Supreme Court overturns opioid settlement with Purdue Pharma that shielded Sacklers

After the Supreme Court struck down a controversial bankruptcy plan from Purdue Pharma, the maker of OxyContin, those who sued the drug company were left uncertain about when promised funds would be available to combat addiction and other damage from the ongoing drug epidemic.

The ruling upended a carefully-crafted settlement worth roughly $8 billion, and involving the Sackler family, which owns Purdue, and all the individuals, states and local governments that had sued over harms from the opioid epidemic.

In a 5-4 decision, the justices focused on the part of the Purdue bankruptcy plan that shielded members of the Sackler family from future opioid-related lawsuits.

In the majority opinion, Justice Neil Gorsuch wrote: “In this case, the Sacklers have not filed for bankruptcy or placed all their assets on the table for distribution to creditors, yet they seek what essentially amounts to a discharge. No provision of the [bankruptcy] code authorizes that kind of relief.”

Some relatives of overdose victims praised the decision. Ed Bisch’s son — also named Ed — overdosed on Oxycontin in 2001, at age 18. Bisch now leads Relatives Against Purdue Pharma, and wants the Sacklers held personally accountable.

“We did not want to give them exactly what they want,” Bisch said. “Today is a very good day for justice.”

Purdue Pharma was facing thousands of lawsuits for falsely marketing OxyContin as non-addictive and fueling the opioid crisis. The company filed for bankruptcy in 2019.

Before that, the Sackler family, which owns Purdue, had moved about $11 billion of profits into personal accounts. In his ruling, Gorsuch said members of the family had created a “milking program” designed to shelter opioid profits from their company’s bankruptcy.

During the bankruptcy negotiations, the family offered to pay $6 billion in exchange for immunity from future lawsuits.

A federal bankruptcy judge approved that deal in 2021, but Gorsuch ruled that it was an overreach.

“The court is doing a reset here,” said Melissa Jacoby, an expert on bankruptcy law at the University of North Carolina. “[The Court is] saying there is no authority to protect the Sacklers, who are not bankruptcy filers themselves, at least against claimants who have not agreed to settle with them.”

Many on both sides are unhappy about new delays

The total settlement would have amounted to roughly $8 billion directed towards states, local governments, personal injury victims, schools, and hospitals.

In a statement, Purdue Pharma called the ruling “heart-crushing.” It also said Purdue would immediately reach out to the parties to work on a new agreement: “The decision does nothing to deter us from the twin goals of using settlement dollars for opioid abatement and turning the company into an engine for good.”

The recent death toll from the ongoing opioid crisis exceeds 100,000 Americans every year.

In the dissenting opinion, Justice Brett Kavanaugh wrote: "Today's decision is wrong on the law and devastating for more than 100,000 opioid victims and their families."

Many relatives of overdose victims considered the bankruptcy deal the best they could hope for — a way to funnel money from the Sacklers to communities to fund addiction treatment programs, and to individuals harmed by Oxycontin. Now that money is on hold, potentially for years.

Calls for swift return to negotiating table

Advocates called for new negotiations as soon as possible.

“I think everybody wants this done in an expeditious way. It’s important to get to the table and negotiate something that puts victims first very quickly,” said Ryan Hampton, an author and activist on addiction issues who supported the bankruptcy settlement.

Some suggested the Sacklers could use their personal funds to compensate victims, rather than waiting for a formal bankruptcy deal to be finalized for Purdue.

“The Sackler family should begin the process today of compensating the thousands of individuals who lost loved ones to an overdose from their company’s product. There's no need to wait — and no time to waste,” said Regina LaBelle in a statement. LaBelle is a former acting director of the Office of National Drug Control Policy and an addiction policy scholar at Georgetown University.

In a statement sent to NPR, members of the Sackler family, who deny any wrongdoing, said they would work to renegotiate a settlement, but they also expressed some defiance, describing themselves as the victims of “profound misrepresentations about our families and the opioid crisis.”

Money already flowing from other opioid-related lawsuits

Most states are already participating in other opioid-related settlements with opioid manufacturers Johnson & Johnson, Teva Pharmaceutical Industries, and Allergan; pharmaceutical distributors AmerisourceBergen, Cardinal Health, and McKesson; and retail pharmacies Walmart, Walgreens, and CVS. Many are also settling with the national supermarket chain Kroger.

It’s estimated that the total payout from multiple settlements could come to about $50 billion.

Several of these deals began paying out in the second half of 2023, leading to bumps in states’ opioid settlement pots.

There is no national database on how settlement dollars are being spent, but efforts by journalists and advocates to track the money flows have revealed some of the more common ways the funds are being used.

Wide leeway in how to spend opioid settlement funds

One of the biggest is investing in treatment. Many jurisdictions are building residential rehab facilities or expanding existing ones. They’re covering the cost of addiction care for uninsured people and trying to increase the number of clinicians prescribing medications for opioid use disorder, which have been shown to save lives.

Another common expense is naloxone, a medication that reverses opioid overdoses. Wisconsin is spending about $8 million on this effort. Kentucky has dedicated $1 million. And many local governments are allocating smaller amounts.

Some other choices have sparked controversies. Several governments used settlement dollars to purchase police patrol cars, technology to help officers hack into phones, and body scanners for jails. Supporters say these tools are critical to crack down on drug trafficking, but research suggests law enforcement efforts don’t prevent overdoses.

This article was produced in partnership with KFF Health News, a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF.