US Supreme Court blocks OxyContin bankruptcy deal that would shield Sacklers

Justices temporarily halt agreement to protect family, the owners of Purdue Pharma, from civil lawsuits related to the opioid epidemic

By Mark Sherman 11 August 2023, 12:47 am

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An activist sets up cardboard gravestones with the names of victims of opioid overdose outside the courthouse where the Purdue Pharma bankruptcy case was taking place in White Plains, New York, on August 9, 2021. (AP Photo/Seth Wenig)

WASHINGTON (AP) — The US Supreme Court on Thursday temporarily blocked a nationwide settlement with OxyContin maker Purdue Pharma that would shield members of the Sackler family who own the company from civil lawsuits over the toll of opioids.

The justices agreed to a request from the Biden administration to put the brakes on an agreement reached last year with state and local governments. In addition, the high court will hear arguments before the end of the year over whether the settlement can proceed.

The deal would allow the company to emerge from bankruptcy as a different entity, with its profits used to fight the opioid epidemic. Members of the Sackler family would contribute up to $6 billion.

But a key component of the agreement would shield family members, who are not seeking bankruptcy protection as individuals, from lawsuits.

The US Bankruptcy Trustee, represented by the Justice Department, opposes releasing the Sackler family, descendants of Jewish immigrants to New York, from legal liability. The family is one of the richest in the US.

The justices directed the parties to address whether bankruptcy law authorizes a blanket shield from lawsuits filed by all opioid victims.

The 2nd US Circuit Court of Appeals had allowed the reorganization plan to proceed.

Lawyers for Purdue and other parties to the agreement had urged the justices to stay out of the case.

“We are confident in the legality of our nearly universally supported Plan of Reorganization, and optimistic that the Supreme Court will agree,” the company said in a statement following the court’s action Thursday. “Even so, we are disappointed that the US Trustee, despite having no concrete interest in the outcome of this process, has been able to 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.”

Ed Neiger, a lawyer representing individual victims of the opioid crisis who would be in line for a piece of the settlement, said it was a disappointment that they would have to wait longer for any compensation but also praised the court for agreeing to hear the case so soon. “They clearly see the urgency of the matter,” he said.

Another group of mostly parents of people who died from opioid overdoses has called for the settlement not to be accepted.

Opioids have been linked to more than 70,000 fatal overdoses annually in the US in recent years. Most of those are from fentanyl and other synthetic drugs. But the crisis widened in the early 2000s as OxyContin and other powerful prescription painkillers became prevalent. The Sackler family’s critics say it used unethical sales tactics to push the drugs to doctors and patients, despite knowing about the risk of addiction.

Times of Israel staff contributed to this report.