Explained: US Supreme Court to hear challenge to Purdue’s $6bn deal. Will it affect opioid epidemic relief?

The United States Supreme Court is set to hear a challenge to Purdue Pharma’s $6 billion opioids settlement, on Monday (Dec 4) which would immunise the company’s billionaire Sackler family owners from future lawsuits brought by opioid victims. The Justice Department has argued against this immunity after accusing them of flooding the country with highly addictive opioids and challenging its legality. 

In August, the Supreme Court of the US (SCOTUS) temporarily blocked a bankruptcy deal for Purdue Pharma that would have shielded members of the Sackler family which controls the drugmaker from future litigation over their role in the country’s opioid epidemic. 

The Department of Justice (DOJ) has argued that the family earned tens of billions of dollars while flooding the country with the highly addictive pain medication OxyContin, which played a key role in the opioid epidemic that has caused over half a million deaths across the US. 

Purdue’s plan involves paying up to $6 billion to settle thousands of lawsuits filed by states, hospitals, people who had become addicted and others who have sued the Connecticut-based company over its misleading marketing of OxyContin in exchange for full immunity from all civil legal disputes. 

The opioid epidemic in the US has caused more than 500,000 overdose deaths over two decades, according to American officials. In 1996, Purdue introduced OxyContin and marketed and promoted it aggressively. 

The pain medication has been attributed to kickstarting the epidemic, according to the various plaintiffs who have argued in thousands of lawsuits against Purdue, across the US. The drugmaker has also been accused of encouraging the free-wheeling prescription of their products while hiding the addictive nature of the drugs.

Following an avalanche of litigation which involved legal officials from all 50 US states, in 2021, Purdue pled guilty to three criminal charges over its marketing of OxyContin. The drugmaker also pleaded guilty to misbranding and fraud charges over the marketing of its pain medication, in 2007 and 2020.

However, the litigation prompted Purdue, in 2019, to file for Chapter 11 bankruptcy to address its debts nearly all of which stemmed from thousands of OxyContin-related lawsuits. 

Purdue’s bankruptcy settlement, approved by a US bankruptcy judge in 2021, would provide around $10 billion in value to its creditors, said the company. 

The settlement was revised a year later, to include more money from the Sacklers after the Attorneys General of eight states and the District of Columbia successfully appealed the bankruptcy court approval.

This was after Purdue had reached a bankruptcy settlement with creditors, including various state attorneys general, local governments and the DOJ’s criminal and civil divisions. 

As a part of the revised deal, the Sackler family would pay up to $6 billion to a trust to settle claims filed by states, hospitals, people who had become addicted and individual opioid plaintiffs.

A group comprising more than 60,000 people who have filed personal injury claims due to Purdue’s opioid products told the Supreme Court that they support the settlement, including legal immunity for the Sackler family.

However, the settlement is opposed by the DOJ’s bankruptcy watchdog and some individual opioid plaintiffs.

The temporary block on the bankruptcy deal for Purdue came after the top court agreed to hear US President Joe Biden’s administration regarding the legality of the settlement and said it would hold oral arguments in December. 

The order was filed by the US Trustee, an office within the DOJ that carries out an administrative function and performs a watchdog role in some instances. 

The settlement, which was approved by a lower court, gave the families of Raymond Sackler and Mortimer Sackler protection from all future civil claims which would effectively protect their other assets from opioid-related lawsuits. 

The objection filed by the DOJ argues that Purdue’s plans allowed the members of the Sackler family to take advantage of legal protections meant for debtors in “financial distress,” not for billionaires like the Sacklers.

“The court of appeals’ decision is a roadmap for corporations and wealthy individuals to misuse the bankruptcy system to avoid mass-tort liability,” US Trustee told the SCOTUS.

Sackler family members withdrew $11 billion from Purdue over the 11 years before the company filed for bankruptcy protection and later agreed to contribute $6 billion to its opioid settlement, said the Biden administration.

Purdue said it was disappointed that the US Trustee filed a challenge that has “single-handedly” delayed “billions of dollars in value that should be put to use for victim compensation, opioid crisis abatement for communities across the country and overdose rescue medicines.” 

The company also said that it was confident about the legality of its “universally supported plan of reorganization” and the SCOTUS will agree with it. 

The Sacklers have consistently denied wrongdoing and expressed regret that OxyContin “unexpectedly became part of an opioid crisis.” The billionaire family would receive immunity in exchange for paying the settlement amount, despite not being bankrupt themselves. 

The Sacklers would shield themselves through what is called a non-debtor release, which the US Congress initially granted in the context of asbestos litigation. 

Simply put, Sacklers for giving billions of dollars to Purdue – which as a part of the settlement deal would transform into a nonprofit and dedicate its assets to addressing the harms of opioid addiction across the US – cannot be held accountable for their role in the opioid crisis and don’t even have to declare bankruptcy to for that protection. 

In this context, the Supreme Court justices would decide whether members of the Sackler family should be shielded from current and future lawsuits connected with Purdue. 

Ellen Isaacs, a former OxyContin user, who lost her son to overdose and is among those who oppose the $6 billion settlement, wrote to the justices saying that the settlement fails to hold the Sacklers responsible. 

“In a case where so many lost everything priceless, including their lives, justice is served when the villains keep nothing at all,” she wrote. “But justice is not served by forcing victims, against their will, into a deal that leaves the Sacklers billionaires,” she added. 

(With inputs from agencies)