Bankruptcy judge clears $7.4bn Purdue Pharma settlement

A bankruptcy judge said on Friday he would sign an agreement that would force Purdue Pharma and its billionaire owners to pay $7.4 billion (£5.6 billion) for their role in the US opioid crisis.

Approval of the plan, which was first introduced in January, is expected to end a tortuous legal effort to hold OxyContin’s maker and its owners, the Sackler family, accountable and finally unlock long-sought funds for people struggling with addiction.

Purdue filed for bankruptcy protection in 2019 as it faced thousands of lawsuits accusing it of fueling the opioid epidemic.

The settlement represents an increase of more than $1 billion over a previous agreement, which the U.S. Supreme Court rejected last year.

“Today we cement the end of a long chapter and move closer to the end of Purdue’s book,” Steve Miller, chairman of the Purdue Board of Trustees, said in a statement Friday.

The restructuring plan, he said, “unlocks billions of dollars in recovery and significant non-monetary benefits.”

The deal requires the Sacklers to give up ownership of the company. A nonprofit called Knoa Pharma will take its place as a “purpose-driven company with a mission to solve the opioid crisis,” Miller said.

Purdue became a household name in the United States as the manufacturer and promoter of OxyContin, a prescription painkiller that often served as a gateway to drugs like heroin.

The drug has been blamed for amplifying America’s deadly opioid crisis, which has been linked to 900,000 deaths in the United States since 1999.

In thousands of lawsuits, Purdue and members of the Sackler family were later accused of aggressively marketing OxyContin, while misleading doctors and patients about its addiction and overdose risks.

Purdue pleaded guilty in 2020 in a separate criminal case brought by the Justice Department.

But that agreement did not address lawsuits filed by local, state, Native American tribal and other governments that helped precipitate the bankruptcy.

A previous settlement, which the Supreme Court overturned last year, would have protected members of the Sackler family from future civil lawsuits for their role in fueling the opioid crisis.

The nation’s highest court ruled that granting such protections to the Sacklers, who have not filed for bankruptcy themselves, was not permitted by law. The latest $7.4 billion settlement does not grant the Sacklers immunity from future opioid-related lawsuits.

Family members are now willing to contribute between $6.5 billion and $7 billion as part of the deal. They have long denied any wrongdoing.

Some people voiced objections to the deal during a previous bankruptcy hearing, arguing that it did not go far enough to directly compensate victims. Individual victims are expected to receive up to $865 million.

But the settlement garnered overwhelming support from government groups and injury victims. More than 99% of creditors voted in favor of the bankruptcy restructuring plan, Purdue said in October.

State and local governments will receive most of the money from the settlement. Many said the deal would fund treatment and prevention of opioid addiction in the United States.

“By holding Purdue Pharma and the Sackler family accountable for their role in fueling the opioid epidemic, we are providing much-needed funds for addiction treatment, prevention and recovery for those affected by this crisis,” California Attorney General Rob Bonta said in a statement in June, when 55 attorneys general agreed to sign the settlement.