Supreme Court pauses Purdue Pharma’s OxyContin bankruptcy settlement amid legal challenge: report

10 August 2023

The United States Supreme Court on Thursday agreed to hear the United States Department of Justice's legal challenge to OxyContin maker Purdue Pharma's bankruptcy settlement for the extensive harm that its pain-relieving drug caused, Reuters correspondents John Kruzel and Andrew Chung report. The case is scheduled for December.

"Purdue filed for Chapter 11 bankruptcy in 2019 to address its debts, nearly all of which stemmed from thousands of lawsuits alleging that OxyContin helped kickstart an opioid epidemic that has caused more than 500,000 U.S. overdose deaths over two decades," Kruzel and Chung recall.

"Purdue's owners under the settlement," Kruzel and Chung write, "would receive immunity in exchange for paying up to $6 billion to settle thousands of lawsuits filed by states, hospitals, people who had become addicted and others who have sued the Stamford, Connecticut-based company over its misleading marketing of the powerful pain medication OxyContin."

But President Joe Biden's administration is now questioning "whether US bankruptcy law allows Purdue's restructuring to include legal protections for the members of the Sackler family, who have not filed for personal bankruptcy," Kruzel and Chung explain.

The reporters note that "in a court filing, the administration told the Supreme Court that Purdue's settlement is an abuse of bankruptcy protections meant for debtors in 'financial distress,' not people like the Sacklers. According to the administration, Sackler family members withdrew $11 billion from Purdue before agreeing to contribute $6 billion to its opioid settlement."

Purdue, however, maintains that the new suit will "single-handedly delay billions of dollars in value that should be put to use for victim compensation, opioid crisis abatement for communities across the country and overdose rescue medicines."

Kruzel and Chang add that a group "comprising more than 60,000 people who have filed personal injury claims stemming from their exposure to Purdue opioid products" told the Supreme Court that "Regardless of how one feels about the role of the Sackler family in the creation and escalation of the opioid crisis, the fact remains that the billions of dollars in abatement and victim compensation funds hinge on confirmation and consummation of the existing plan."

Kruzel's and Chung's analysis is available at this link.

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