The family initially sought relief from any civil litigation, but Drain objected, shouting at one point over an attorney for the Sacklers that the family should be immune only to legal claims related to the crisis they are contributing roughly $4.3 billion to abate. The final settlement will grant relief specifically for claims related to the opioid epidemic.
The bankruptcy plan is at the center of a national reckoning over the devastating opioid epidemic, which has killed more than 500,000 people in the United States over two decades. The proceeding offered victims an unusual opportunity to seek restitution, with creditors pushing for accountability for the drugmaker and its wealthy owners.
Nonetheless, the plan, which received overwhelming support in a confirmation vote by creditors, is likely to face appeal, with critics voicing anger over the Sacklers’ refusal to accept blame for the epidemic or give up immunity.
Drain, in his ruling Wednesday, acknowledged the “extraordinary harmful effect” of Purdue opioid products in the epidemic.
“The role of these debtors and their owners to that crisis makes the bankruptcy case before me highly unusual and complex,” he said.
In rare public testimony during the 11-day confirmation hearings, members of the Sackler family said they did nothing illegal and would not contribute to the settlement if they were not shielded from future lawsuits.
Referring to the Sacklers’ testimony, Drain said that “a forced apology is not really an apology, so we will have to live without one.”
The Raymond Sackler branch of the family said in a statement, “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."
“We hope that the resolution will signal the beginning of a far-reaching effort to deliver assistance where it is most needed,” the Mortimer Sackler branch of the family said.
Members of Congress pushing for an overhaul of the bankruptcy code said the decision to grant sweeping immunity for the family marked “a dark day for justice in America.”
“We cannot permit powerful people to evade accountability through legal releases in bankruptcy court,” House Oversight Committee Chairwoman Carolyn B. Maloney (D-N.Y.) and Rep. Mark DeSaulnier (D-Calif.), a panel member, said in a statement. “We cannot turn a blind eye to this miscarriage of justice.”
Nine states and a branch of the Justice Department objected to the terms of the settlement, arguing that the Sacklers encouraged the marketing and sale of OxyContin by downplaying the addictive potential, a playbook adopted by other drug companies as communities became inundated with billions of pills.
Drain disputed those objections, saying the settlement offered the quickest and least costly way for victims and communities to receive funds. He also argued that the negotiations provided an unprecedented look at the Sacklers’ estimated $11 billion in assets.
“Bitterness over the outcome of this case is completely understandable,” he said. “Where such pain has been inflicted one cannot help but be bitter, but one also has to look at the process.”
Drain has suggested that he hopes to avoid an appeal. On Friday, in a last-minute bid to resolve issues, he urged attorneys on a call to continue negotiations that would win the support of the remaining nonconsenting states.
“It would be a real service to millions, if not tens of millions, of people if the objecting states, or at least some subset of them, were able to resolve their differences with the Sacklers,” he said.
After Drain concluded his six-hour bench ruling, at least three parties that had objected to the plan said they would appeal the conditional approval.
“This order lets the Sacklers off the hook by granting them permanent immunity from lawsuits in exchange for a fraction of the profits they made from the opioid epidemic — and sends a message that billionaires operate by a different set of rules than everybody else,” Bob Ferguson, attorney general in Washington state, said in a statement.
Steve Miller, chairman of Purdue’s board of directors, praised the judge’s decision, saying it was “an outcome that is truly in the public interest.”
“Instead of years of value-destructive litigation, including between and among creditors, this Plan ensures that billions of dollars will be devoted to helping people and communities who have been hurt by the opioid crisis,” he said in a statement.
Once effective, the bankruptcy plan will set aside funds for cities, counties and other entities. Individuals — such as those who suffered from addiction, families of people who died of overdoses and babies exposed to opioids in the womb and born with neonatal abstinence syndrome, or NAS — would be entitled to payments ranging from $3,500 to $48,000. The claims would still need to be adjudicated, an effort that could be complicated by that fact that years-old medical records may no longer exist.
“It isn’t what we were promised or what we were hoping for,” said Ryan Hampton, an author and activist who had represented victims during the bankruptcy. Hampton resigned from his post on the victims committee the day before the judge’s decision, in part because he believed the compensation for victims was inadequate, especially compared with the proportion of the fund set aside for the cities, counties, states and other public entities suing Purdue.
Hampton also resigned because of a preemptive company effort to discourage the Justice Department from appealing the deal. A letter, obtained by The Washington Post and first reported by NPR, that was framed as if it were written by victims actually came from company representatives in an attempt to lobby federal attorneys.
“Appealing or seeking a stay here could delay and jeopardize the delivery of billions of dollars to American communities to help abate the opioid crisis and provide compensation to victims,” the letter states.
In addition to the roughly $4.3 billion contribution over nine years, two branches of the Sackler family would relinquish ownership of Purdue Pharma, which values the agreement at more than $10 billion. The third branch, descendants of Arthur Sackler, was not involved in the litigation — he sold his shares of the company before OxyContin’s introduction.
The company would be re-formed into a public trust company overseen by an independent board that would steer profits to addressing the crisis. Drain expressed hope that the new company could become a model for the industry.
“The measures will set a standard not only for this company but other companies that manufacture and distribute these products that are legal yet dangerous,” he said.
The landmark agreement also includes several concessions: The company will release a trove of more than 30 million documents, offering a deeper glimpse at Purdue Pharma and the Sackler family’s marketing of OxyContin. The family, whose name has appeared on the walls of museums and art exhibits despite protests, will not be able to lend its name to future charitable gifts for nine years.
Other opioid lawsuits have reached their conclusions, as well, after a protracted legal battle. Pharmaceutical distributing giants AmerisourceBergen, Cardinal Health and McKesson and drugmaker Johnson & Johnson agreed to a $26 billion national settlement last month that a critical mass of states is expected to sign onto.
Meanwhile, a bellwether trial against pharmacies, including Walgreens, CVS and Walmart, is expected to begin in federal court in Cleveland in October.
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