After a legal saga involving thousands of civil lawsuits, a Supreme Court ruling and what was once one of America’s wealthiest families, a U.S. bankruptcy judge has signed off on the $7.4 billion settlement that will close the books on the opioid crisis litigation surrounding Purdue Pharma and its former owners, the Sackler family.
U.S. Bankruptcy Judge Sean Lane of the U.S. Bankruptcy Court in the Southern District of New York formally signed off on the plan on Tuesday, mandating the Sacklers to pay up to $7 billion over 15 years, the AP reported. The majority of the money will go to government entities to combat the opioid crisis locally, while a pool of about $850 million designated for individual victims will be distributed next year.
Overall, at least $7.4 billion will be doled out to Purdue’s public and private creditors, settlement mediator Willkie Farr & Gallagher explained in an announcement. An additional $500 million could come from the sale of the Sacklers’ international pharmaceutical business. Added cash recoveries are also expected from insurance and other litigation, Purdue said in a Nov. 14 release.
“My heart goes out to all those who have suffered such pain,” Lane said in approving the plan, as quoted by AP. “The settlements are fair and equitable and in the best interest of the bankruptcy estates.”
The bankruptcy plan achieved a “remarkable consensus” from voting creditors, with more than 99% support, Purdue Pharma pointed out in its release. Purdue issued the release after the court indicated it would approve the plan following a confirmation hearing that involved more than 5,000 pages of testimony and dozens of witnesses.
“The Plan is the product of intense work with our creditors through a singular, shared focus on delivering as much value as possible to meaningfully address the opioid crisis,” Purdue board chairman Steve Miller said in a statement. “We are grateful for the perseverance and herculean efforts of our creditors who worked with us to craft an entirely consensual plan that unlocks billions in recoveries and significant non-monetary benefits.”
With that, Purdue Pharma will be no more. The company filed for bankruptcy in 2019 after accruing a mountain of litigation for its marketing of opioid-based painkiller OxyContin, a major factor in the nationwide opioid crisis.
Purdue’s Chapter 11 bankruptcy reorganization plan dissolves Purdue and transfers its assets to a newly formed company called Knoa Pharma. Knoa will be owned by an independent foundation and provide millions of doses of opioid use disorder treatments and overdose reversal meds with “no obligation to maximize profits,” according to Purdue.
The Sacklers haven’t had formal involvement with Purdue for years, with the last member of the Sackler family to sit on the company’s board stepping down at the start of 2019. The family will continue to have “no interest or role in” the new company, which will be subject to a “strict operating injunction” and overseen by a monitor to ensure it provides its products safely, according to the plan.
The plan also mandates a document repository that exposes millions of documents related to Purdue’s historical sales and marketing practices.
Purdue was required to emerge from its bankruptcy as a public benefit company by the U.S. Justice Department in 2020, when Purdue agreed to plead guilty to felony charges tied to its misleading OxyContin marketing. Since then, the company has been making efforts to restore its public image. Last year, it won an FDA approval for its emergency opioid overdose rescue treatment Zurnai, an nalmefene injection.
The Sacklers, meanwhile, previously came out of years of negotiations with a proposed $6 billion settlement that would have granted them legal immunity from civil lawsuits. That plan went through numerous courts before being knocked down by the U.S. Supreme Court, which determined that the Sacklers, who had not themselves filed for bankruptcy, weren’t eligible for protection from current and future litigation.
The new, now-confirmed bankruptcy settlement is the largest U.S. opioid related settlement with individuals to date. Other billion-dollar settlements have come from drugmakers and drug distributors also involved in the opioid crisis, such as Johnson & Johnson, AmerisourceBergen, Cardinal Health and McKesson’s $26 billion deal in 2022 or Teva’s $4.25 billion settlement in the same year.