Purdue Backs Fraud Claim Against Sacklers, Amid Scramble for Immunity

    In bankruptcy court on July 9, OxyContin manufacturer Purdue Pharma secured an injunction to temporarily stave off lawsuits while it renegotiates a deal with its owners, the Sackler family. A day earlier, Purdue also supported a legal complaint against the Sacklers brought by the company’s own creditors.

    For years, the Sackler family’s plan to weather the storm of national opioid litigation hinged on an agreement with Purdue: They’d contribute $6 billion to the settlements, and in exchange they’d receive ongoing legal immunity from damages. In June, that deal collapsed.

    Purdue filed for Chapter 11 bankruptcy in 2019, which has kept at bay countless lawsuits accusing the company of deceptive marketing practices that portrayed OxyContin as nonaddictive. The Sacklers, however, never filed for bankruptcy themselves. On June 27, the Supreme Court ruled that liability protections therefore applied to the company, but not to the family. Per a 60-day court-ordered injunction, the Sacklers now have until September 9 to get a new deal in place before legal action resumes.

    “In June 2024, the Court voted 5-4 against third-party releases contained in the Plan of Reorganization,” Purdue stated in the wake of the Supreme Court ruling, referring to the Sacklers being excluded from immunity. “We are reaching back out to creditors and renewing our pursuit of a resolution that delivers billions of dollars of value for opioid abatement and allows the Company to emerge from bankruptcy as a company with a public-minded mission.”‘

    In response to the Supreme Court ruling, on July 8 Purdue’s top creditors filed a complaint describing intentions to sue the Sacklers. The filing centers around the widely known allegation that the family personally funneled off billions in company funds. The creditors believe the Sackers owe more than $6 billion. According to Reuters, Purdue expressed support for the action, as the company was “not the most appropriate entity to pursue litigation” itself.

    The fraud allegations, which describe the family siphoning around $11 billion from the company over the course of a decade, were made in a 2019 audit commissioned by Purdue.

    “The money is not being spent effectively.”

    Whether the Sacklers’ billions will ultimately go toward repairing some of the damage the family has caused, that’s a drop in the bucket compared to the many more billions in opioid settlement funds being paid out across the country. The more pressing issue is that those payouts are not having a proportionate impact.

    “The money is not being spent effectively,” Dennis Cauchon, president of nonprofit Harm Reduction Ohio told Filter. “Almost nothing is going to victims—it’s all going to state and local governments, [which] are not well equipped to efficiently deploy the money. And are they the real victims? No.”

    Governments can put 15 percent of the payouts they receive toward unrestricted use, but are required to put the other 85 percent toward remediation for communities impacted by the opioid-involved overdose crisis. This includes harm reduction efforts like increasing access to naloxone and medication for opioid use disorder.

    OneOhio Recovery Foundation, the entity created to manage the state’s opioid settlement payouts, has drawn widespread criticism for its resistance to transparency. But Cauchon emphasized that mismanagement of the funds is not an isolated problem.

    “The court system is not well-equipped to funnel money correctly and accurately to the victims,” Cauchon told Filter. “State and local governments have easy standing in the court system, as well as resources to sue. Whereas real victims have a hard time getting standing, and minimal resources to pursue any remedy.”



    Image (cropped) via United States Department of Justice

    • Alexander is Filter’s staff writer. He writes about the movement to end the War on Drugs. He grew up in New Jersey and swears it’s actually alright. He’s also a musician hoping to change the world through the power of ledger lines and legislation. Alexander was previously Filter‘s editorial fellow.

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