C: Cindy Shebly https://bit.ly/32tDUQf CC BY 2.0

U.S. judge throws out $4.5bn settlement protecting Sacklers from opioid lawsuits

A federal judge in the U.S. has overturned a settlement worth roughly $4.5 billion that legally protected members of the Sackler family from opioid lawsuits. The family founded and own the pharmaceutical companies Purdue Pharma and Mundipharma and stand accused of culpability regarding over-prescription of addictive pharmaceutical drugs. Purdue Pharma has come under fierce criticism for its role in the opioid epidemic in the U.S.

In 2019 alone, nearly 50,000 people in the United States died from opioid-involved overdoses, according to CDC statistics. The misuse of and addiction to opioids – including prescription pain relievers, synthetic opioids such as fentanyl and heroin — has been described as “a serious national crisis” that impacts public health as well as social and economic welfare across America, according to The National Institute on Drug Abuse.

The CDC estimates that the total “economic burden” of prescription opioid misuse alone in the U.S. amounts to $78.5 billion a year, which takes into account the costs of healthcare, addiction treatment, lost productivity and criminal justice involvement.

In November 2020, opioid manufacturer Purdue Pharma pleaded guilty to conspiracies to defraud the United States and violate the anti-kickback statute. Purdue pleaded guilty to an information charging it with three felony offences: 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.

“The abuse and diversion of prescription opioids has contributed to a national tragedy of addiction and deaths, in addition to those caused by illicit street opioids,”  Deputy Attorney General Jeffrey A. Rosen said at the time.

Expanding on the case, he said: “Purdue admitted that it marketed and sold its dangerous opioid products to healthcare providers, even though it had reason to believe those providers were diverting them to abusers,”  said Rachael A. Honig, First Assistant U.S. Attorney for the District of New Jersey.  “The company lied to the Drug Enforcement Administration about steps it had taken to prevent such diversion, fraudulently increasing the amount of its products it was permitted to sell. Purdue also paid kickbacks to providers to encourage them to prescribe even more of its products.”

Now, a U.S. District Judge Colleen McMahon in New York has rejected OxyContin maker Purdue Pharma’s offer for a $4.5 billion settlement with thousands of plaintiffs, including individuals impacted by the opioid epidemic in the U.S. and local, state and Native governments, because of a clause which would have shielded the Sackler family from liability. McMahon said that the bankruptcy court that first agreed to the $4.5bn settlement did not have the legal authority to release the family for liability for their role in the opioid crisis.

Attorney General Merrick Garland, the Head of the Justice Department which had appealed the Sackers’ plan, said he was ‘pleased’ with the judge’s ruling.

The Attorney General also added that: “The bankruptcy court did not have the authority to deprive victims of the opioid crisis of their right to sue the Sackler family.” In a statement released last Thursday night, Purdue said it would appeal the ruling while trying to come up with another plan that its creditors will back. Purdue also claimed that the ruling would not damage the company’s operations, however it will make it more difficult for company and Sackler money to be used as the legal fight continues over their role in the opioid crisis.

Steve Miller, chairman of the Purdue board of directors, said: “’It will delay, and perhaps end, the ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis,” adding that: “These funds are needed now more than ever as overdose rates hit record-highs, and we are confident that we can successfully appeal this decision and deliver desperately needed funds to the communities and individuals suffering in the midst of this crisis.”

Representatives of the two branches of the Sackler family who own the company reportedly did not immediately respond to a request for comment following the court ruling.

Connecticut Attorney General William Tong, one of the state officials who sought to have the deal terminated, said that the ruling was “a seismic victory for justice and accountability”. Tong added that the ruling will “re-open the deeply flawed Purdue bankruptcy and force the Sackler family to confront the pain and devastation they have caused.”

In 2019, Purdue sought bankruptcy protection when it was inundated with thousands of lawsuits which claimed the company pushed doctors to prescribe OxyCotin, a drug which was a catalyst in the opioid crisis that has been linked to at least 500,000 deaths in the U.S. in the last twenty years. A deal was agreed at the bankruptcy court with its creditors which meant that members of the Sackler family would give up ownership of the company, which would still sell opioids under a different entity – but would use profits to fight the crisis which has been created. The company also pledged to develop new anti-addiction and anti-overdose drugs and provide them at little or no cost.

The Sackler family also agreed to contribute $4.5 billion in cash and charitable assets as part of an overall deal reportedly worth $10 billion, including the value of the new drugs if they are brought to market. The deal also calls for millions of company documents, including legal documents, to be brought into the public domain while government entities and businesses agree to use any money they receive towards fighting the opioid epidemic.
In return, members of the wealthy family would receive protection from litigation lawsuits over their role in the opioid crisis, including the 860 lawsuits already filed and any that are filed in the future.

The central issue of the appeal was the lawfulness of the measures that would give family members legal protections. The Purdue deal would not protect the family from any criminal charges that could be taken against them, although so far none have been filed. There are currently no signs that any are forthcoming, yet some activists are calling for charges.

In last Thursday’s hearing, McMahon focused attention on how members of the Sackler family transferred $10.4 billion from the privately held Stamford, Connecticut-based company over the ten years before the bankruptcy. McMahon wanted to determine whether the money was transferred from the company to ensure a role for the Sacklers in bankruptcy negotiations.

However, in her ruling on Thursday, McMahon did not expand on those transfers of the idea of holding the Sacklers to account for the opioid crisis. Rather, she focused on whether the bankruptcy law actually allows for the type of deal the company and its creditors struck and any objections to it.

“The great unsettled question in this case is whether the Bankruptcy Court – or any court – is statutorily authorized to grant such releases. This issue has split the federal Circuits for decades,” she said in written comments.

She also said that other courts will have their say on the case, with the next step most likely being before the U.S. 2nd Circuit Court of Appeals.

“This opinion will not be the last word on the subject, nor should it be,” she wrote, adding :”This issue has hovered over bankruptcy law for thirty-five years.”

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