The resolution calls for an additional $50 million from the family and acceleration of some milestone payments, according to the mediation document. In all, the contribution from the Sacklers will be about $4.5 billion over nine years. Purdue Pharma, which has not actively marketed OxyContin for two years, will be wound down or sold by 2024.
The states did win a concession that a trove of 30 million documents relating to Purdue Pharma and the Sackler family’s marketing of OxyContin would be made public. The family, whose naming rights for museums and art exhibits have attracted protests, also will not be allowed to place its brand on future charitable gifts until terms of the deal have been satisfied.
“While I know this resolution does not bring back loved ones or undo the evil of what the Sacklers did, forcing them to turn over their secrets by providing all the documents, forcing them to repay billions, forcing the Sacklers out of the opioid business, and shutting down Purdue will help stop anything like this from ever happening again,” Massachusetts Attorney General Maura Healey (D) said in a statement.
Even though the family did not declare bankruptcy, the Sacklers made their personal immunity from future OxyContin-related lawsuits a key condition of the Purdue Pharma bankruptcy negotiations. The bid to protect the bulk of their fortune immediately divided states once the plan was first proposed at the time of Purdue Pharma’s Chapter 11 filing, in September 2019.
The family is estimated to have taken about $13 billion in cash out of Purdue Pharma over the years, a sum that included money set aside for taxes, according to court documents. States have alleged that OxyContin’s introduction in 1996 was a key driver of the United States’ epidemic of opioid addiction and overdose deaths.
Attorneys general who dropped their objections to the settlement expressed a desire to speed settlement money to be used to combat opioid addiction and deaths after years of wrangling. Purdue Pharma sought bankruptcy to shield it from more than 3,000 lawsuits.
“For nearly two years, since Purdue Pharma declared bankruptcy, the company and the Sackler family have used every delay tactic possible and misused the courts — all in an effort to shield their misconduct,” said New York Attorney General Letitia James (D). “While this deal is not perfect, we are delivering $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.”
Purdue Pharma is one of numerous drugmakers and distributors embroiled in litigation over the deaths and economic devastation inflicted by the opioid epidemic. In the two decades to 2019, nearly 500,000 Americans died of opioid overdoses, according to the Centers for Disease Control and Prevention.
The family called the mediation agreement a key step toward getting its settlement contribution into the hands of local governments.
“This resolution to the mediation is an important step toward providing substantial resources for people and communities in need. The Sackler family hopes these funds will help achieve that goal,” it said.
The states were probably headed for a loss in bankruptcy court on the question of the Sackler family’s exposure to future litigation, particularly after the Justice Department reached a settlement last year with both Purdue Pharma and the Sacklers, a deal the bankruptcy court has already approved, said Adam J. Levitin, a professor at Georgetown Law School specializing in bankruptcy.
"These 15 holdout states were willing to settle because they recognized that they won’t be able to prevent the bankruptcy court from releasing the Sacklers and that appeals are near impossible in bankruptcy,'' Levitin said. "The bankruptcy court’s approval of Purdue’s settlement with DOJ ensured that the Sacklers would get away with keeping most of the money they made off of opioids.''
He added that the settlement terms will allow the Sacklers to receive the benefits of bankruptcy protection without actually declaring bankruptcy themselves, which would have meant opening their financial holdings to the scrutiny of creditors and the public.
"It’s a sign that the bankruptcy system is broken,” he said.
Connecticut is among the nine states, plus the District of Columbia, that still have not endorsed the bankruptcy settlement.
“Purdue and the Sacklers have misused this bankruptcy to protect their vast wealth and evade consequences for their callous misconduct,” said Connecticut Attorney General William Tong (D). He said the state will continue to seek avenues to block the settlement, which is pending in U.S. Bankruptcy Court in White Plains, N.Y.
“We need to take a hard look at our bankruptcy laws and our system of justice that allows the Sacklers to walk away clinging to their jewelry, art and vacation homes while the victims of their depraved schemes continue to suffer and grieve,” Tong said.
Purdue Pharma pleaded guilty to three federal felony charges of deceptive marketing in October 2020 and agreed to an $8 billion settlement with the Justice Department. But the $8 billion figure was largely symbolic because the bankrupt drugmaker’s annual sales have dwindled significantly, and it is already indebted to states, communities and other creditors.
The Sacklers agreed to pay the government $225 million as part of the Justice Department settlement while denying the family did anything wrong.
The family has long sought to distinguish between its ownership and leadership of the company and the individual criminal acts of lower-level managers. But emails included in lawsuits brought by states showed direct involvement in decisions related to OxyContin sales, including efforts to boost revenue in the years after Purdue Pharma reached a previous government settlement in 2007 over its marketing practices.
The family members — including Richard Sackler, David Sackler, Mortimer D.A. Sackler, Kathe Sackler and Jonathan Sackler (who is now deceased) — demanded in 2012 that company executives come up with a plan to generate greater revenue in response to slumping sales, according to the Justice Department settlement.