The U.S. judge who approved a bankruptcy reorganization plan for Purdue Pharma last week acknowledged that the OxyContin maker’s sales tactics compounded the opioid addiction crisis. However, the Sackler family won’t have to face any future litigation, thanks to provisions granting them a lifetime legal shield.

Judge Robert Drain conditionally approved the bankruptcy plan, which dissolves Purdue and transforms the company into a public trust dedicated to combating the ill effects of opioids. The settlement also calls for the Sackler family to pay out more than $4.3 billion over nine years to compensate thousands of private individuals, states, local governments and tribes harmed by OxyContin. 

Those individuals, organizations and entities became creditors in the bankruptcy case after suing Purdue and Sackler family members over their alleged contributions to opioid-related overdose and death. But Drain’s approval of the bankruptcy plan, which grants the Sacklers lifetime immunity from civil liability, left families who lost loved ones to the epidemic more than a little upset. 

“Am I happy they don’t have to admit guilt and give up all their money?” Of course not,” Lynn Wencus, of Wrentham, Massachusetts, told the Associated Press. Her son, Jeff, died of an opioid overdose in 2017. “But what would that do? It doesn’t bring my son back and it doesn’t help those who are suffering.”

It was a bitter pill for patients, especially given that the company pleaded guilty to criminal charges stemming from its marketing of opioids last October, reaching an $8.3 billion settlement with the Justice Department. Then again, plaintiffs get the certainty of payment, even if the sums may be less than they wanted or expected.

“The creditors are being paid relatively promptly, whereas in litigation it can take several years to get a case tried,” Professor Robert Ausness, who teaches product liability at the University of Kentucky College of Law, noted.

And even if plaintiffs had chosen to go to court, they may not have won. “The trouble with individual plaintiffs who sue is that juries and courts aren’t always sympathetic,” Ausness added. Both might have felt that victims bore a degree of blame for overdosing, for instance. 

The Sacklers, for their part, have denied allegations raised in the lawsuits that they shoulder responsibility for the opioid crisis. They said they acted ethically and lawfully during their tenure on Purdue’s board. A former director of the company, David Sackler, did admit a “moral responsibility” for the crisis.

Noting that the Sackler family owners who testified showed little remorse, Drain reprimanded Purdue for its promotional practices: “It’s clear that marketing contributed to a massive public health crisis,” the judge said during a multi-hour monologue, giving states and local governments some measure of vindication beyond the settlement monies.

Source: Getty Images.

While Purdue may be losing all its cash, the ruling allows the Sacklers to hold onto most of their vast fortune. An audit of Purdue introduced during the bankruptcy proceedings in late 2019 showed that the Sackler family has pulled nearly $11 billion out of Purdue since 2008.

As part of the deal, the family will sell their pharmaceutical holdings, contribute $4.325 billion in cash and relinquish control of family foundations worth $175 million. The family previously agreed to pay $225 million to resolve the Justice Department’s civil allegations, which they denied.

Some 48 states had sued Purdue for fueling the opioid epidemic. Many had contended that the company embarked on a deceptive marketing campaign to convince doctors and the public that OxyContin is effective for treating chronic pain and has a low risk of addiction, despite a lack of evidence to that effect.

Purdue declared bankruptcy in October 2019, shortly before the lawsuits were set to go to trial, then obtained an injunction halting all state legal actions against the company. As part of the bankruptcy proceedings, Purdue had to draft a plan that, once approved by the judge, governs how the company will pay back all its creditors — including the 48 state attorneys general that filed suit.

But the broad immunity granted to the Sacklers as part of the bankruptcy deal has been roundly criticized. After all, the family didn’t file for bankruptcy protection; only the company did. Some of the states that became creditors in Purdue’s bankruptcy proceedings have argued that those cases shouldn’t be swept up in the settlement.

“This order is insulting to victims of the opioid epidemic who had no voice in these proceedings – and must be appealed,” stated Washington State attorney general Bob Ferguson, one of several state attorneys general who vowed to appeal. Drain’s ruling also came over the objections of the Office of the U.S. Trustee, a bankruptcy watchdog and part of the Justice Department, which filed a motion to stay the order. 

Given that 95% of creditors and some 80% of states approved the settlement, though, scuttling the agreement would be hard. “Under any measure, this plan has been universally accepted,” Drain explained.

As for the new, post-Purdue public entity, the new company will still generate revenue from OxyContin and other medicines. OxyContin saw $2.3 billion in net sales in 2010. But by 2018, that number had dropped over half (to $820 million) and by 2020 had further dropped to $517 million,” as noted in filings by Purdue executives. OxyContin sales are expected to continue to slide in 2025 and in 2027 when patent protections expire and the product faces generic competition.

Meanwhile, the opioid epidemic continues unabated. The Centers for Disease Control and Prevention reported that more than 93,000 Americans died from opioid overdoses last year, a record number and a 30% jump from 2019. Almost 250,000 Americans died from opioid overdoses from 1999 to 2019, according to the CDC, which also found that prescription opioid-related deaths more than quadrupled during that time.