A federal judge overturned the bankruptcy plan of Oxycontin maker Purdue Pharma over a provision that would protect owners of the pharmaceutical company from separate litigation.
New York U.S. District Judge Colleen McMahon said that the provision to grant the Sackler family members immunity from thousands of lawsuits over the opioid crisis is “inconsistent” with the U.S. Bankruptcy Code, disagreeing with the court that had previously approved the $4.5 billion bankruptcy agreement.
“This is a seismic victory for justice and accountability that will re-open the deeply flawed Purdue bankruptcy and force the Sackler family to confront the pain and devastation they have caused,” Attorney General William Tong of Connecticut said in a press release following the ruling.
Purdue filed for bankruptcy protection in 2019 after facing thousands of lawsuits for claims that the company pushed doctors to prescribe OxyContin, which ignited the opioid crisis in the U.S.
In the bankruptcy deal, members of the Sackler family would give up ownership of the company. The company would still sell opioids, however, the profits would be used to fight the crisis.
David Sackler stated in August that the family would walk away from the bankruptcy deal if the family was not granted immunity from current and future civil claims associated with the company.
“The bankruptcy court did not have the authority to deprive victims of the opioid crisis of their right to sue the Sackler family,” Attorney General Merrick Garland stated after voicing approval of McMahon’s decision.
Purdue announced it would appeal the decision. Steven Miller, chairman of Purdue’s board, said in a statement that the ruling would “delay and perhaps end the ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis.”
Before 1996, doctors had resisted prescribing opioids except to the terminally ill, due to their addictiveness. Things changed when Purdue began an aggressive marketing campaign, distributing educational material that made light of the risks of opioids and encouraged doctors to prescribe them regularly as painkillers.
Purdue plead guilty to felony charges in 2007 for the false marketing of OxyContin and paid $635 million as a result. Three executives also pleaded guilty to criminal charges but managed to avoid prison time.
In 2010, Purdue reformulated Oxycontin to be “abuse-deterrent” in an effort to deter people from crushing the pills to snort or inject them. However, the move indirectly fueled greater heroin use in the U.S. as addicts could no longer get their high from the pills, prompting many to substitute heroin.
A record number of Americans died of overdoses between April 2020 to April 2021. Over 100,000 died in that time period as compared with 78,000 the previous year.
The Sackler family has given millions to museums and foundations for the past fifty years. “It’s blood money,” Andrew Kolodny, Brandeis University’s co-director of Opioid Policy Research said.
“I would hope the institutions that are taking Sackler money would begin to think about it and treat it in the same way they would a donation from [Colombian drug lord] Pablo Escobar.”