Purdue's opioid deal is on the verge of collapse after Supreme Court ruling

The hard-fought resolution of thousands of lawsuits against Purdue Pharma came close to collapsing Thursday after the Supreme Court rejected liability protections for the company's owners, members of the billionaire Sackler family. The ruling effectively prevents the release of billions of dollars that could help alleviate the harm of opioid addiction.

The future of the cases, some of which date back a decade, is now in limbo as states, local governments, tribes and more than 100,000 individuals who have sued the company, best known for its painkiller OxyContin, try to figure out their next moves.

The court struck down a condition the Sacklers had long insisted on: immunity from all current and future opioid lawsuits in exchange for payments of up to $6 billion to the plaintiffs.

In a statement, Purdue called the decision “heartbreaking” because the settlement had been agreed to by the vast majority of plaintiffs.

“We will immediately turn to the same creditors who have already demonstrated that they can come together to reach a settlement,” the company said, so that Purdue can emerge from bankruptcy and the funds can begin to flow.

Descendants of Dr. Mortimer Sackler and Dr. Raymond Sackler released a joint statement saying they are willing to continue talking and are “confident we will reach a resolution that provides substantial resources to help combat a complex public health crisis.” .

But they did not indicate whether they would agree to pay billions of dollars without liability shields. “The sad reality is that the alternative is costly and messy litigation in courts across the country,” the statement continued. “While we are confident we will prevail in any future litigation, given the profound misrepresentations about our families and the opioid crisis, we continue to believe that a swift, negotiated settlement to provide billions of dollars to individuals and communities in need is the best path forward.”

In statements, several states said they were eager to resume talks.

“The court’s ruling means we now have to get back to the table. Purdue and the Sacklers need to pay up so we can save lives and help people live free of addiction,” said Josh Stein, North Carolina’s attorney general. “If they don’t pay up, I’ll see them in court.”

A statement from lawyers who negotiate for local governments noted that the ongoing delay was eating away at potential payments, while legal fees piled up. “We will study the opinion and chart a course to ensure the Sackler family does not escape justice,” the statement said.

A central question hovers over every new deal: Without the Sacklers being able to get full liability protection, how much will they be willing to pay to settle these cases?

Some lawyers involved in Purdue's long-running negotiations had been prepared for the possibility that the Supreme Court would rule against the current plan. Those who spoke to The New York Times did so on condition of anonymity, citing the sensitivity of the issue. They said mediation sessions were scheduled and privately predicted a resolution would eventually be reached.

Protection from civil suits is usually granted to companies emerging from bankruptcy restructuring, such as Purdue. But because only the company, and not the Sacklers, had filed for bankruptcy, the Supreme Court said the Sacklers were not entitled to the same shield.

In doing so, the court agreed with the U.S. Trustee, a branch of the Justice Department that oversees the federal bankruptcy system, which said a bankruptcy judge lacks the authority to grant such protection. The government argued that allowing the family that protection would be granted without the consent of prospective plaintiffs, and would therefore deprive them of due process rights.

A handful of states opposed the deal for months, eventually getting more money from the Sacklers before they signed. After the Supreme Court ruling, William Tong, the attorney general of Connecticut, one of those states, said: “The U.S. Supreme Court got it right: Billionaire wrongdoers should not be allowed to protect blood money in a court of law bankruptcy.” He expected the negotiations to return to bankruptcy court.

The agreement also included payments to hundreds of tribes. Verlon Jose, president of the Tohono O'odham Nation, with 36,000 registered members based largely in Arizona, said: “The Sacklers have brought suffering to millions, billions of dollars in damage and an epidemic of misery that has lasted for decades . The remaining Sacklers will remain billionaires while people continue to die of addiction.”

Of the many pharmaceutical companies that have been sued in the national opioid litigation, few, including Purdue, have agreed to compensate individual victims in addition to state and local governments. More than 100,000 individual plaintiffs, including families of those who died from opioid overdoses, could have benefited from between $3,500 and $48,000 from the Purdue settlement.

Ryan Hampton, who was co-chairman of a committee in the Purdue bankruptcy that represented individual victims, said Thursday that he was primarily concerned about protecting that stake in any new negotiations.

“Advocates across the country will fight like crazy and pressure state attorneys general to ensure that every single cent of victims' compensation is protected at all costs,” he said. “The victims must come first, before any state takes a part in whatever the new negotiated agreement is.”

But Ellen Isaacs, whose son died of an overdose, had long fought Purdue's settlement because she believed the Sacklers should not be given a legal pass.

Her attorney, Michael Quinn, praised Thursday's ruling, saying, “The decision preserves the right of individual victims to agree to a settlement or to exercise their right to go to court against non-debtors,” he said, using a legal term to refer to the Sacklers.

Like the more than $50 billion in settlements already made with other drug companies in national opioid litigation, Purdue and Sackler's billions were earmarked for addiction education, treatment and prevention. Each state and its local governments have their own dispensing protocols.

Although many companies make, distribute, and sell opioids, Purdue is widely regarded as creating the dynamic painkiller market in 1996, with the introduction of OxyContin, which it aggressively marketed as long-acting and almost It's addictive. Other manufacturers jumped into the lucrative business, and within several years opioid abuse and overdose deaths spread nationwide. The impact has affected families, law enforcement, emergency services and child welfare agencies.

By 2014, local governments began filing lawsuits against Purdue. In September 2019, Purdue, facing nearly 3,000 lawsuits, hundreds of them personally named by the Sacklers, filed for bankruptcy restructuring, a move that put all claims on hold.

Over the next four years, the most difficult demand to resolve was the Sacklers' insistence that they be permanently released from future Purdue opioid lawsuits.

As the years passed, groups of state attorneys general dropped their objections to the Sacklers' request in the interest of getting the deal done.

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