The Supreme Court has voided the bankruptcy agreement of Purdue Pharma, the pharmaceutical company that, with its aggressive marketing of the painkiller OxyContin, became the main cause of the worst public health crisis in the United States between AIDS and the pandemic, the opioid crisis. The agreement reached in the bankruptcy proceedings implied that the Sacklers, who controlled the company, contributed up to 6 billion dollars (about 5.6 billion euros) for the restructuring of the company, but at the same time protected the family, which controlled the company and received juicy dividends, from liability against possible claims. The Joe Biden Administration challenged the agreement and the Supreme Court now agrees with it.
The Sacklers are left without the shield against potential lawsuits that they wanted, but at the same time, the victims and the States that expected compensation are left without them. Sentence, written by Neil Gorsuch, notes that “nothing in current law authorizes the Sackler disclaimer.”
The Attorney General Elizabeth Prelogar, argued that the settlement granted the Sacklers and a number of other individuals and entities — who have not filed for bankruptcy protection — a “release of liability of exceptional and unprecedented breadth.” This absolute, unconditional, irrevocable, full and final release exonerated the Sacklers from any type of opioid-related civil claim, including claims based on fraud and other forms of willful misconduct.
The decision was made by a vote of five to four, with the three progressive justices (Ketanji Brown Jackson, Elena Kagan and Sonia Sotomayor) and Brett Kavanaugh, who wrote the dissenting opinion, dissenting. “Today’s decision is legally flawed and devastating for more than 100,000 opioid victims and their families. The Court’s decision rewrites the text of the U.S. Bankruptcy Code and restricts the long-established authority of bankruptcy courts to fashion fair and equitable relief for victims of mass injuries. As a result, opioid victims are now deprived of the substantial monetary recovery they fought so long for and finally won after years of litigation,” writes Kavanaugh. “Opioid victims and other future victims of mass torts will suffer greatly as a result of today’s unfortunate and destabilizing decision,” he added.
The bankruptcy plan was put on hold pending the Supreme Court’s decision. The Justice Department held that a bankruptcy agreement by a company (in this case, Purdue Pharma) cannot grant immunity to a third party (the Sackler family) that was not actually a party to the bankruptcy proceedings. The Sacklers, however, had agreed to contribute the $6 billion and to give up ownership of the company, which would emerge from bankruptcy as a separate entity, Knoa Pharma.
Under the now-voided bankruptcy plan, the new firm would develop and distribute opioid addiction treatments and overdose reversal medications, while continuing to manufacture Purdue Pharma products, including OxyContin. Its profits would be used for treatment and prevention.
The case divided the victims and their families. While some rejected the Sackler armor, others considered it to be the viable solution to obtain monetary reparation. The point was that if this shield was eliminated, the agreement as a whole would be in jeopardy and, with it, compensation for which the plaintiffs had been fighting for years. Now, with the shield against future claims removed, the Sacklers have no incentive to contribute that money from their own pockets, which is only part of the enormous profits they made with opioids.
“Today’s Supreme Court ruling is a major setback for families who lost loved ones to overdoses and for those who continue to struggle with addiction,” said Edward Neiger, an attorney who represents more than 60,000 overdose victims, in a statement. statement cited by the Associated Press. “Purdue’s plan was a victim-centered plan that would provide billions of dollars to states to be used exclusively to combat the opioid crisis and $750 million to victims of the crisis so they could begin to rebuild their lives. As a result of the Government’s senseless three-year crusade against the plan, thousands of people died from overdoses, and today’s decision will lead to more unnecessary overdose deaths,” he adds.
Addiction
The Stamford, Connecticut-based company’s drug, used as a remedy for non-chronic pain, hooked hundreds of thousands of Americans and caused more than 500,000 deaths in two decades. For many addicts, OxyContin use was a gateway drug to fentanyl, a synthetic drug 50 times more potent than morphine that has also become an epidemic across the United States.
Purdue Pharma filed for bankruptcy in 2019 to address its debts, stemming from thousands of lawsuits. The company’s restructuring agreement was approved in 2021, with the expectation of initially contributing $10 billion to States, municipalities, addiction treatment and recovery centers, hospitals, survivors and relatives of the deceased, among others affected. The Biden Government and eight States challenged the agreement. The latter agreed to retire after the Sacklers agreed to contribute more money to the compensation fund. The appeals court approved the pact, admitting the shield with the argument that the claims against Purdue Pharma and against the Sacklers were so linked to each other that if this immunity was prevented, the pact would not be possible. The Department of Justice challenged that decision before the Supreme Court.
In parallel, Purdue Pharma accepted in an agreement with the Department of Justice the payment of a total of $8.3 billion in fines, civil liability and compensation, the largest penalty imposed on a pharmaceutical company. However, the company’s own bankruptcy filing complicated the making of these payments.
Numerous pharmaceutical companies have reached settlements totaling tens of billions of dollars in damages over the opioid crisis. There have been claims of liability by both drug manufacturers and the chains that marketed and dispensed them. But the case of Purdue Pharma and the Sacklers is at the epicenter of the health crisis.
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