Purdue Pharma Bankruptcy Deal Could Shield Sackler Family From Future Lawsuits

The Sackler family, owners of Purdue Pharma, the pharmaceutical company responsible for Prescription Opioids like OxyContin, have faced numerous lawsuits in recent years for their role in America’s Opioid Epidemic. In 2022, the family publicly agreed to pay $6 billion in restitution after admitting to its overprescription of OxyContin, a drug it knew to be “addictive and widely misused.”

In return for this deal, a bankruptcy court ruled that the Sackler family would receive immunity in all civil cases moving forward; a move that some US officials say was an “overreach of the court’s power.”

While Purdue Pharma filed for bankruptcy in 2019, the Sacklers did not, yet they were granted a protection usually preserved for companies faced with mass injury claims after they have filed for bankruptcy.

A Split Decision

While a lower New York federal court has previously found that Purdue Pharma’s bankruptcy filing could extend to the Sackler family, not all Supreme Court justices agree.

“For 30 years bankruptcy courts have been approving plans like this . . . why is [this settlement] categorically inappropriate?” Justice Brett Kavanaugh asked a lawyer for the DoJ, Curtis Gannon, who had argued that the comprehensive liability releases granted to the Sacklers could not be justified under existing US law.

Gannon argued that Sacklers should not get such a release, no matter the size of their contribution, unless they filed for bankruptcy themselves.

“The Sacklers are saying they want global peace, they would pay a lot for 97.5 per cent,” Gannon said, arguing that nearly all claimants wanted to be paid soon and thus would bring the Sacklers to the bargaining table for a deal even without a comprehensive release.

“In some ways, they’re getting a better deal than the usual bankruptcy discharge,” Justice Elena Kagan told Gregory Garre, a lawyer representing Purdue, adding that the Sacklers under the deal would be “protected from claims of fraud and willful misconduct,” which does not happen in a typical bankruptcy proceeding.

Sentiments toward the case are also split amongst public opinion. Outside the courthouse, while the justices were hearing arguments, a crowd of around 50 people protested the settlement. Among them were family members of Opioid victims, some of which held signs in memory of loved ones, while others chanted “Sacklers lie, people die.”

Conversely, attorneys representing over 60,000 individuals in favor of the agreement hailed it as a pivotal moment in the opioid crisis. They acknowledged that, despite this, “no sum of money could adequately redress” the harm inflicted due to the deceptive promotion of OxyContin.

Setting A Precedent

What is perhaps most important about this supreme court case is the precedent it would set moving forward. The question at the center of this case is a difficult one: Do bankruptcy courts possess the authority to grant “third-party releases” to entities that haven’t filed for bankruptcy?

Legal scholars say that, whatever the court’s decision, the ruling will have “vast implications” for cases moving forward.

“I think this is probably the biggest bankruptcy case in front of the Supreme Court in decades,” said Pamela Foohey, a bankruptcy law professor at Cardozo School of Law, noting that third party cases are often the largest bankruptcy cases.

“They’re the headliner cases. They involve the most people who the bankruptcy system touches.”

These types of third party cases have played a major part in settlements of previous major cases of sexual abuse, such as cases against USA Gymnastics, the Catholic Church, and the Boy Scouts of America.

Legal analysts also anticipate that the forthcoming ruling in this case, expected by summer, will significantly impact Chapter 11 bankruptcies across various domains, spanning from mass tort cases to upheavals in cryptocurrency and reorganizations centered around private equity, potentially shaping their trajectories for years to come.

The Long Road Ahead

No matter what ruling the Supreme Court hands down this summer, it’s clear that the damage caused by the Sackler family will be here to stay for years, if not decades, to come. In the past ten years, fatal Opioid overdoses surged from 21,733 in 2013 to 81,027 by July 2023 – a 272% increase.

Of those affected by the Opioid Epidemic is Ellen Isaacs, a mother who lost her son to an Opioid addiction five years ago. Ellen says she is opposed to the current settlement and immunity being offered to the Sackler family.

“It’s really important to me that these people get held accountable for all the people that they’ve murdered,” she said. “They’re criminals and they need to be treated as such.”

Like many others, Ellen feels that the Sackler family is getting off too easy.

In the current arrangement, the Sackler family has agreed to pay roughly $750 million to victims and their families, which is estimated to be between $3,500 to $48,000 per family.

“I’m kind of hitting retirement age, and there’s no way now that I can retire,” she says, adding, “there’s no family that could ever go up against the Sacklers, anyway.”

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Zachary Pottle

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  • Zachary Pottle earned his B.A. in Professional Writing from Saint Leo University and has over three years of journalistic experience. His passion for writing has led him to a career in journalism, where he specializes in writing about stories in the pain management and healthcare industry. His main goal as a writer is to bring readers accurate, trustworthy content that serve as useful resources for bettering their lives or the lives of those around them.

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