Fifteen states have reached an agreement with Purdue Pharma, the maker of the prescription painkiller OxyContin, that would pave the way toward a settlement of at least $4.5 billion and resolve thousands of opioid cases.
The states decided late Wednesday to drop their opposition to Purdue’s bankruptcy reorganization plan, in exchange for a release of millions of documents and an additional $50 million from members of the Sackler family, the company’s owners.
The agreement was contained in a late-night filing by a mediator in U.S. Bankruptcy Court in White Plains, New York.
The settlement extracts concessions that will be added to a comprehensive proposal now being voted upon by more than 3,000 plaintiffs, including cities, counties, tribes and states, who sought to hold Purdue and its owners responsible for their role in the opioid epidemic. In the last two decades, more than 500,000 Americans have died from overdoses of prescription and illegal opioids.
Trials against other opioid manufacturers and drug distributors are underway.
Nearly two years ago, the Sacklers proposed paying $3 billion in cash to settle rapidly increasing litigation. Both the company and family members had resisted releasing the full trove of documents, including hundreds of thousands of work emails and communications with attorneys, reaching back 20 years. According to Wednesday night’s filing, Purdue and the Sacklers will now release some 33 million documents.
The Sacklers’ contribution to a deal has risen to $4.5 billion, plus an additional $225 million in a civil settlement with the federal Department of Justice, for which they admit no wrongdoing.
Purdue Pharma will distribute $500 million as soon as the company emerges from bankruptcy.
The two branches of the Sackler family said in a statement: “This resolution to the mediation is an important step toward providing substantial resources for people and communities in need. The Sackler family hopes these funds will help achieve that goal.”
According to the proposed settlement, the Sacklers would pay $4.325 billion. Trustees appointed by a national opioid abatement fund would oversee Sackler charitable arts trusts worth at least $175 million. Those funds would go toward addressing the opioid crisis.
The Sacklers will still have nine years to make payments, but the new agreement includes an enhanced schedule.
The Sacklers, who are now barred from participating in the opioid business, will be forbidden to seek naming rights to places like hospitals and museums until they have paid all their opioid debts and exited their worldwide opioid-related businesses. The family name had been widely displayed before public pressure forced some institutions to strip the Sackler name from their buildings.
According to the House Committee on Oversight and Reform, which has been investigating Purdue’s role in the opioid epidemic, the net assets of the Sackler family are roughly $11 billion, in large measure due to profits from Purdue.
Thousands of creditors have until July 14 to vote on Purdue’s reorganization plan. The company has been seeking approval from an overwhelming majority, hoping to set the plan in motion, which would also include initial payments to funds for plaintiffs.
In a statement Thursday, the company said, “We will continue to work to build even greater consensus for our plan of reorganization, which would transfer billions of dollars of value into trusts for the benefit of the American people and direct critically needed medicines and resources to communities and individuals nationwide who have been affected by the opioid crisis.”
The settlement, brokered by a court-appointed mediator, addresses an issue that loomed large over nearly two years of bitter legal battles: whether individual members of the Sackler family, who oversaw Purdue’s operations and sat on its board of directors, could be sued. Although Purdue’s bankruptcy filing halted lawsuits against the company, the Sacklers themselves did not seek bankruptcy protection. But in exchange for their cash payments, they insisted that they too be released from any lawsuits.
If Judge Robert Drain, who is presiding over the bankruptcy proceedings, certifies the plan after a confirmation hearing Aug. 9, as is now widely expected in light of the latest agreement, family members and the company would be shielded from further opioid-related lawsuits.
Neither the overall bankruptcy plan, which runs to about 350 pages, nor the latest settlement preclude states from pursuing the Sacklers criminally, although such prosecutions would be challenging to mount.
At a news conference Thursday announcing the settlement, the attorneys general from Massachusetts, New York and Minnesota pointedly noted that they had asked the Sacklers for years to admit culpability and to apologize, but that family members refused.
The government lawyers said that rather than spend years in pursuit of more money to address the dire needs created by the opioid epidemic, they agreed to stand down to free up funds more swiftly.
Reps. Carolyn B. Maloney, D-N.Y., and Mark DeSaulnier, D-Calif., have introduced legislation they call the Sackler Act, which would allow states to pursue owners of companies in bankruptcy proceedings, which the attorneys general said they strongly supported. But even if Congress were to pass such a bill, the attorneys general added, the Sacklers and Purdue would almost certainly have long concluded this case and escaped the bill’s reach.
According to the overarching bankruptcy proposal, Purdue as such will cease to exist, reemerging as a new company that would produce limited quantities of OxyContin and overdose reversal drugs. It would be overseen by an appointed board. Profits would seed payments to funds for far-flung plaintiffs that would mainly support drug treatment and prevention programs.
Lawyers involved in the negotiations underscored the import of the public document repository, which is almost unparalleled in its breadth and depth. Although Purdue has already produced 13 million documents during the course of the litigation, it will now add 20 million more. The scope of documents from this one company rivals that revealed by the entire tobacco industry, a much-desired consequence of the Big Tobacco litigation some 20 years earlier.
The Purdue documents will include depositions, emails and letters reaching back two decades. They are expected to reveal granular details about Purdue’s behind-the-scenes contacts with federal investigators and officials with the Food and Drug Administration as the company staved off harsher penalties for abetting turbocharged sales that promoted OxyContin as effective and nonaddicting. Experts anticipate that the musings and mandates by Dr. Richard Sackler, a former Purdue president and CEO, would also be laid bare.
In the briefing Thursday, Maura Healey, the attorney general of Massachusetts, who was the first to sue individual Sacklers, said that the document trove stood as a promise kept to families of opioid victims.
“It will tell the whole story, all the conversations, all the discussions, all the planning, all the ways in which they were going to make money and evade accountability and regulation,” she said.
An initial disclosure of millions of documents is expected this winter and will be readily available on the internet. Additional, formerly confidential documents may emerge within a few years.
Another official in the pursuit of the Sacklers was Letitia James, the attorney general of New York.
“For nearly two years, since Purdue Pharma declared bankruptcy, the company and the Sackler family have used every delay tactic possible and misused the courts — all in an effort to shield their misconduct,” she said. “While this deal is not perfect, we are delivering $4.5 billion into communities ravaged by opioids on an accelerated timetable and it gets one of the nation’s most harmful drug dealers out of the opioid business once and for all. ”
In addition to Massachusetts, New York and Minnesota, the other states that have signed on include Colorado, Hawaii, Idaho, Illinois, Iowa, Maine, Nevada, New Jersey, North Carolina, Pennsylvania, Virginia and Wisconsin.
Nine states, including California, Connecticut, Delaware, Maryland, New Hampshire, Oregon, Pennsylvania, Vermont and Washington, and the District of Columbia continue to oppose the agreement.
“While some progress has been made — especially around the public document depository — this plan is far from justice,” said William Tong, the attorney general of Connecticut. “Purdue and the Sacklers have misused this bankruptcy to protect their vast wealth and evade consequences for their callous misconduct. This deal alarmingly allows the Sacklers to still walk away with their personal wealth intact, and now allows funds already intended for charity to be included in this deal. We are evaluating all options to continue to fight this bankruptcy plan until all viable options are exhausted.”
The first lawsuits to take on the supply chain of opioids were filed in 2014, and Purdue Pharma quickly topped the list of companies most frequently named. Defendants now include many other manufacturers, drug distributors and dispensers, including marquee names like Walmart and Walgreens.
By 2019, thousands of lawsuits from an ever-growing sprawl of plaintiffs piled into federal and state courts. That September, Purdue filed for bankruptcy reorganization, saying that its skyrocketing legal fees were burning through profits that could otherwise go toward settlement.
The Purdue plan, if confirmed, would hardly be the sum total paid by defendants to address the crisis, which hit record overdose deaths during the pandemic. Johnson & Johnson, which also manufactured opioids, recently settled with New York and is appealing a verdict from an Oklahoma state trial. Distributors are facing a bench trial in a West Virginia federal court and they and other manufacturers are being tried before a jury in a New York state court. And the major pharmacy chains have only recently begun to sit down at the negotiating table.