Topline
Purdue Pharma and the governments and victims suing them for their role in the opioid crisis aren’t done with their court proceedings just yet, as the Supreme Court struck down Thursday the company’s bankruptcy settlement that shielded members of the Sackler family from lawsuits—despite the victims telling the court they didn’t agree with the challenge.
Key Facts
The federal government asked the Supreme Court to weigh in on Purdue Pharma’s bankruptcy settlement, first reached in 2022 and held up in an appeals court, which allows members of the Sackler family to pay $6 billion to governments, institutions and individuals suing them for their role in the opioid crisis, and in return shields them from civil liability going forward.
The court ruled 5-4 to reverse the court’s ruling that upheld the settlement, ruling the terms of the settlement that release the Sacklers from liability are not lawful under the bankruptcy code.
“Nothing in present law authorizes the Sackler discharge,” Justice Neil Gorsuch wrote in his opinion for the court’s majority, though he noted their decision is a “narrow” one that shouldn’t impact other bankruptcy plans.
As the manufacturer of opioid OxyContin, Purdue Pharma has come under widespread criticism for its role in causing and perpetuating the opioid epidemic, leading to thousands of lawsuits against the company and members of the Sackler family, who previously presided over the company.
Surprising Fact
The federal government asked the high court to weigh in on the plan, objecting to it shielding members of the Sackler family from civil liability and having to potentially pay damages in thousands of lawsuits. But the parties who stand to benefit from the settlement disagreed, urging justices to approve it and opposing the government’s intervention in the case. The government challenging the settlement “continues to harm [victims of the opioid crisis] every day,” a coalition of individual victims who have brought lawsuits against Purdue Pharma said in a court filing, claiming the U.S. trustee who challenged the settlement “has no ties to the opioid crisis, no economic stake in the outcome of the Cases, and never identified a single claimant, let alone tens of thousands, who authorized the U.S. Trustee to vindicate his or her constitutional rights.”
Forbes Valuation
Forbes last estimated the Sackler family’s net worth at $10.8 billion in 2020. The family has not had any involvement with Purdue Pharma since 2018, though technically the company remains owned on paper by a trust that benefits members of the Sackler family until the bankruptcy settlement goes through. Two branches of the Sackler family—stemming from Raymond Sackler and Mortimer Sackler, two brothers who previously co-led Purdue Pharma and are now deceased—were parties in the Supreme Court case and stand to benefit from the settlement, but were not directly involved with the litigation beyond filing briefs in the case.
Key Background
Purdue Pharma filed for bankruptcy in 2019 after coming under widespread criticism and facing thousands of lawsuits for its role in the opioid crisis, as the company profited off sales of its drug OxyContin even as addiction rates to the opioid soared, along with overdose deaths. The National Institute on Drug Abuse reports overdose deaths from prescription opioids went up from 3,442 deaths in 1999 to 16,416 in 2020, reaching a peak of 17,029 deaths in 2017. The Sackler family, which founded Purdue Pharma and became billionaires off its profits, came under widespread condemnation for their role in the opioid epidemic and for using it to enrich themselves, with museums and other cultural institutions stripping the Sackler name from their buildings and protesters targeting institutions with Sackler ties. The family—only some members of which are involved with the opioid controversy—have said in public statements they “have acted lawfully in all respects,” claiming OxyContin “unexpectedly became part of the opioid crisis that has brought grief and loss to far too many families and communities.” The bankruptcy settlement reached in 2022 increased the amount the Sacklers paid out to victims of the opioid crisis, after the company initially announced a settlement in 2019 that would have had members of the family pay only $3 billion and give up their ownership of the company. An updated settlement was then reached in 2021, in which the Sacklers were set to pay $4.5 billion, but states appealed the settlement, and it was overturned by an appeals judge in Dec. 2021. In addition to their civil cases over the opioid crisis, Purdue Pharma also pleaded guilty to criminal charges regarding its marketing of OxyContin in 2020, agreeing to pay $8.3 billion. Individual members of the Sackler family were not charged, and the settlement reached in 2022 does not shield them from criminal liability.
