Sacklers, Purdue Pharma to Pay $6B in New Opioid Settlement

The payout is 40% higher than the $4.55 billion deal that was vacated by a federal court in December, and does not protect the Sackler family from criminal charges.

OxyContin maker Purdue Pharma and the Sackler family will surrender $6 billion for their central role in fueling the deadly and ongoing opioid epidemic that has claimed the lives of 840,000 Americans since 1999.

The civil settlement was announced Thursday by attorneys general from nine states that had challenged a 2021 settlement of $4.55 billion, and which was vacated by a federal judge in December. The new settlement still must be approved by a federal bankruptcy court and the U.S. Court of Appeals for the Second Circuit.

Among the many stipulations in the deal, the Sackler family must apologize for their role in creating the opioid epidemic, which until now they have steadfastly refused to do.

In exchange for the money and the other stipulations of the settlement, the Sacklers will be given immunity from further civil litigation. However, the deal does not shield them from potential criminal prosecution.

California, Connecticut, Delaware, Maryland, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia objected to and ultimately appealed the plan. The U.S. Department of Justice also appealed.

Connecticut Attorney General William Tong, who led the effort to overturn the earlier settlement, called the new deal "both significant and insufficient—constrained by the inadequacies of our federal bankruptcy code."

"But Connecticut cannot stall this process indefinitely as victims and our sister states await a resolution. This settlement resolves our claims against Purdue and the Sacklers, but we are not done fighting for justice against the addiction industry and against our broken bankruptcy code," Tong said.

Purdue 'Pleased With the Settlement'

Purdue Pharma issued a statement saying it was "pleased with the settlement achieved in mediation, under which all of the additional settlement funds will be used for opioid abatement programs, overdose rescue medicines, and victims. With this mediation result, we continue on track to proceed through the appeals process on an expedited schedule, and we hope to swiftly deliver these resources."

Thursday's announcement marks the second multibillion dollar opioid settlement in recent weeks. In late February, drugmaker Johnson & Johnson and drug wholesalers AmerisourceBergen, Cardinal Health and McKesson agreed to pay a combined $26 billion to resolve their role in the epidemic.

However, the settlements are dwarfed by the cost of opioid epidemic. The Centers for Disease Control and Prevention has estimated that the "economic burden" of opioid epidemic is $78.5 billion a year, which includes the costs of healthcare, lost productivity, addiction treatment, and criminal prosecutions.

The settlement keeps intact provisions of the Purdue bankruptcy plan forcing the company to be dissolved or sold by 2024 and banning the Sacklers from the opioid business globally.

Under the new settlement:

• The Sackler family must pay up to $6 billion to the bankruptcy estate – $1.7 billion above the initial bankruptcy plan. The payments will be spread over 18 years, with larger payments frontloaded so states receive more money, sooner as compared to the previous bankruptcy plan.

• The Sackler family must allow institutions to remove the family name from buildings, scholarships, and fellowships.

• Responding to state requests, mediator Judge Shelley C. Chapman urged the Bankruptcy Court to require members of the Sackler family to participate in a public hearing where victims and their survivors would be given an opportunity to directly address the family.

• Purdue must make public additional documents previously withheld as privileged legal advice, including legal advice regarding advocacy before Congress, the promotion, sale, and distribution of Purdue opioids, structure of the Purdue Compliance Department and its monitoring and abuse deterrence systems, and documents regarding recommendations from McKinsey & Company, Razorfish, and Publicis related to the sale and marketing of opioids.

• States reserve the right to object to nonconsensual third-party releases, including advising the court that agreement to the settlement does not indicate belief that those releases that remain in the Purdue bankruptcy plan are legal. The settlement also preserves the right of the states to file amicus briefs arguing against nonconsensual third-party releases if the case makes it to the U.S. Supreme Court.

In a separate settlement in October, 2020, Purdue Pharma agreed to pay $8 billion and dissolve as a company in a deal to settle civil and criminal charges. Purdue pled guilty to a three-count felony information charging it with one count of dual-object conspiracy to defraud the United States and to violate the Food, Drug, and Cosmetic Act, and two counts of conspiracy to violate the Federal Anti-Kickback Statute, for violations that occurred between 2007 and "at least March, 2017," DOJ said.

Under the earlier bankruptcy plan, Stamford, Connecticut-based Purdue Pharma was renamed "Knoa Pharma LLC," will dedicate resources to addiction treatment and relief, and will be overseen by a public board of trustees.

A copy of the mediator's report is available here. A copy of the motion for approval which includes the settlement term sheet is available here.