Supreme Court justices are set to hear a challenge by Joe Biden’s administration against a controversial $6 billion bankruptcy deal for opioid producer Purdue Pharma.
The OxyContin maker’s nationwide insolvency settlement would shield its wealthy owners, the Sackler family, from civil lawsuits over their role in the country’s opioid epidemic.
Described as ‘a watershed moment in the opioid crisis’ by victims’ lawyers, the deal would involve Purdue Pharma donating up to $6 billion for drug treatment and prevention causes.
This payment amounts to half the Sackler family’s collective fortune – which is largely held offshore. In return, the company would emerge from bankruptcy as a different entity.
The deal was agreed between local and state governments and victims, but the Biden administration objected to it, prompting SCOTUS justices to put the settlement on hold this summer.
Supreme Court justices are set to hear a challenge by Joe Biden ‘s administration against a controversial $6 billion bankruptcy deal by OxyContin producer Purdue Pharma. (Pictured: members of the Sackler family, the Pharma giant’s owners)
Supreme Court justices are set to hear a challenge by Joe Biden ‘s administration against a controversial $6 billion bankruptcy deal by OxyContin producer Purdue Pharma
Purdue Pharma agreed to contribute up to $6 billion to combat the narcotics crisis and give up ownership of their company in a bankruptcy deal now being challenged by the Biden administration in the Supreme Court
The issue for the justices is whether the legal shield that bankruptcy provides can be extended to people such as the Sacklers, who have not declared bankruptcy themselves.
Lower courts have issued conflicting decisions over that issue, which also has implications for other major product liability lawsuits settled through the bankruptcy system.
The U.S. Bankruptcy Trustee, an arm of the Justice Department, contends that the bankruptcy law does not permit protecting the Sackler family from being sued by people who are not part of the settlement.
During the Trump administration, the government supported the settlement.
Proponents of the plan said third-party releases are sometimes necessary to forge an agreement, and federal law imposes no prohibition against them.
Lawyers for more than 60,000 victims who support the settlement called it ‘a watershed moment in the opioid crisis,’ while recognizing that ‘no amount of money could fully compensate’ victims for the damage caused by the misleading marketing of OxyContin, a powerful prescription painkiller.
A lawyer for a victim who opposes the settlement calls the provision dealing with the Sacklers ‘special protection for billionaires.’
OxyContin first hit the market in 1996, and Purdue Pharma´s aggressive marketing of it is often cited as a catalyst of the nationwide opioid epidemic, persuading doctors to prescribe painkillers with less regard for addiction dangers.
But SCOTUS justices put the Purdue Pharma settlement on hold over the summer in response to objections from the Biden administration, who will give their argument in court on Monday
The drug and the Stamford, Connecticut-based company became synonymous with the crisis, even though the majority of pills being prescribed and used were generic drugs.
Opioid-related overdose deaths have continued to climb, hitting 80,000 in recent years. Most of those are from fentanyl and other synthetic drugs.
The Purdue Pharma settlement would be among the largest reached by drug companies, wholesalers and pharmacies to resolve epidemic-related lawsuits filed by state, local and Native American tribal governments and others. Those settlements have totaled more than $50 billion.
But the Purdue Pharma settlement would be one of only two so far that include direct payments to victims from a $750 million pool. Payouts are expected to range from about $3,500 to $48,000.
Sackler family members no longer are on the company’s board, and they have not received payouts from it since before Purdue Pharma entered bankruptcy.
In the decade before that, though, they were paid more than $10 billion, about half of which family members said went to pay taxes.
A decision in Harrington v. Purdue Pharma, 22-859, is expected by early summer.