WASHINGTON — The High Council Rejected Thursday a national settlement with OxyContin maker Purdue Pharma that would have shielded members of the Sackler family, who own the company, from civil lawsuits over the toll of opioids, but also would have provided billions of dollars to combat the opioid epidemic.
After more than six months of deliberation, the judges entered a 5-4 vote blocked an agreement reached with state and local governments and victims. The Sacklers are said to have contributed up to $6 billion and given up ownership of the company, but retained billions more. The agreement stipulated that the company would emerge from bankruptcy as a different entity, with profits used for treatment and prevention.
The Supreme Court has done that put the settlement on hold last summer, in response to objections from the Biden administration.
It is unclear what happens next.
The arguments lasted nearly two hours in a packed courtroom in early December as the judges alternately appeared unwilling to disrupt a carefully negotiated settlement and reluctant to award the Sacklers.
The question for the judges was whether the legal shield provided by bankruptcy can be extended to people like the sacklers, which have not themselves declared bankruptcy. Lower courts had issued conflicting rulings on this issue, which also has implications for other major product liability lawsuits being processed through the bankruptcy system.
The U.S. Bankruptcy Trustee, a division of the Justice Department, argued that bankruptcy law does not allow the Sackler family to be protected from lawsuits. During the Trump administration, the government supported the settlement.
The Biden administration had argued to the court that negotiations could resume and potentially lead to a better deal if the court were to halt the current agreement.
Proponents of the plan said third-party releases are sometimes necessary to reach an agreement, and that federal law does not prohibit that.
OxyContin first hit the market in 1996. Purdue Pharma’s aggressive marketing is often cited as a catalyst for the nationwide opioid epidemic, persuading doctors to prescribe painkillers with less regard for the dangers of addiction.
The drug and the Stamford, Connecticut-based company became synonymous with the crisis, even though most of the pills prescribed and used were generics. The number of opioid-related overdose deaths has continued to rise, reaching 80,000 in recent years. Most of these come from fentanyl and other synthetic drugs.
The Purdue Pharma settlement would have been one of the largest reached by pharmaceutical companies, wholesalers and pharmacies to resolve epidemic-related lawsuits brought by state, local and Native American tribal governments and others. These settlements totaled more than $50 billion.
But the Purdue Pharma settlement would have been only the second to date to include direct payments to victims from a $750 million pool. The payouts would range from approximately $3,500 to $48,000.
Sackler family members no longer serve on the company’s board and have not received any payouts from the company since before Purdue Pharma filed for bankruptcy. However, in the decade before that, they received more than $10 billion, about half of which went to taxes, according to family members.
The case is Harrington v. Purdue Pharma, 22-859.
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