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Judge gives Purdue Pharma opioid settlement conditional approval

OxyContin bottle and pills
A judge gave conditional approval Wednesday to a settlement plan for OxyContin maker Purdue Pharma over its role in the nation’s opioid crisis.
(Toby Talbot / Associated Press)

A federal bankruptcy judge on Wednesday gave conditional approval to a sweeping, potentially $10-billion plan submitted by OxyContin maker Purdue Pharma to settle a mountain of lawsuits over its role in the opioid crisis that has killed half a million Americans over the last two decades.

Under the settlement reached with creditors including individual victims and thousands of state and local governments, the Sackler family will give up ownership of the company and contribute $4.5 billion but will be freed from any future lawsuits over opioids.

The drugmaker will be reorganized into a new company with a board appointed by public officials and will funnel its profits into government-led efforts to prevent and treat opioid addiction.

Also, the settlement sets up a compensation fund that will pay some victims of drug addiction an expected $3,500 to $48,000 each.

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U.S. Bankruptcy Court Judge Robert Drain said Wednesday after speaking from the bench for more than six hours that he would approve the plan as long as two technical changes were made. If so, he said, he will formally enter the decision on Thursday.

He said before his ruling that, while he does not have “fondness for the Sacklers or sympathy for them,” collecting money from them through litigation would be complicated.

More than a dozen states drop their objections to Purdue Pharma’s reorganization plan, edging the company closer to resolving its bankruptcy case.

The settlement comes nearly two years after the Stamford, Conn.-based company filed for bankruptcy protection under the weight of some 3,000 lawsuits from states, local governments, Native American tribes, hospitals, unions and other entities. They accuse Purdue Pharma of fueling the crisis by aggressively pushing sales of its bestselling prescription painkiller.

The Sacklers were not given immunity from criminal charges, though there have been no indications they will face any.

State and local governments came to support the plan overwhelmingly, though many did so grudgingly, as did groups representing those harmed by prescription opioids.

Nine states, Washington, D.C., the city of Seattle and the U.S. bankruptcy trustee, which seeks to protect the nation’s bankruptcy system, opposed the settlement, largely because of the protections granted to the Sackler family. At least some of them are expected to appeal.

Washington state Atty. Gen. Bob Ferguson quickly announced he would appeal the plan, calling it inadequate.

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The bankruptcy judge, based in White Plains, N.Y., had urged the holdouts to negotiate an agreement, warning that drawn-out litigation would delay getting settlement money to victims and the programs needed to address the epidemic.

“Bitterness over the outcome of this case is completely understandable,” Drain said. “But one also has to look at the process and the issues and risks and rewards and alternatives of continued litigation versus the settlement laid out in the plan.”

He noted that the payout issue was mediated by Kenneth Feinberg, who oversaw the government’s Sept. 11 Victim Compensation Fund.

Most states have sued Purdue, claiming it aggressively marketed OxyContin, contributing to an opioid overdose and addiction epidemic that has been linked to more than 500,000 deaths in the U.S.

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Some of the deaths have been attributed to OxyContin and other prescription opioids, but most are from illicit forms of opioids such as heroin and illegally produced fentanyl. Opioid-linked deaths in the U.S. continued at a record pace last year, hitting 70,000.

The crisis crushed the reputation of the Sackler family, major philanthropists whose name was once emblazoned on the walls of museums and universities around the world. With the settlement, family members who have owned the company will still be worth billions.

Whether the deal provides enough accountability for the Sacklers was the most contentious question through the proceedings. Many state attorneys general and advocacy groups working on behalf of opioid victims pushed for the family members to pay more and initially fought against the liability waiver.

They succeeded in boosting the amount the Sacklers would pay from a likely $3 billion to a guaranteed $4.5 billion over a decade.

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David Sackler, a former Purdue board member, had testified that family members would not accept the agreement unless it protected them from lawsuits.

Otherwise, he said, the family would defend itself in litigation that could drag on for years, with the company’s and the family’s assets eaten up by lawyers’ fees rather than used to help address the crisis.

His father, Richard Sackler, a former Purdue president and board chairman, said under questioning that he, his family and the company did not bear responsibility for the opioid crisis.

Drain noted that none of the four Sacklers who testified offered an explicit apology. “A forced apology is not really an apology, so we will have to live without one,” he said.

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One projection commissioned by a group of state attorneys general found that the family’s wealth could rise from the current estimate of $10.7 billion to more than $14 billion by 2030 despite making payments under the settlement. That’s because the family could continue to benefit from investment returns and interest payments as they make their gradual contributions under the deal.

However, lawyers for Purdue and branches of the Sackler family disputed the assumptions used in the projection.

The settlement also requires members of the Sackler family, who are scattered across the U.S., Britain and elsewhere in Europe, to get out of the opioid business worldwide.

Several attorneys general won another provision that will create a massive public repository of company documents, including communications with lawyers that normally would be protected by attorney-client privilege.

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Purdue has said the settlement overall will be worth about $10 billion, a figure that includes the value of addiction treatment and overdose antidote drugs it is developing.

The bankruptcy case is not the first time Purdue faced legal trouble over the marketing of its prescription painkillers.

The company pleaded guilty in 2007 to federal charges that it misled regulators and others about the addiction dangers of OxyContin and agreed to pay more than $600 million in penalties.

Last November, as part of a settlement with the U.S. Justice Department, Purdue pleaded guilty to conspiring to defraud the United States and violating anti-kickback laws.

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Purdue’s bankruptcy has been the highest-profile case in a complicated universe of opioid litigation.

Drugmaker Johnson & Johnson and the three largest U.S. drug distribution companies recently announced a settlement that could be worth up to $26 billion if state and local governments agree.

Individual trials also remain, including one scheduled to start in October in Cleveland over the role that pharmacies played in the crisis. Other trials have been held this year in California, New York and West Virginia, though verdicts have not yet been reached.


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