Purdue Pharma has recently submitted a revised bankruptcy settlement plan to a judge, aimed at resolving thousands of lawsuits related to the opioid crisis, particularly stemming from the use of its powerful painkiller OxyContin. This new proposal could require the Sackler family, who owns Purdue Pharma, to contribute as much as $7 billion towards the settlement.
This filing marks a significant milestone in an ongoing legal battle that has persisted for over five years. The Sackler family, whose total wealth was estimated to be around $11 billion based on documents from 2020 and 2021, would relinquish ownership of Purdue Pharma while making financial contributions spread over a 15-year period, with a substantial amount paid upfront.
Prior to Purdue filing for bankruptcy protection in 2019, family members took steps to distance themselves from the company by resigning from its board, halting their monetary gains from it, and ceasing any direct involvement due to escalating lawsuits from various state and local governments and other entities.
The restructured settlement plan proposes the creation of a new entity that would be managed by a board appointed by state governments. This organization would focus on alleviating the opioid crisis, which has been linked to hundreds of thousands of deaths across the United States since OxyContin was introduced in 1996. Early waves of the opioid epidemic began with prescriptions like OxyContin, followed by subsequent waves that included heroin and, more recently, illicit fentanyl.
The current settlement proposal has garnered support from nearly all major groups that had previously sued Purdue, having been developed through extensive mediation efforts. However, the process of obtaining approval for this plan is expected to take several additional months.
A previous settlement version had received bankruptcy court approval but was refused by the U.S. Supreme Court last year. The Supreme Court rejected it mainly because the plan offered protections to Sackler family members from civil lawsuits, despite the fact that they did not seek bankruptcy protection themselves. Under the new version of the settlement, plaintiffs can choose to participate and gain full shares; those who opt out would retain the right to sue Sackler family members, who have committed to increasing their contributions by approximately $1 billion relative to earlier plans.
The Sacklers’ financial contributions will depend on several factors, including the number of parties that decide to join the settlement and the financial performance of international drug companies they own. Additionally, some of the funds they commit to the settlement are earmarked for potential legal judgments against them, but if not utilized for that purpose, the funds would revert to the main settlement pool.
Members of the Sackler family have faced public backlash, being characterized as villains in the opioid crisis narrative, leading to the removal of their names from numerous prestigious institutions worldwide. They continue to deny any malfeasance related to their ownership of Purdue Pharma.
In comparison, other pharmaceutical companies and distribution entities have already settled various opioid-related lawsuits for an estimated total of around $50 billion. Purdue's settlement, which is anticipated to include around $900 million from the company’s own funds, would rank among the largest if finalized.
The terms of this settlement necessitate that the majority of the funds be allocated for combating the opioid epidemic. Notably, Purdue’s plan is distinct as it also includes direct monetary compensation for victims, potentially exceeding $850 million to support individuals impacted by addiction, their families, as well as infants born suffering from withdrawal symptoms. This amount marks an increase from prior settlement attempts.
Although the deadline for individuals to apply for these funds has long since lapsed, previous iterations of the settlement had projected compensation amounts ranging between approximately $3,500 and $48,000 per individual. The deal remains divisive among families affected by the crisis.
Furthermore, Purdue intends to provide millions of documents for public access to enhance transparency. The company is also involved in producing a low-cost version of naloxone, a critical medication that reverses opioid overdoses.
