A US Bankruptcy Court judge is preparing to publicly detail his reasoning for approving a monumental settlement plan from OxyContin maker Purdue Pharma, which will resolve thousands of lawsuits linked to the devastating opioid crisis.
The $7 Billion Settlement Breakdown
Judge Sean Lane confirmed last week that he would accept the deal, ranking it among the largest opioid settlements in history. A defining feature of this plan is its provision for direct payments to individual victims, a step not always seen in major cases.
The settlement mandates that members of the Sackler family, who own the company, contribute up to $7 billion over a 15-year period. This sum constitutes the majority of the cash involved. The funds allocated to state, local, and Native American governments are designated primarily to address the ongoing opioid epidemic.
Critically, approximately $850 million is reserved for individual victims, including children born with opioid withdrawal. To qualify for a payment, individuals struggling with addiction or survivors of those who died must demonstrate they were prescribed OxyContin. Successful claimants could receive payments of around $8,000 or $16,000, with the exact amount depending on the duration of their prescription and the total number of qualifying applicants. The distribution to individual victims is scheduled for next year.
Beyond the Financial Payout
The settlement's terms extend beyond a simple financial transaction. The Sackler family has agreed to relinquish ownership of Purdue Pharma. However, this represents a largely symbolic gesture, as no family member has held a position on the company's board or received funds from it since 2018.
The plan also stipulates that Purdue will be dissolved and replaced by a new entity, Knoa Pharma. This new company will be governed by a board appointed by states and will operate with a public benefit mission. In a significant move, Sackler family members have consented to stop having their name placed on institutions in exchange for charitable contributions, a practice they were once known for.
Furthermore, Purdue has agreed to make public a vast collection of internal documents. These records are expected to provide further insight into the company's methods for promoting and monitoring its opioid products. One notable concession from a previous proposed deal that did not make the final cut was a requirement for Sackler family members to sit and listen to accounts from people directly harmed by OxyContin.
Conclusion of a Long Legal Battle
Purdue Pharma initially sought bankruptcy protection in 2019 amidst a flood of opioid-related litigation. While a judge approved a settlement two years later, the U.S. Supreme Court overturned it. The court objected to the provision that shielded the Sackler family from future opioid lawsuits despite not having filed for personal bankruptcy.
This latest, revised plan addresses that concern by allowing lawsuits to proceed against Sackler family members by those who choose not to participate in the settlement. During a three-day confirmation hearing last week, few parties formally objected, though some self-representing individuals affected by addiction voiced their concerns.
