In August of 2023, Purdue Pharma was declared bankrupt by the Supreme Court.
In June 2024, the Supreme Court then blocked Purdue Pharma’s bankruptcy deal because it would have protected the Sackler family (who owned the company) from future lawsuits over the opioid crisis. The Court ruled that bankruptcy law does not allow non-debtors, like the Sacklers, to escape liability unless all victims agree. This means Purdue’s proposed settlement, which included billions in payments but immunity for the Sacklers, cannot move forward as written. As a result, victims and states can continue to sue the Sacklers directly.
This article will discuss how a famous pharmaceutical company contributed to and even triggered the opioid epidemic through the selling and marketing of a highly addictive drug named Oxycontin.
Purdue Pharma, located in Stamford, Connecticut, is a huge pharmaceutical company owned by the Sackler family. Founded in 1892 by John Purdue Gray and George Frederick Bingham, it now has 5,000 employees worldwide. The company is condemned for introducing Oxycontin, a highly addictive opioid, which has been responsible for the deaths of over 500,000 people in the United States over a span of 21 years.
The Sacklers introduced Oxycontin to the public in 1996. The drug was promoted and marketed aggressively, leading to a rapid rise in sales: from $48 million in 1996 to nearly $1.1 billion in 2000. Purdue Pharma encouraged doctors to prescribe Oxycontin by offering free trips to pain-management seminars. Drug sales soared, as did the number of deaths related to opioid overdose. In 2004, Oxycontin became the undisputed and leading drug of abuse in the US.
In 2007, in response to lawsuits filed against them, Purdue Pharma was fined an exorbitant sum of money for intentionally misleading the public about how addictive Oxycontin was compared to other pain medications available. However, the sale of opioids by Purdue Pharma still did not stop.
In September 2019, Purdue filed for Chapter 11 bankruptcy protection, eventually reaching a settlement in 2021 in which they were to pay $8.3 billion of the company’s worth and an additional $225 million, whereafter the company was to close down. However, the plan was opposed by some attorneys, and in January 2023 the US House of Representatives lapsed the bill. The reason for the termination of this law was to prevent legal immunity for the Sackler family. In September 2021, the company was rebranded ‘Knoa Pharma’ and is now governed by new board members. Knoa Pharma will ultimately be owned by a trust established to fund opioid abuse prevention efforts.
In total, over 2,600 lawsuits were filed against Purdue by opioid victims, families, local governments, and other creditors. Aside from these individual lawsuits, the U.S. federal government (through the Department of Justice) filed both criminal and civil charges against Purdue in the same year.
The issue with Oxycontin was that contrary Purdue’s claims, it didn’t provide sustained pain relief for 12 hours. Instead, effects would wear off after 8 hours. Moreover, it didn’t adequately control pain, resulting in withdrawal symptoms which included intense cravings for the drug. Many people therefore became addicted.
Purdue was well aware of this issue, yet they continued marketing the product, selling bottles of Oxycontin for hundreds of dollars. They advised doctors to prescribe strong doses to their patients, which exacerbated their addiction. The Drug Enforcement Administration confirmed this issue in 2003. Purdue benefited from the huge income that resulted from the sales of Oxycontin, and continued to market their product with ingenious marketing strategies.
Following a set of negotiations between Purdue and many states across the US in the years 2019-2020, wherein Purdue agreed to give up ownership of the company and distribute billions to the public as-well as dispense free addiction treatment drugs, an $8 billion settlement was agreed upon. Purdue now became a public benefit company and the Sacklers were no longer allowed to be involved in the new company.
The following year, the Sacklers sought immunity from lawsuits from the court, which would enable them to give up the company whilst still being able to retain their personal assets. However, it was argued that this would enable the family members to get away scot-free and not be held accountable for the pain, misfortune and deaths they’ve brought about. Other victims approved the plan as they claimed that it’ll guarantee prompt payment.
In August 2023, the bankruptcy settlement was paused by the Supreme Court after an appeal made by the Justice Apartment. They argued that the settlement would shield the Sacklers from lawsuits and claims of fraud and deliberate crime. Moreover, the Sacklers had taken assets from the company, resulting in insufficient funds to pay back creditors.
Outside the courtroom, crowds of demonstrators, many of them wearing red t-shirts bearing the phrase ‘Sackler v. the People,’ with photos of those that died of overdose, conveyed their opposition to the bankruptcy settlement. Ralph Diego, whose son died of opioid overdose in 2014 stated, ‘I don’t want their money… They should lose it or, at least, every bit that they made on Oxycontin… I think they should be in jail.’ They demanded that the Sacklers be prosecuted properly for their crime.
The lawyers for Purdue claimed that the bankruptcy settlement would ‘provide billions of dollars and lifesaving benefits to the victims of the opioid crisis…’; and that striking down the deal would jeopardize this benefit.
A trust of about $750 million has been established for victims and their families. Purdue Pharma no longer exists; rather, its assets will be transferred to its rebranded form known as ‘Knoa Pharma.’ Oxycontin will continue to be made and distributed vis prescription only, with all the profits going toward the settlement funds.
In June 2024, the Supreme Court decisively rejected Purdue Pharma’s bankruptcy deal because it would have protected the Sackler family from future lawsuits. Instead, the Supreme Court and Purdue Pharma/ the Sackler family agreed to resolve claims with the following settlement deal:
A $7.4 billion settlement was agreed upon between Purdue Pharma, the Sackler family, and a coalition of all 50 U.S. states, the District of Columbia, and U.S. territories.
In short, the final settlement agreed upon was a $7.4 billion payout total, with $6.5 billion coming from the Sacklers and $900 million (plus more over time) being contributed by Purdue Pharma.
Victims and families will now have access to a $7.4 billion payout fund that will go toward addiction treatment, prevention programs, and direct support for communities devastated by opioids. Importantly, unlike the earlier rejected deal, this settlement does not shield the Sackler family from future lawsuits in any way, so victims still have the right to sue them directly if they choose. Some families may receive individual compensation payments, while much of the money will flow into state and local programs for treatment and recovery services. In short, this outcome gives victims both financial support and the power to keep holding the Sacklers accountable in court.
It is hoped that the agreed-upon settlement will bring much needed resources and relief to individuals, families and communities still grappling with the devastating after-effects of the opioid epidemic. With time, work and consistent effort, perhaps healing can come from the very same place which fueled the destruction in the first place.