuring this family is remembered throughout history for their callous disdain for human suffering and nothing else,” said Connecticut Attorney General William Tong.

As for the Sackler family members, a court document contained their statement: “The Sackler families are pleased to have reached a settlement with additional states that will allow very substantial additional resources to reach people and communities in need. The families have consistently affirmed that settlement is by far the best way to help solve a serious and complex public health crisis. While the families have acted lawfully in all respects, they sincerely regret that OxyContin, a prescription medicine that continues to help people suffering from chronic pain, unexpectedly became part of an opioid crisis that has brought grief and loss to far too many families and communities.”

Purdue Pharma previously pleaded guilty to three felony criminal charges as part of an $8.3 billion settlement that also resolved civil charges against the company. At the time, the U.S. Department of Justice left the door open to pursuing criminal charges against individuals, a step that federal authorities have been urged to take since some Sackler family members tightly controlled the company.

The settlement, which is part of the larger Purdue reorganization plan, must still be approved by U.S. Bankruptcy Court Judge Robert Drain, according to Carl Tobias,  a professor at the University of Richmond School of Law, who specializes in product liability and mass torts litigation.

The deal could be challenged by individual victims or U.S. Trustee William Harrington, whose office oversees the administration of bankruptcy cases for the Department of Justice. The trustee had objected over concern the immunity was too broad and raised constitutional issues concerning due process because it denied opioid victims an opportunity to be heard, among other things.

But some say that criminal charges remains a sticking point.

“The fight is not over. What victims really want is criminal liability. That’s what needs to happen next,” said Ryan Hampton, an activist who is recovering from opioid addiction and was co-chair of the unsecured creditors committee in the Purdue bankruptcy. He also recently published a book, called “Unsettled: How the Purdue Pharma Bankruptcy Failed the Victims of the American Overdose Crisis,” in which he took the court system to task.

Although the immunity provision raised concerns, the states agreed to a larger settlement because it prevented the bankruptcy plan from unraveling and potentially resulting in future lawsuits that might have precluded many opioid victims from receiving any compensation. If one state, for instance, had successfully brought a lawsuit, victims living in other states may not have benefited.

“This settlement is both significant and insufficient—constrained by the inadequacies of our federal bankruptcy code. But Connecticut cannot stall this process indefinitely as victims and our sister states await a resolution,” said Tong.

“This was all about money, who was going to get the money and who had the power to decide that,” said Hampton.