The Supreme Court blocks Purdue Pharma's bankruptcy deal

The US Supreme Court has done that annulled part of the bankruptcy agreement for Purdue Pharma that would have protected members of the Sackler family from future lawsuits over their role in fueling the opioid crisis.

The Sacklers, who owned and operated the Oxycontin manufacturer for decades, had agreed to pay $6 billion (£4.7 billion) in a wider settlement in return for sweeping protection against civil claims related to the addictive opioid .

But the nation's highest court ruled against granting such protection to the Sacklers who did not go bankrupt themselves were not authorized under the law.

Relatives of Sackler said they would continue to push for a settlement, warning that the alternative would be “expensive and chaotic legal proceedings in courtrooms across the country.”

The ruling is a victory for the US government and others who had challenged the deal, arguing that releasing the Sacklers was an abuse of the system.

But it raises big questions about the future of the deal, which had received significant, if mixed, support from many who sued the company and saw it as the only practical way to reach the family's billions for drug treatment and other uses .

Ellen Isaacs, whose son Patrick Ryan Wroblewski died of an overdose in 2018 at age 33, was among the family members who opposed the shield for the Sacklers.

She said she wasn't sure what would happen next, but hoped justice would be served.

“I would like to see them fully held accountable,” she said. “I'm so grateful to the Supreme Court right now that I can't move forward.”

Purdue became a household name in the US as the creator and promoter of OxyContin – a prescription painkiller that promoted it as safe despite being aware that it was both highly addictive and widely abused.

The company declared bankruptcy in 2019 after being hit with thousands of lawsuits filed by states, cities and families. The company later pleaded guilty to criminal charges, including defrauding health authorities and making illegal payments to doctors.

The kind of protection the Sacklers get in this deal has been a key part of other high-profile settlements, including those with the Boy Scouts of America and the Catholic Church.

But the courts are divided on whether such “exemptions” from liability for third parties like the Sacklers are actually allowed.

In asking the Supreme Court to take up the issue, US government lawyers said leaving it alone would “leave a road map for wealthy corporations and individuals to abuse the bankruptcy system” and escape responsibility.

Writing for the 5-4 majority, Justice Neil Gorsuch echoed these concerns.

“The Sacklers have not agreed to leave anything close to their entire assets on the table for opioid victims,” he wrote. “Yet they seek an injunction that would wipe out virtually all claims against them for fraud, intentional injury, and even wrongful death, all without the consent of those who brought and are trying to make such claims.”

The court noted that the Sacklers, who have long denied wrongdoing, “seek to pay less than the code normally requires and receive more than is normally allowed.”

Oxycontin, often a gateway to harder drugs like heroin, has been blamed for causing the opioid crisis.

Since 1999, a few years after the drug hit the market, deaths from opioid overdoses have increased eightfold to more than 80,000 per year.

Court records show the Sackler family had long been aware of the legal risks and withdrew about $11 billion from the company in the decade before the bankruptcy. They hid a large part of the money abroad, which made recovery difficult.

When the Supreme Court heard arguments last year, dozens of protesters showed up against the deal, holding signs reading “My Dead Son Won’t Let the Sacklers Go Free.”

But many others had supported the deal and were willing to accept the terms if the result was billions of dollars for treatment, and $750 million going directly to opioid victims, estimated at $3,500 to $48,000 per person.

In his dissent, Judge Brett Kavanaugh said the settlement was a “shining example” of the bankruptcy system working.

“Today's decision is legally wrong and devastating to more than 100,000 opioid victims and their families,” he wrote, warning that it would limit bankruptcy courts' options to “fashion fair and billy relief.”

Purdue called Thursday's decision “heartbreaking” and said it would immediately reach out to resume negotiations.

Abbe Gluck, a professor at Yale Law School, said judges were under intense pressure not to stop this money from flowing to victims.

But she said the dispute has served as a “test case” for broader legal issues, as more companies look to bankruptcy courts — which have unusual power to centralize lawsuits and force a settlement — to resolve claims of mass wrongdoing .

She said the decision was a warning against that trend.

“The court is sending a signal of caution. I think this should have an impact on other pending cases,” she said, adding that the ruling left open the possibility that bankruptcy courts could grant legal protection to third parties like the Sacklers if they consented. were achieved.

Cheryl Juaire, the mother of two sons who died of opioid overdoses and who had helped negotiate the deal as a member of the creditors' committee, said the prospect of further negotiations was “a complete nightmare.”

“There is no win-win situation here. If the Sacklers go to jail, it would be justice for a lot of people, but it wouldn't save lives,” Ms Juaire said.