Federal Judge Overturns Purdue Pharma Settlement That Left Sacklers Protected From Suits

A federal judge overturned the bankruptcy plan negotiated by Purdue Pharma on Thursday, saying a deal that released the billionaire Sackler family from legal claims related to its opioids was “inconsistent” with the law.

District Judge Colleen McMahon said in her ruling Thursday the $4.5 billion settlement announced earlier this year should not move forward as it shields the Sacklers — one of the wealthiest families in America — from any liability in future cases related to Purdue’s main opioid, OxyContin.

Purdue Pharma said Thursday night it would appeal the ruling, criticizing the decision and saying it would limit the amount of money available to jurisdictions that sued the company for its role in the opioid epidemic.

“It will delay, and perhaps end, the ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis,” Steve Miller, the chairman of the company’s board of directors, said in a statement. “These funds are needed now more than ever as overdose rates hit record-highs, and we are confident that we can successfully appeal this decision and deliver desperately needed funds to the communities and individuals suffering in the midst of this crisis.”

Purdue first sought bankruptcy protection in 2019 amid a tidal wave of lawsuits over its aggressive tactics marketing OxyContin to Americans. The landmark settlement approved earlier this year by a bankruptcy court judge in New York was hailed by thousands of state, local and tribal governments who said they would immediately use the money to help treat opioid addiction.

The deal would see Purdue formally dissolved and a new company formed to produce OxyContin, but the profits would go to states and fund opioid treatment. The Sacklers said they would give up ownership of the company and personally contribute $4.5 billion of their own money to the settlement, and all lawsuits against Purdue would be dissolved.

However, the Sacklers also insisted that the deal include immunity from any cases related to its opioids filed in civil court in order to contribute some of their billions to the deal.

Several states filed an appeal, saying they were unhappy with the terms of the settlement, adding the Sacklers should be held responsible for their products. Lawyers representing those states said the judge’s decision Thursday will help hold the family accountable for its role in the epidemic.

“This is a seismic victory for justice and accountability that will re-open the deeply flawed Purdue bankruptcy and force the Sackler family to confront the pain and devastation they have caused,” William Tong, Connecticut’s attorney general, said in a statement.

In her ruling Thursday, McMahon said she was troubled that the Sacklers had withdrawn more than $10 billion from Purdue between 2008 and 2018, funds that were primarily deposited in accounts out of reach of American authorities at the height of the opioid crisis.

The Sacklers have denied any impropriety related to the transfers.

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