By Dietrich Knauth
NEW YORK Bankrupt OxyContin maker Purdue Pharma can shield its owners, members of the wealthy Sackler family, from opioid lawsuits in exchange for a $6 billion contribution to the company's broader bankruptcy settlement, a U.S. appeals court ruled on Tuesday.
The New York-based 2nd U.S. Circuit Court of Appeals said that U.S. bankruptcy law allows legal protections for non-bankrupt parties, like the Sacklers, in extraordinary circumstances.
Purdue has sought to use its bankruptcy case to resolve thousands of lawsuits, many filed by state and local governments, alleging that OxyContin helped kickstart an opioid epidemic that caused more than 500,000 U.S. overdose deaths over two decades.
Purdue has pleaded guilty to charges related to its opioid marketing, while its owners have expressed regret but denied wrongdoing.
The Sackler family members have agreed to contribute up to $6 billion to a trust that will be used to pay the claims of states, victims of addiction, hospitals and others who have sued Purdue over its misleading marketing of OxyContin.
In exchange, the Sacklers will receive broad legal protection from lawsuits related to the opioid crisis.
The Sackler contribution accounts for most of the cash payment in a broader bankruptcy settlement that Purdue values at more than $10 billion.
A federal judge blocked that bankruptcy settlement in December 2021, ruling that it could not protect the Sackler family members from lawsuits because they were not bankrupt themselves, leading to Purdue's appeal to the 2nd Circuit.
With the appeal concluded, Purdue will now return to court to seek final approval of the settlement and end its long-running Chapter 11 bankruptcy.
In addition to the Sackler payment, Purdue will pay an additional $1.4 billion in opioid settlements, contribute "substantial" additional insurance recoveries, and restructure itself into a new company committed to developing and distributing overdose reversal and addiction treatment medicines for no profit.
U.S. overdose deaths have accelerated in recent years, with more than 100,000 in 2021, over 75% of which involved an opioid drug, according to the U.S. Centers for Disease Control and Prevention.
The lawsuits against Purdue allege that the drugmaker misled doctors about how addictive OxyContin was, causing many patients to become hooked on opioids. Many of those patients later turned to illegal drugs like heroin, sometimes laced with dangerously potent fentanyl, causing even wider damage, according to the lawsuits.
Similar lawsuits related to the U.S. opioid crisis have resulted in more than $50 billion in settlements with opioid manufacturers, drug distributors and pharmacy chains.
(Reporting by Dietrich Knauth; Editing by Bill Berkrot)
