Last week, a federal bankruptcy judge tentatively approved a $10 billion plan submitted by OxyContin manufacturer Purdue Pharma. The plan will resolve lawsuits related to the company’s role in the opioid crisis — an epidemic that has killed 500,000 Americans during the last 20 years. The settlement was reached with both individual victims and thousands of state and local governments.

Details of the $10 Billion Plan for Purdue Pharma

U.S. Bankruptcy Judge Robert Drain noted that his approval of the plan is contingent upon two technical changes.  While he does not have “fondness for the Sacklers (owners of Purdue Pharma) or sympathy for them,” collecting money from them through litigation would be challenging.

Under the new terms, the Sackler family will release ownership of the company and contribute $4.5 billion to the plan but will be absolved from any future opioid lawsuits. They were not, however, given immunity from criminal charges, although there is no reason to believe they will face any. Additionally, a compensation fund will pay sufferers of drug addiction between $3,500 and $48,000 each. 

Meanwhile, Purdue Pharma will be reorganized into a new company. The board will be determined by public officials, and the company will contribute its profits to efforts to prevent and treat opioid addiction.

The Opioid Epidemic

It’s been nearly two years since the drug manufacturer filed for bankruptcy after over 3,000 lawsuits were filed against them. These cases accuse the company of fueling the opioid epidemic through aggressive marketing of the addictive prescription painkiller. 

For more information about the opioid crisis and settlement, contact us today.

Additional Reading:

Tentative Opioid Settlement For $26 Billion Focuses on Treatment, Prevention, and Education

Johnson & Johnson Agrees to End Opioid Business With $230 Million Settlement

Opioids

The United States Department of Justice (DOJ) is denouncing a proposed bankruptcy plan for Purdue Pharma, the manufacturer of OxyContin. In court filings from mid-July, the DOJ’s Trustee Program, which keeps a close eye on the federal bankruptcy system, describes the settlement as fatally flawed, unconstitutional, and illegal. In a second statement, the office of the U.S. Attorney for the Southern District of New York argued that the plan went against the “constitutional right to due process” for individuals with potential opioid claims. 

Purdue Pharma Opioid Settlement

According to the settlement, which has been negotiated over the past year, the Sackler family, who owns Purdue Pharma, would pay nearly $4.3 billion from their private accounts to help the people and communities negatively affected by OxyContin. In return, members of the family as well as a long list of their associates, would be given “third-party releases,” protecting them from future opioid lawsuits. Although that provision has raised eyebrows, more and more states are agreeing to the plan. 

In his objection, Trustee William Harrington described the settlement as “impermissible.” He blamed the Sacklers, who, by their own calculations, earned more than $10 billion from opioid sales, and their associates of using the bankruptcy system to avoid taking responsibility for “alleged wrongdoing in concocting and perpetuating for profit one of the most severe public health crises ever experienced” in our country. In a separate filing, U.S. Attorney Audrey Strauss said that the bankruptcy plan denies due process to those with potential claims. 

Purdue Pharma as Trigger for Opioid Epidemic

The marketing of OxyContin by Purdue Pharma in the late 1990s is recognized as a primary trigger of the deadly opioid epidemic, which has killed over 500,000 Americans. The company has pleaded guilty twice to federal criminal charges concerning its marketing techniques. Still, the Sacklers believe they have done nothing wrong and acted ethically.

Federal Bankruptcy Judge Robert Drain is expected to approve the settlement at a confirmation hearing planned for Monday, August 9. He believes the plan is “an opportunity to avoid years of costly and uncertain litigation.”

For more information about the opioid epidemic and settlement, contact us today.

Additional Reading:

Tentative Opioid Settlement For $26 Billion Focuses on Treatment, Prevention, and Education

Johnson & Johnson Agrees to End Opioid Business With $230 Million Settlement

Opioids