A court in New York, USA, has reached a controversial bankruptcy settlement for Purdue Pharma that puts an end to thousands of lawsuits. After the bankruptcy, the company is renamed Knoa Pharma. It will largely be owned by the National Opioid Abatement Trust, with profit-funding programs to help prevent and treat addiction. But the Sackler family, who owned and ran Purdue, have escaped responsibility. They also keep most of their huge fortune.
Purdue began promoting opioid drugs for chronic use after its timed pain reliever, OxyContin (oxycodone), was approved in 1996. While this strategy grossed billions for the company – and other opioid manufacturers – it left millions of people plagued by addiction. The US Centers for Disease Control estimates that over half a million people have been killed by opioid abuse in the past few decades.
Federal Judge Robert Drain agreed to the settlement with a few minor changes in late August. He spent six hours explaining the reasons behind his decision and described the case as the most complex of his career. He expressed his frustration at how the Sacklers had managed to drive so much of their vast fortunes into offshore tax havens. All things considered, however, he decided that he should allow the settlement to come about because of the cost of the delay and the amount of money that would go to fight the opioid epidemic.
The Sacklers have also received the kind of post-bankruptcy protection that is normally given to businesses without going bankrupt themselves. They will pay about $ 4.3 billion (£ 3.1 billion) in installments over the next decade, mostly to fund addiction prevention and treatment programs, but that is only a fraction of the fortune they are through Deserved Purdue. The money will go to states and Native American tribes, along with payouts to more than 130,000 individuals, each receiving up to $ 48,000.
The Sacklers end up paying a relatively small portion of the fortune made through their horrific activities
Harry Nelson, Attorney at Nelson Hardiman
Knoa will not be allowed to advertise opioid products, and the Sacklers will not be involved in the business. The portfolio includes products for the treatment of opioid addiction and overdose, such as an over-the-counter naloxone nasal spray and an injectable form of the opioid antagonist nalmefene. These are currently under development.
Although most plaintiffs backed the deal because of its potential to alleviate the epidemic, some – including Washington State – have already signaled they want to appeal. “This order leaves the Sacklers off the hook by giving them permanent immunity from legal proceedings in exchange for a fraction of the profits they made from the opioid epidemic,” said Washington Attorney General Bob Ferguson.
The whole story that went on in the company is now never going to be tried in court. However, the family agreed to post more than 30 million emails and other documents that could ultimately shed more light on Purdue’s shady practices. But they continue to deny that they are responsible for the opioid epidemic – former President Richard Sackler even testified and did not apologize.
Harry Nelson, founding partner of the Los Angeles-based law firm Nelson Hardiman, believes Purdue Pharma paid the maximum price as a company, but it did not for the family. “The Sacklers end up paying a relatively small fraction of the fortune they made through their horrific activities,” he says. “They worked hard to transfer the money to family members and hide it in trusts so it couldn’t be reached.”
However, he believes the settlement will not end direct claims against the Sacklers, and there is also the possibility of outside criminal charges. “I think we’ll see states and plaintiffs attorneys digging deep into civil and criminal liability as it looks like the bad actors in the family have largely got away with it,” he says.
Unless any of the appeals to the settlement succeed – and Nelson is skeptical that it will – this should be the end of the lawsuit against Purdue. However, other multiple defendants lawsuits against opioid manufacturers are still pending. In late July, a $ 26 billion settlement led by the New York attorney general covered McKesson, Cardinal Health, Amerisource Bergen, and Johnson & Johnson. Nelson says this means a significant number of cases have now been resolved. But in contrast to the Purdue bankruptcy, which is binding on all parties, deviating states can get out. “I am expecting several declarations of intent, so these four companies will still be dealing with some legal disputes,” he says.
And other lawsuits are still in court. “Several major defendants, including Mallinckrodt, Rochester Drug Cooperative, Endo, Teva and Allergan Finance, are still fighting the battle,” said Nelson. “These settlements will put more pressure on these companies to set up too … but until they do we will still have a lot of opioid litigation.”