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Purdue Pharma Can Protect Sackler Owners in Opioid Bankruptcy, Court Rules

By | May 30, 2023

Bankrupt Oxycontin manufacturer 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.

Related: Frustration Grows Over Wait on OxyContin Maker’s Settlement Judges Skeptical as Purdue Seeks Revival of Sackler Liability Shield in Bankruptcy Deal Purdue Pharma Judge Overrules DOJ to Approve $6 Billion Opioid Settlement

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.

Photo: (AP Photo/Toby Talbot, File)

Topics Legislation

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