The billionaire family behind Purdue Pharma, the maker of the powerful and highly addictive prescription painkiller OxyContin, can be protected from lawsuits related to their company’s role in the opioids crisis, a federal appeals court ruled on Tuesday.
The second US circuit court of appeals in New York determined the company can shield its owners from legal claims in exchange for a $6bn contribution to the company’s broader bankruptcy settlement, in a ruling that also cleared the way for Purdue to settle lawsuits tied to America’s devastating opioid epidemic.
The company has tried to use its bankruptcy to resolve thousands of lawsuits, many filed by state and local governments, alleging that OxyContin helped kickstart a crisis that caused more than 500,000 US overdose deaths over two decades. Purdue has pleaded guilty to charges related to its opioid marketing, while its owners, the wealthy Sackler family, have expressed regret but denied wrongdoing.
The ruling issued on Tuesday found that the legal claims against Purdue were inextricably linked to claims against its owners and allowing lawsuits to continue targeting them would undermine Purdue’s efforts to reach a bankruptcy settlement.
The Sacklers must give up ownership of Purdue, which would become a new company known as Knoa, under the ruling, and would commit to developing and distributing overdose reversal and addiction treatment medicines for no profit.
Family members would also contribute up to $6bn in cash over time, or around half of what the court found to be their collective fortune, much of it held offshore. At least $750m of that money will go to individual victims of the opioid crisis and their survivors. Payments are expected to range from about $3,500 to $48,000.
“It’s a great day for victims, some of who desperately need the money and have been waiting for this day for a long time,” said Ed Neiger, a lawyer representing individual victims.
Cheryl Juaire, a Massachusetts woman who lost two sons to overdoses, said she does not know what size payment to expect. “My children are gone and there’s nothing I can do to bring them back,” she said, but she said the funds would help her sons’ children. “They’ll have braces, they’ll have glasses, they’ll have things they need that they wouldn’t have otherwise.”
Sackler family members and Purdue praised the decision.
“The Sackler families believe the long-awaited implementation of this resolution is critical to providing substantial resources for people and communities in need,” family members said in a statement on Tuesday.
The family has already fulfilled a non-financial term of the deal that required them last year to listen to the stories of some of the people harmed by their company’s drug.
Purdue issued its own statement, calling the ruling “a victory for Purdue’s creditors, including the states, local governments and victims who overwhelmingly support the plan of reorganization”.
In addition to the Sackler payment, Purdue will pay $1.4bn in opioid settlements, contribute “substantial” additional insurance recoveries, and restructure itself.
Some activists have opposed the settlement and called for Sackler family members to be prosecuted for crimes. The settlement would not block criminal charges against the family, but there is no indication that will happen.
Although Sackler family members still technically own Purdue, they stopped receiving money from the company years ago.
Several other drugmakers, distribution companies and pharmacies also have been sued by state and local governments for their roles in the opioids crisis. While a handful of cases have gone to trial, many are being settled.
The total value of proposed and finalized settlements in recent years is more than $50bn. Earlier this month, Walgreens agreed to a $230m settlement with San Francisco for its role in the city’s unprecedented opioid crisis.
Most of the money from the settlements is required to be used to fight the opioid crisis. Just one other major opioid lawsuit settlement included payments for victims.