Purdue sentencing clears path for opioid settlement

Summary

A Purdue Pharma sentencing was expected to advance a settlement requiring Sackler family members to pay up to $7 billion.

Why this matters

The case is a major test of how opioid litigation will deliver money for addiction response and compensation to victims. It also helps determine whether Purdue’s bankruptcy settlement can move forward after years of legal challenges.

A judge is expected to sentence OxyContin maker Purdue Pharma on Tuesday to forfeit $225 million to the Justice Department, a step that would clear the way for a broader settlement over the company’s role in the opioid crisis to take effect.

The payment was part of a 2020 agreement resolving federal civil and criminal investigations. If approved, the government would not collect other penalties in exchange for Purdue settling thousands of lawsuits.

Another judge approved the broader settlement last year, and it could take effect May 1. It requires Sackler family members who own Purdue to pay up to $7 billion over 15 years to state, local, and Native American tribal governments, some individual victims, and others.

Purdue, based in Stamford, Connecticut, pleaded guilty in November 2020 to three federal criminal charges. The company admitted it lacked an effective program to prevent its prescription painkillers from being diverted to the black market after telling the U.S. Drug Enforcement Administration that it did.

Purdue also admitted it paid doctors through a speakers program to prescribe the drugs and paid an electronic medical records company to send doctors patient information that encouraged more opioid prescriptions.

Under the plea deal, the government agreed not to collect $5.3 billion in criminal forfeitures and fines and $2.8 billion in civil liabilities. Portions of that money are instead counted in the broader settlement, from which the federal government will receive a small share.

Under the settlement, Purdue would be replaced by a new company, Knoa Pharma, operated for the public benefit with a board appointed by states. Sackler family members would be protected from opioid-related lawsuits brought by those who accept the settlement.

Court filings show Purdue had paid more than $1 billion by the end of last year to law firms and other professionals involved in the case. Sackler family members received $10.7 billion in payments from Purdue from 2008 to 2018, but the company has not paid them since 2018, and the last family member left Purdue’s board in 2019.

More than 54,000 people with personal-injury claims against Purdue voted to accept the settlement, while 218 voted against it. Some victims and relatives opposed it, saying it fell short of accountability in a crisis linked to 900,000 U.S. deaths since 1999.

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