Members of the billionaire Sackler family and their company, Purdue Pharma, have reached a deal with a group of states that had long resisted the company’s bankruptcy plan — a crucial step toward funneling billions of dollars from the family’s fortune to addiction treatment programs nationwide, according to a court filing on Thursday.
If Judge Robert Drain, who has presided over Purdue’s bankruptcy proceedings in White Plains, N.Y., approves the agreement, the Sacklers would pay as much as $6 billion to help communities address the damage from the opioid crisis. In return, Sackler family members would get the prize they insisted upon for nearly three years: an end to all current and future civil claims against them over the company’s prescription opioid business.
The Sacklers’ liability protection would not extend to criminal prosecutions.
The deal still faces potential hurdles in the courts, but it is the first time in three years of negotiations that all states have accepted a settlement agreement with Purdue Pharma and the Sacklers. The new agreement includes an increase of at least $1 billion in the amount the Sacklers would pay. In addition to the family’s money, Purdue itself is contributing, through cash and revenue from future sales, payments expected to amount to $1.5 billion by 2024, with far more to come.
The agreement marks a significant moment in the national opioid litigation, an effort by state, local and tribal governments to hold companies across the vast pharmaceutical industry accountable for the crisis of opioid addiction that led to at least 500,000 deaths since 1999.
Though cases have been filed against dozens of companies, Purdue became the target of the earliest and greatest number of lawsuits, because its signature opioid painkiller, OxyContin, initially dominated the market.
“We’re pleased with the settlement achieved in mediation, under which all of the additional settlement funds will be used for opioid abatement programs, overdose rescue medicines and victims,” Purdue said in a written statement. “With this mediation result, we continue on track to proceed through the appeals process on an expedited schedule, and we hope to swiftly deliver these resources.”
While the deal is a breakthrough, it is likely to leave many people disappointed that members of the Sackler family did not acknowledge wrongdoing or any personal responsibility for the public health crisis.
In a statement attached to the court filing, the Sacklers said: “While the families have acted lawfully in all respects, they sincerely regret that OxyContin, a prescription medicine that continues to help people suffering from chronic pain, unexpectedly became part of an opioid crisis that has brought grief and loss to far too many families and communities.”
Other manufacturers, distributors and big retailers such as C.V.S., Walgreens and Walmart, are still defendants in opioid cases. A few have resulted in verdicts, with mixed outcomes for plaintiffs and the company defendants. Some significant settlements have already been reached, notably a $26 billion agreement last month by three major distributors — AmerisourceBergen, Cardinal Health and McKesson — along with Johnson & Johnson and states and localities, and a separate one with tribes. But seasoned lawyers involved in the cases said it will take years to resolve them all.
Many other settlement talks in the national litigation have been stalled over money and because of the unwillingness of companies to concede any culpability. Though Purdue itself has pleaded guilty twice to federal charges associated with misleading marketing and minimizing OxyContin’s risk of addiction, the Sacklers have always maintained that they acted scrupulously. In August, Dr. Richard Sackler, a former president and co-chairman of the board of Purdue, testified before Judge Drain that neither the family, the company nor its products bore any responsibility for the opioid epidemic.
As the opioid crisis began to wreak havoc across the country, two branches of the Sackler family, whose forebears along with another branch founded the privately owned company in the 1950s, presided in various leadership roles at Purdue in the last 20 years. The company worked with a cadre of doctors who spoke at medical conferences, praising OxyContin for being safe and effective. Though many other opioids soon crowded the market, OxyContin stood out for the no-holds-barred aggressiveness of Purdue’s sales force and the market dominance of the drug.
In one of the latest deal’s terms, the Sacklers have agreed to place in a public repository confidential documents that detail lobbying, public relations and marketing activities.
“This settlement is both significant and insufficient — constrained by the inadequacies of our federal bankruptcy code,” said William Tong, the attorney general of Connecticut and a leader of the effort to wrest this latest offer from the Sacklers. “But Connecticut cannot stall this process indefinitely as victims and our sister states await a resolution. This settlement resolves our claims against Purdue and the Sacklers, but we are not done fighting for justice against the addiction industry and against our broken bankruptcy code.”
An earlier settlement proposal from the Sacklers of $4.55 billion, including a $225 million settlement with the federal government, had been approved by an overwhelming majority of states, local governments, tribes and individuals. But in December, a federal judge vacated that plan, questioning the legality of the protections from liability granted to the Sacklers. The corporate bankruptcy code typically confers protection from lawsuits for the company that seeks restructuring, but it is unusual for the company’s owners to also get that shield if they did not file for personal bankruptcy as well.
The Sacklers’ shield against lawsuits was the major sticking point for states that opposed the plan. The District of Columbia and nine states — California, Connecticut, Delaware, Maryland, New Hampshire, Oregon, Rhode Island, Vermont and Washington — had voted against the earlier proposal, contending they had the right to pursue the Sacklers under state civil laws.
Mediation talks between the holdouts and the Sacklers began soon afterward. To get those opponents on board, the Sacklers agreed to pay $5.5 billion, plus up to $500 million more, contingent on the sale of their international pharmaceutical companies.
After hundreds of hours of negotiations mediated by Judge Shelley Chapman of federal bankruptcy court, the Sacklers also agreed to a series of other new terms. In addition to the Sackler statement, which Mr. Tong characterized as an “apology,” Judge Chapman is recommending a hearing that would allow people who suffered from addiction to OxyContin to describe what they had endured, and that family members from each of two Sackler branches attend. And another condition under the deal: If any medical centers and art or educational institutions bearing the Sackler name want it removed, the family cannot contest the request.
Under the plan, Purdue would be renamed Knoa Pharma and overseen by a public board. The restructured, public benefit company would contribute funds for the plaintiffs’ programs, plus more as Knoa evolved into a manufacturer of medications for addiction reversal and treatment, among other drugs, including OxyContin.
The new settlement, however, still faces a hurdle before it can go forward. The U.S. Trustee program, which serves as a watchdog over the bankruptcy system within the Department of Justice, has long argued strenuously against the proposed immunity shield for the Sacklers. Before the tentative deal on Thursday, a battle had been building in the U.S. Court of Appeals for the Second Circuit, which had said it would take up the matter on an expedited basis.
The Justice Department declined to comment on whether it would continue to challenge that condition of the tentative settlement.
As marathon sessions of negotiations dragged on, the opioid crisis continued to deepen, with overdoses soaring during the pandemic. The dilemma for the holdout governments was whether to keep pursuing the Sacklers in court, a process that could take years with no guarantee of victory, or just take the money, now that the cash offer had increased.
While all the states and, in turn, their local governments, would get a bigger payout than the original deal outlined, the holdout states would get even more, as a bonus for their resistance. The $750 million set aside to compensate more than 100,000 individual victims and survivors, whose stories help build the governmental lawsuits, would not grow, but states have committed to funding an “opioid survivors trust” specifically for them.
Ryan Hampton, who monitored years of proceedings on behalf of those affected by the opioid epidemic, said: “At least the $750 million is being protected which is better than no money at all. This bankruptcy needs to end. And the Justice Department needs to flex their muscle and investigate the Sacklers criminally, which is permissible under the bankruptcy plan.”