Sacklers and Purdue Pharma Reach New Deal With States Over Opioids

Holdout states signed on, and thousands of lawsuits were settled over the company’s and family’s roles in the opioid epidemic. An additional $1 billion was agreed to by the Sacklers.

Earlier this week, members of the billionaire Sackler family and Purdue Pharma agreed to a deal with states that had opposed the company’s bankruptcy plan — a crucial step toward funneling billions of dollars from the family’s fortune to addiction treatment programs across the country.

The Sacklers would pay as much as $6 billion to help communities address the damage caused by the opioid crisis if Judge Robert Drain approves the agreement in White Plains, N.Y. The Sackler family would receive the prize they have sought for nearly three years: the end of all civil claims against them regarding the company’s opioid business.

Criminal prosecutions would not be covered by the Sacklers’ liability protection.

Although the settlement agreement with Purdue Pharma and the Sackler family still faces potential challenges in the courts, it is the first time all states have accepted a settlement agreement after three years of negotiations. A $1 billion increase in the Sacklers’ payment is included in the new agreement. As well as the family’s money, Purdue itself will contribute, through cash and revenue from future sales, payments expected to total $1.5 billion by 2024.

As a result of this agreement, state, local, and tribal governments are holding companies across the vast pharmaceutical industry accountable for the opioid epidemic that has claimed at least 500,000 lives since 1999.

The earliest and greatest number of lawsuits have been filed against Purdue, mainly because its OxyContin painkiller was initially a market leader.

“We are pleased with the settlement reached in mediation, which allocates all of the additional settlement funds to opioid abatement programs, overdose rescue medicines, and help for victims,” Purdue said in a written statement. With this mediation result, we will continue to move through the appeals process on an expedited schedule, and we hope to deliver these resources as soon as possible.”

It is likely that many people will be disappointed by the Sackler family’s refusal to acknowledge wrongdoing or accept personal responsibility for the public health crisis, despite the deal’s importance.

In a statement attached to the court filing, the Sacklers stated: “While the families have acted lawfully in all respects, they regret that OxyContin, a prescription medicine that continues to help people suffering from chronic pain, unexpectedly became part of an opioid crisis that has caused grievance and loss for too many families and communities.”.”

C.V.S., Walgreens, and Walmart, as well as other manufacturers, distributors, and big retailers, remain defendants in opioid lawsuits. Several of these cases have resulted in verdicts, with mixed outcomes for plaintiffs and defendants. In the past month, three major distributors – AmerisourceBergen, Cardinal Health and McKesson – along with Johnson & Johnson and states and localities reached a $26 billion agreement. The cases will take years to resolve, according to seasoned lawyers involved in the cases.

Settlement talks in the national litigation have stalled over money and because companies refuse to admit any fault. Although Purdue has pleaded guilty twice to federal charges for misleading marketing and minimizing OxyContin’s addiction risk, the Sacklers maintain that they acted scrupulously. During his testimony before Judge Drain in August, Doctor former president and co-chairman of Purdue, said that the company, family and products did not bear any responsibility for the opioid epidemic.

Two branches of the Sackler family, whose forebears founded Purdue in the 1950s, served in various leadership roles in the company during the opioid crisis. A cadre of doctors spoke at medical conferences, praising OxyContin for its safety and effectiveness. In spite of the fact that many other opioids soon crowded the market, OxyContin’s aggressiveness and market dominance made it stand out.

The Sacklers have agreed to place in a public repository confidential information about their lobbying, public relations, and marketing efforts.

Doctor, Connecticut’s attorney general and one of the leaders of the effort to wrest this latest offer from the Sacklers, said, “This settlement is both significant and inadequate – constrained by the inadequacies of our federal bankruptcy code.” As victims and our sister states await a resolution, Connecticut cannot stall this process indefinitely. The settlement resolves our claims against Purdue and the Sacklers, but we are not finished fighting for justice against the addiction industry and against our broken bankruptcy laws.”

States, local governments, tribes and individuals had approved an earlier settlement proposal from the Sacklers of $4.55 billion, including a $225 million settlement with the federal government. In December, a federal judge vacated that plan, questioning the legality of the protections from liability granted to the Sacklers. It is unusual for the company’s owners to also get that shield if they did not file for personal bankruptcy with their company. Most companies seeking restructuring are protected from lawsuits under the corporate bankruptcy code.

The shield provided by the Sacklers against lawsuits was the major sticking point for states opposed to the plan. Nine states – California, Connecticut, Delaware, Maryland, New Hampshire, Oregon, Rhode Island, Vermont, and Washington – had voted against the earlier proposal, claiming they had the right to pursue the Sacklers under state civil laws.

Soon afterward, mediation talks began between the holdouts and the Sacklers. As part of the agreement, the Sacklers agreed to pay $5.5 billion, plus up to $500 million more, subject to the sale of their international pharmaceutical companies.

As a result of hundreds of hours of negotiations mediated by Judge Shelley Chapman of federal bankruptcy court, the Sacklers also agreed to a number of other new terms. In addition to the Sackler statement, which Doctor as an “apology,” Judge Chapman recommends a hearing that would allow people who suffered from addiction to OxyContin to describe what they had endured, along with family members from each of two Sackler branches. Under the agreement, the family cannot contest any request to remove the Sackler name from medical centers, art galleries, or educational institutions.

Purdue would become Knoa Pharma under the plan, with a public board overseeing it. Among other drugs, Knoa evolved into a manufacturer of medications for addiction reversal and treatment, including OxyContin, as the company restructured and became a public benefit company.

A hurdle still stands in the way of the new settlement, however. US Trustee, which oversees the bankruptcy system within the Department of Justice, has long argued against the immunity shield proposed for the Sacklers. Second Circuit Court of Appeals had promised to take up the matter expeditiously, but there had been a battle building.

In response to a question about whether it would continue to challenge that condition of the tentative settlement, the Justice Department declined to comment.

Overdoses soared during the pandemic as marathon sessions of negotiations dragged on. Now that the cash offer had increased, the holdout governments were faced with the dilemma of whether to pursue the Sacklers in court, a lengthy and uncertain process with no guarantee of success, or just take the money.

The holdout states would get even more as a reward for their resistance, despite getting a bigger payout than the original deal outlined. There would be no increase in the $750 million set aside to compensate over 100,000 victims and survivors, whose stories help build governmental lawsuits. Instead, states have committed to funding an “opioid survivors trust” for them.

The $750 million is being protected which is better than no money at all, according to Doctor, who monitored years of proceedings on behalf of those affected by the opioid epidemic. There needs to be an end to this bankruptcy. In addition, the Justice Department should flex its muscles and investigate the Sacklers criminally, which is permissible under the bankruptcy plan.”

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