Judge overturns Purdue Pharma’s opioid settlement
Within hours of the ruling, Purdue said it would appeal.
A federal judge on Thursday evening unraveled a painstakingly negotiated settlement between Purdue Pharma and thousands of state, local and tribal governments that had sued the maker of prescription painkiller OxyContin for the company’s role in the opioids epidemic, saying that the plan was flawed in one critical area.
The judge, Colleen McMahon of the U.S. District Court for the Southern District of New York, said that the settlement, part of a restructuring plan for Purdue approved in September by a bankruptcy judge, should not go forward because it releases the company’s owners, members of the billionaire Sackler family, from liability in civil opioids-related cases.
Although the Sacklers did not file for personal bankruptcy protection, they had made immunity from opioids claims an absolute requirement in exchange for contributing payments amounting to $4.5 billion to the agreement.
But the bankruptcy code, McMahon said, does not explicitly permit a judge to grant such release, which she called “the great unsettled question.”
The Sacklers did not respond to requests for comment Thursday evening.
In recent months, members of Congress have proposed legislation called “The Sackler Act” to preclude owners from receiving such protections unless they file for bankruptcy. But even if eventually passed, it is unlikely to become law in time to resolve the Purdue case.
Within hours of the ruling, Purdue said it would appeal.
Purdue filed for bankruptcy restructuring in September 2019, which automatically put a hold on all the claims against it.
Nearly two years later, Judge Robert Drain, the bankruptcy court judge in White Plains, New York, confirmed a plan that had been approved by a majority of creditors who voted. Purdue would be formally dissolved and would reemerge as a new company called Knoa Pharma that would still produce OxyContin but also other drugs. The new company’s profits would go to states and communities to fund opioid treatment and prevention efforts.
The Sacklers would renounce their ownership, eventually sell their foreign pharmaceutical companies as well and contribute $4.5 billion of their fortune to state and local opioids abatement funds.
In exchange, all lawsuits against Purdue would be extinguished, a benefit typical of bankruptcy. In court, lawyers said there are more than 800 lawsuits that name the Sacklers.
This article originally appeared in The New York Times.
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