Dec. 4 (UPI) — The U.S. Supreme Court will hear arguments Monday in a legal challenge to Purdue Pharma’s multi-billion dollar bankruptcy deal aimed at providing compensation to victims of the widely abused painkiller OxyContin, but that shields the Sackler family from potential liability for the opioid crisis.
The case involves Purdue Pharma, the drug manufacturer known for aggressively, promoting and deceptively marketing the highly addictive drug, which has agreed to pay billions of dollars to absolve the company’s role in helping create and sustain the national epidemic.
The case comes before the Supreme Court after the high court temporarily blocked the OxyContin maker in August from carrying on with its bankruptcy proceedings, saying it would hear oral arguments in the case this month amid a circuit court split tied to the issue.
The case also takes place several months after Purdue Pharma won a major court victory in its bankruptcy settlement that shields the owners from any personal liability in the crisis.
The May ruling by the U.S. Court of Appeals for the 2nd Circuit in New York protects the Sackler family, who owned and managed Purdue Pharma, from all current and future legal claims by private citizens in exchange for paying $6 billion to the government to help address the continuing crisis.
As part of the original deal, the Sacklers threw in an extra $4 billion to be distributed among states and local governments still grappling with the fallout from the epidemic, but the deal sparked controversy among those suing the company due to the agreement’s greater intent of absolving the Sacklers of any legal responsibility.
The Sacklers increased the proposed settlement to $6 billion in response to objections by eight states and the District of Colombia, who complained that the initial offer was insufficient to cover expenses associated with the crisis.
The additional $2 billion is expected to be sourced from the assets and future earnings of a newly established non-profit entity formed after the dissolution of Purdue, according to previous disclosures about the deal.
The states accepted the increased offer of $6 billion, but U.S. Trustee William Harrington, who is overseeing the bankruptcy case for the government, challenged the lower court ruling, taking issue with the legality of its protection provision.
The Biden administration was expected to argue that bankruptcy law doesn’t authorize courts to approve such liability releases for third parties like the Sacklers, adding a layer of complexity to the captivating and historic legal case.
Georgetown University law professor Adam Levitin contends the $6 billion payment by the Sacklers, spread over eight years, not only absolves the family of liability but also ensures they can’t be forced to testify about their actions in future legal proceedings.
The deal also allows the Sacklers to keep about half their wealth and assets despite the massive civil claims against the company, signifying a financial setback but ensuring they will remain rich.
“The Sacklers do not want to have to be in the bankruptcy fishbowl,” told NPR. “They’re wanting to get bankruptcy at half price.”
Legal advocates, including Levitin, continue to monitor the case while noting the Sacklers have had two decades to conceal income in offshore accounts while employing other clever money maneuvers to hide assets and throw off investigators looking into their finances.
Purdue introduced OxyContin in 1995 and the prescription painkiller has been at the center of opioid addiction in the United States ever since.
For a considerable period of time, however, Purdue Pharma’s involvement in the epidemic was not publicly known, but recent revelations drawn from leaks, confidential sources, TV documentaries and legal proceedings, have since exposed the extensive role the company played in perpetuating the crisis.
In 2020, Purdue Pharma pleaded guilty to three criminal charges, and as a result was required to pay $8 billion in fines.
However, the company first needed to sort out a deal in bankruptcy court to make sure the payout actually reaches the victims, including both governments and individuals affected by the epidemic.
When Purdue Pharma emerges from bankruptcy, the company plans to rebrand itself as Knoa Pharma, which will continue to produce drugs, including OxyContin, while also focusing on long-term public health priorities like addiction treatment, the company said previously.
Communities in all 50 states will divide the $6 billion payout to fund opioid addiction treatment and prevention.
