The end of the Purdue Pharma bankruptcy case has left a bitter taste for those who wanted to see more accountability for members of the Sackler family.
They will be able to sell their ownership and exit the international opioid market. The settlement will also allow them to pay $4.5 billion in cash as well as charitable assets. But they also will escape any future liability over the nation’s addiction and overdose crisis as part of the deal that was given preliminary approval this week by a federal bankruptcy judge.
Planning appeals can be filed by some state attorneys general as well as one federal office.
Their arguments revolve around the question: Is it appropriate that members of wealthy families who did not file bankruptcy to receive such broad protection?
In a case that involved lawsuits from more than 3,000 governments, lawyers and victim advocates said that Purdue’s family members, the Sacklers, played key roles in marketing OxyContin and overseeing the company. Critics claim that the best-selling prescription painkiller by the company helped to fuel the U.S. opioid crisis.
“They get to keep literally billions in dollars they took out Purdue Pharma while causing addiction, death all across our nation and across the globe,” Brian Frosh, Maryland Attorney General, told The Associated Press in an exclusive interview.
Frosh stated that he was looking into appealing.
Lawyers representing Washington, Connecticut, and the District of Columbia have indicated that they will appeal.
The settlement provides Sackler’s family with what is known as a “third party release” in bankruptcy law.
These releases are used in complex bankruptcy cases that involve multiple parties to encourage settlements. Dow Chemical, the owner of Dow Corning was exempted from lawsuits in 1990s due to concerns about silicone breast implants made by Dow Corning. Companies that made asbestos were shielded from lawsuits regarding cancer risks associated to their products, which began in the 1980s.
While some federal appeals courts rejected the releases, the majority of them have accepted them. This includes the 2nd Circuit which could hear appeals from decisions of U.S Bankruptcy Judge Robert Drain. Drain ruled in Purdue’s case from White Plains, New York.
The “The SACKLER Act,” a long-term bill pending in Congress, would prohibit third-party release. Even if the legislation were to be adopted, it would not have any effect on its nameake case.
Drain spoke out about the reasons for allowing family members to be protected in his preliminary ruling.
He said that he wished the plan had allowed for more from Sackler family members. However, he stated, “but I won’t jeopardize the plan’s ability to provide what it does by denying confirmation.”
The settlement forces the Sacklers out of Purdue, and makes it a new company with a government-appointed board of directors. The family, future profits, and company accounts will be used to pay for some of the victims of the opioid crisis as well as to fund treatment and education programs.
More than 500,000 Americans have died from overdoses since 2000. These deaths were caused by prescription painkillers, illicit painkillers, or illegally manufactured fentanyl.
Purdue Pharma, located in Stamford (Connecticut), has estimated that the settlement would be worth $10 billion. This includes the value of addiction treatment drugs and overdose antidotes it’s been creating.
The Sackler family, with a combined wealth of over $10 billion, has made it clear that they will not contribute to the settlement if they are not protected from lawsuits.
Experts said that it was possible to forcibly pay the debt without a settlement, as the family’s fortunes are largely overseas. According to the bankruptcy judge, some relatives are citizens of other countries, which could make their assets even more difficult to access.
Another problem is that Purdue pleaded guilty to federal criminal offenses last year and agreed to forfeiture of $2 billion. The plea agreement stipulates that the company must pay $225 million to the federal government if it settles other opioid lawsuits and makes use of the proceeds to combat the crisis. Purdue would need to pay $1.7 billion more to the federal government if the bankruptcy settlement is not upheld. This would make it far easier to split the money between the states, local governments, and the opioid victims.
“If they appeal, what do they get?” Lindsey Simon is an assistant professor at the University of Georgia School of Law and teaches bankruptcy law. “The answer is probably chaos and less money.”
This is a view many state government lawyers hold.