Supreme Court Blocks Purdue Pharma Settlement, Preventing Sackler Family Immunity

Jimmy Williams

The Supreme Court on Thursday blocked a nationwide settlement with OxyContin maker Purdue Pharma, preventing members of the Sackler family who own the company from being shielded from civil lawsuits. This decision comes after more than six months of deliberation. The justices voted 5-4 against the agreement, which had been negotiated with state and local governments and victims of the opioid crisis.

Under the blocked settlement, the Sacklers would have contributed up to $6 billion and relinquished ownership of Purdue Pharma. In return, they would have retained billions more and been protected from future lawsuits. The company would have emerged from bankruptcy as a new entity, with its profits dedicated to opioid treatment and prevention programs.

The Supreme Court’s decision follows a temporary halt on the settlement imposed last summer in response to objections from the Biden administration. The ruling leaves the future of the settlement uncertain.

During a nearly two-hour argument session in December, the justices expressed mixed feelings. Some were hesitant to disrupt the carefully negotiated settlement, while others were reluctant to let the Sacklers avoid full accountability. The central issue was whether bankruptcy protections could extend to the Sacklers, who have not declared bankruptcy themselves. Lower courts had previously issued conflicting rulings on this matter, which also impacts other major product liability settlements processed through the bankruptcy system.

The U.S. Bankruptcy Trustee, part of the Justice Department, argued that bankruptcy law does not allow shielding the Sackler family from lawsuits. Notably, the Trump administration had supported the settlement, while the Biden administration argued that negotiations could resume and potentially lead to a better deal if the current agreement was stopped.

Proponents of the settlement contended that third-party releases are sometimes essential to reach agreements and that federal law does not prohibit them.

Purdue Pharma’s aggressive marketing of OxyContin, which launched in 1996, is widely blamed for sparking the nationwide opioid crisis. Despite this, most prescribed and used opioids were generic. Opioid-related overdose deaths have continued to rise, reaching 80,000 annually, primarily due to fentanyl and other synthetic drugs.

The Purdue Pharma settlement would have been one of the largest ever reached by drug companies, wholesalers, and pharmacies to resolve opioid-related lawsuits, totaling more than $50 billion. Unique to this settlement was the inclusion of direct payments to victims from a $750 million fund, with payouts ranging from $3,500 to $48,000.

Members of the Sackler family have not been on Purdue Pharma’s board for some time and have not received payouts from the company since it entered bankruptcy. However, they were paid more than $10 billion in the decade prior, with about half reportedly used to pay taxes.

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