Bankruptcy Judge Approves Purdue Pharma Plan to Resolve Opioid Claims

More than two decades after Purdue Pharma launched its blockbuster pain pill OxyContin, preceding a deadly overdose crisis, a judge approved a bankruptcy plan Wednesday that will resolve thousands of lawsuits against the drugmaker and grant sweeping legal immunity to its billionaire owners.

Negotiated until the 11th hour, the final terms of the settlement confirmed by federal bankruptcy Judge Robert D. Drain grant the family that owned Purdue Pharma, the Sacklers, broad protection from future litigation, despite objections from nine states and a branch of the U.S. Justice Department.

The family initially sought relief from any civil litigation whatsoever but Drain objected, shouting at one point over an attorney representing the Sacklers that the family should not be immune to legal claims related to the crisis they are contributing roughly $4.3 billion to abate. The final settlement will grant relief specifically for claims related to the opioid epidemic.

The bankruptcy plan is at the center of a national reckoning over the devastating epidemic, which has killed more than 500,000 people in the United States over two decades. The proceeding offered victims an unusual opportunity to seek restitution, as creditors have pushed for accountability for the drugmaker and its wealthy owners.

Nonetheless, the plan, which received overwhelming support in a confirmation vote by creditors, is likely to face appeal as advocates have voiced outrage over the Sacklers’ refusal to accept blame for the epidemic or give up immunity.

Drain, in his ruling Wednesday, acknowledged the “extraordinary harmful effect” opioid products by Purdue had in the deadly drug epidemic.

“The role of these debtors and their owners to that crisis makes the bankruptcy case before me highly unusual and complex,” he said.

In rare public testimony during the 11-day confirmation hearings, members of the Sackler family said they did nothing illegal and would not contribute to the settlement if they were not shielded from future lawsuits.

Nine states and a branch of the U.S. Justice Department objected to the terms of the releases, arguing the Sacklers encouraged the marketing and sale of OxyContin by downplaying the addictive potential, a playbook adopted by other drug companies as communities became inundated with billions of pills.

Drain disputed those objections, saying the settlement offered the quickest and least costly way for victims and communities to receive funds. He also argued the negotiations provided unprecedented transparency into the Sacklers’ estimated $11 billion in assets.

“Bitterness over the outcome of this case is completely understandable,” he said. “Where such pain has been inflicted one cannot help but be bitter, but one also has to look at the process.”

Drain has suggested he hopes to avoid appeal. On Friday, in a last-minute bid to resolve ongoing issues, Drain urged attorneys on a call to continue negotiations that would win the support of the remaining non-consenting states.

“It would be a real service to millions, if not tens of millions of people, if the objecting states, or at least some subset of them, were able to resolve their differences with the Sacklers,” he said.

The attorney general of Washington state promised he would appeal the ruling as the judge finished his six-hour bench ruling.

Once effective, the bankruptcy plan will set aside funds for cities, counties and other entities. Individuals, such as those who suffered from addiction, families of people who died from overdoses and babies exposed to opioids in the womb and born with neonatal abstinence syndrome, known as NAS, would be entitled to payments from $3,500 to $48,000. The claims would still need to be adjudicated, an effort that could be complicated as years-old medical records may no longer exist.

“It isn’t what we were promised or what we were hoping for,” said Ryan Hampton, an author and opioid activist who had represented victims during the bankruptcy. Hampton resigned from his post on the victims’ committee the day before the judge’s decision in part because he believed the compensation for victims was inadequate, especially compared to the proportion of the fund set aside for the cities, counties, states and other public entities suing Purdue.

Hampton also resigned due to a preemptive company effort to discourage the Justice Department from appealing the deal. A letter, obtained by The Washington Post and first reported by NPR, is framed as if it was written by victims but came from company representatives in a lobbying attempt of federal attorneys.

“Appealing or seeking a stay here could delay and jeopardize the delivery of billions of dollars to American communities to help abate the opioid crisis and provide compensation to victims,” the letter states.

In addition to the roughly $4.3 billion contribution over nine years, two branches of the Sackler family would relinquish ownership of Purdue Pharma, which values the agreement at more than $10 billion. The third branch, descendants of Arthur Sackler, were not involved in the litigation after he sold his shares of the company before OxyContin’s introduction.

The company would be reformed into a public trust company overseen by an independent board that would steer profits to addressing the crisis. Drain expressed hope that the new firm could become a model for the industry.

“The measures will set a standard not only for this company but other companies that manufacture and distribute these products that are legal yet dangerous,” he said.

The landmark agreement also includes several concessions: The company will release a trove of more than 30 million documents, offering a deeper glimpse at Purdue Pharma and the Sackler family’s marketing of OxyContin. The family, whose name has appeared on the walls of museums and art exhibits despite protests, will not be able to lend their moniker to future charitable gifts for the next nine years.

The milestone of Purdue Pharma’s dark, complicated history since it first introduced pain killer OxyContin comes as other opioid lawsuits have reached their conclusions following a protracted legal battle. Pharmaceutical distributing giants AmerisourceBergen, Cardinal Health and McKesson and drug maker Johnson & Johnson agreed to a $26 billion national settlement last month that a critical mass of states is expected to sign on to.

Meanwhile, the bellwether trial against pharmacies, including Walgreens, CVS and Walmart, is expected to begin in federal court in Cleveland in October.