States vow to fight Purdue Pharma bankruptcy plan that shields Sacklers from opioid lawsuits

At least two states and Washington, D.C., are preparing appeals over a bankruptcy plan for the maker of OxyContin that would shield Sackler family owners from future lawsuits.

“This decision is a slap in the face to the millions of suffering and grieving Americans who have lost their lives and loved ones due to the Sacklers calculated and craven pursuit of opioid profits,” Connecticut Attorney General William Tong said in a statement.

A federal judge on Wednesday said that he would approve Purdue Pharma LP’s bankruptcy reorganization plan that will resolve thousands of lawsuits and shield the Sackler family from future opioid litigation.

Purdue Pharma, which makes OxyContin, was dissolved Wednesday in the settlement that will require members of the Sackler family to spend billions to address the deadly opioid epidemic.

The attorneys general for Connecticut, Washington state and Washington, D.C., said it requires the Sackler family to pay $4.3 billion to states and municipalities over nine years — while they say the Sackler family made at least $11 billion in profits as the opioid epidemic raged.

The bankruptcy plan overcame opposition to garner support from nearly all states, local governments, tribes, hospitals and other creditors that voted on the restructuring.

The plan, which Purdue Pharma values at more than $10 billion, dissolves the drugmaker and shifts assets to a new company not controlled by Sackler family members. It also sets up a compensation fund that will pay some victims of drugs an expected $3,500 to $48,000 each.

The drugmaker itself will be reorganized into a new charity-oriented company with a board appointed by public officials and will funnel its profits into government-led efforts to prevent and treat addiction.

The agreement also includes legal releases shielding Sackler family members from future opioid litigation, a provision that some states opposed. Congressional Democrats in recent weeks introduced legislation to block such legal releases.

The Sacklers have denied allegations that they bear responsibility for the opioid epidemic. They have said they acted ethically and lawfully while serving on Purdue’s board.

Some of the opioid deaths over the past two decades have been attributed to OxyContin and other prescription painkillers, but most are from illicit forms of opioids such as heroin and illegally produced fentanyl. Opioid-linked deaths in the U.S. continued at a record pace last year, hitting 70,000.

Some families who lost loved ones to drugs opposed the settlement.

Ed Bisch, of Westampton, New Jersey, lost his 18-year-old son to an overdose nearly 20 years ago. “The Sacklers are buying their immunity,” he said.

Washington Attorney General Bob Ferguson sees the agreement in a similar vein.

“This order is insulting to victims of the opioid epidemic who had no voice in these proceedings,” he said in announcing plans to appeal.

Bankruptcy Judge Robert Drain said it was clear the wrongful marketing of the company’s opioid products contributed to the country’s addiction crisis.

Drain noted that he had expected a larger contribution from the Sacklers and said the evidence showed more might have been secured through litigation, although that was hard to predict.

“This is a bitter result,” he said. He also said he would not jeopardize what the plan did achieve by rejecting it and asked for small changes to secure his final approval.

Still, the evidence showed the plan was negotiated by the creditors who all viewed the Sacklers as “the other side, the opposition, the potential defendants,” Drain said. “This is not the Sacklers’ plan.”

People familiar with the negotiations said that an appeal could disrupt or delay the distribution of settlement funds to the states.

New York Attorney General Letitia James, who supports the plan, said Wednesday that “no deal is perfect.”

“But this resolution will deliver $4.5 billion into communities ravaged by opioids on an accelerated timetable and it gets one of the nation’s most harmful drug dealers out of the opioid business once and for all,” she said.

But victims’ families said they did not want to risk losing the money that will go toward treatment and prevention.

“If they gave me a million dollars, would it help bring back my son?” said Lynn Wencus, of Wrentham, Massachusetts. “Let’s help the people who are really struggling with this disease.”

Oregon Attorney General Ellen Rosenblum said she was weighing an appeal, but objected to the Sackler family being able to keep its name on hospitals and museums “despite its clear connection to the death and devastation of the decades-long opioid crisis.”

Purdue Pharma filed for bankruptcy in 2019 amid an onslaught of litigation. Roughly 3,000 lawsuits nationwide sought to pin blame on Purdue and Sackler family members for contributing to a public health crisis that has claimed the lives of about 500,000 people since 1999, according to the U.S. Centers for Disease Control and Prevention.

“This resolution is an important step toward providing substantial resources for people and communities in need, and it is our hope these funds will help achieve that goal,” the family of Raymond Sackler said in a statement Wednesday.

A lawyer for the Office of the U.S. Trustee, a bankruptcy watchdog and part of the Department of Justice, said his office would file a motion for a stay of the order confirming the plan during the appeal.

More than 95 percent of creditors voting approved Purdue’s restructuring, far above the legal threshold required for a bankruptcy judge’s blessing.

Sackler family members behind Purdue were prolific philanthropists, with their names on museum wings and other cultural institutions. They have also agreed to a prohibition on associating their name with charitable contributions until litigation settlement funds are fully paid and they have exited all businesses worldwide that manufacture or sell opioids, according to court records.

Much of the plan’s value is contingent on future donations of overdose reversal and addiction treatment medications that Purdue has under development.

Overall, the company resolved U.S. Justice Department criminal and civil investigations that carried penalties and other claims exceeding $8 billion. Much of that money, though, went unpaid due to factors in Purdue’s bankruptcy case.

Sackler family members have not been criminally charged. They previously agreed to pay $225 million to resolve separate civil allegations with the Justice Department. The family members have denied those allegations.