Supreme Court Strikes Down Opioid Deal With Purdue Pharma That Protected Sacklers: Shots

After the Supreme Court struck down a controversial bankruptcy plan from Purdue Pharma, the maker of OxyContin, those suing the drug company were left unsure when promised funds would be available to fight addiction and other harm from the ongoing epidemic. drugs.

The decision overturned a carefully crafted settlement worth about $8 billion that included the Sackler family, which owns Purdue, and all the individuals, states and local governments that had sued for damages from the opioid epidemic.

In a 5-4 decision, the justices focused on the part of Purdue’s bankruptcy plan that protected Sackler family members from future opioid-related lawsuits.

In the majority opinion, Judge Neil Gorsuch wrote: “In this case, the Sacklers have not filed for bankruptcy or put all of their assets on the table for distribution to creditors, but they are seeking what essentially amounts to a dismissal. No provision of [bankruptcy] the code authorizes that type of relief.”

Some relatives of overdose victims praised the decision. Ed Bisch’s son – also named Ed – overdosed on Oxycontin in 2001, aged 18. Bisch now leads relatives against Purdue Pharma and wants the Sacklers to be held personally liable.

“We didn’t want to give them exactly what they want,” Bisch said. “Today is a very good day for justice.”

Purdue Pharma was facing thousands of lawsuits for falsely marketing OxyContin as non-addictive and fueling the opioid crisis. The company filed for bankruptcy in 2019.

Before that, the Sackler family, which owns Purdue, had transferred about $11 billion in profits to personal accounts. In his ruling, Gorsuch said family members had set up a “milking scheme” designed to protect opioid profits from bankrupting their company.

During bankruptcy negotiations, the family offered to pay $6 billion in exchange for immunity from future lawsuits.

A federal bankruptcy judge approved that deal in 2021, but Gorsuch ruled it an overreach.

“The court is doing a reset here,” said Melissa Jacoby, a bankruptcy law expert at the University of North Carolina. “[The Court is] saying that there is no authority to defend the Sacklers, who are not themselves bankrupts, at least against claimants who have not agreed to settle with them.”

Many on both sides are unhappy about the new delays

The total settlement would have reached approximately $8 billion to states, local governments, personal injury victims, schools and hospitals.

In a statement, Purdue Pharma called the decision “heartbreaking.” He also said Purdue will immediately contact the parties to work on a new agreement: “The decision does nothing to detract from our twin goals of using the settlement dollars to reduce opioids and return the company to an engine for good.”

The latest death toll from the ongoing opioid crisis exceeds 100,000 Americans each year.

In the dissenting opinion, Judge Brett Kavanaugh wrote, “Today’s decision is wrong in law and devastating to more than 100,000 opioid victims and their families.”

Many relatives of overdose victims considered the bankruptcy settlement the best they could hope for — a way to funnel money from the Sacklers to communities to fund addiction treatment programs and to individuals harmed by Oxycontin. Now that money is on hold, potentially for years.

Calls are made for a quick return to the negotiating table

The lawyers demanded new negotiations as soon as possible.

“I think everyone wants this to be done in a quick way. It’s important to go to the table and negotiate something that puts victims first very quickly,” said Ryan Hampton, an author and addiction activist who supported the bankruptcy settlement.

Some suggested the Sacklers could use their personal funds to compensate victims, rather than wait for a formal bankruptcy settlement to be finalized for Purdue.

“The Sackler family must begin today the process of compensating the thousands of individuals who lost loved ones to overdoses from their company’s product. There’s no need to wait — and there’s no time to waste,” Regina LaBelle said in a statement. LaBelle is a former acting director of the Office of National Drug Control Policy and an addiction policy scholar at Georgetown University.

In a statement sent to NPR, members of the Sackler family, who deny any wrongdoing, said they would work to renegotiate a settlement, but they also voiced some objections, describing themselves as victims of “deep misrepresentations to our families and the opioid crisis.

Money is already flowing from other opioid-related lawsuits

Most states are already participating in other opioid-related settlements with opioid makers Johnson & Johnson, Teva Pharmaceutical Industries and Allergan; pharmaceutical distributors AmerisourceBergen, Cardinal Health and McKesson; and retail pharmacies Walmart, Walgreens and CVS. Many are also settling with national supermarket chain Kroger.

It is estimated that the total payout from multiple settlements could reach around $50 billion.

Some of those deals began paying out in the second half of 2023, leading to bumps in states’ opioid settlement pots.

There is no national database of how the settlement dollars are spent, but efforts by journalists and advocates to track the cash flows have revealed some of the most common ways the funds are used.

Broad discretion on how to spend opioid repayment funds

One of the biggest is investing in treatment. Many jurisdictions are building residential rehabilitation facilities or expanding existing ones. They are covering the cost of addiction care for uninsured people and trying to increase the number of doctors who prescribe opioid use disorder medications, which have been shown to save lives.

Another common expense is naloxone, a drug that reverses opioid overdoses. Wisconsin is spending about $8 million on the effort. Kentucky has cost $1 million. And many local governments are allocating smaller amounts.

Several other choices have sparked controversy. Some governments used the dollars to buy police patrol cars, technology to help officers hack phones and body scanners for prisons. Supporters say these tools are critical to cracking down on drug trafficking, but research suggests law enforcement efforts don’t prevent overdoses.

This article was produced in partnership with KFF Health Newsa national newsroom that produces in-depth journalism about health issues and is one of the main operating programs in KFF.