Seven months after the Supreme Court struck a deal that would resolve thousands of opioid cases against Purdue Pharma, the company’s owners, members of the Sackler family, increased their cash offer to resolve the litigation, but with a new problem.
Under a new agreement, the Sacklers would not receive immunity from future opioid lawsuits, a condition they had long insisted on but which the court had ruled was impermissible.
Instead, they would pay up to $6.5 billion – $500 million more than in the previous agreement – but with a new condition: Claimants, including states, municipalities and individuals, would have to set aside up to $800 million into an account similar to a legal account. -defense fund for billionaires to fight such cases, according to people familiar with the negotiations.
Some details of the framework – but not the legal defense fund – were announced Thursday by New York Attorney General Letitia James. He said the overall deal totals $7.4 billion, which would include $897 million from Purdue.
New York could receive up to $250 million, he said.
“The Sackler family has relentlessly pursued profit at the expense of vulnerable patients and played a critical role in starting and fueling the opioid epidemic,” Ms. James said.
Echoing other settlements in the national opioid litigation, these payments are intended to fund efforts to prevent and treat addiction in hard-hit communities across the country.
“We are extremely pleased that a new agreement has been reached that will provide billions of dollars to compensate victims, reduce the opioid crisis, and provide overdose treatment and life-saving medications that will save lives,” Purdue said in a statement, stressing that a reorganization plan was still in the works.
The Sacklers did not respond to requests for comment.
It is unclear how many claimants will accept the new terms. Ms. James noted that 14 other states involved in the talks were on board: Florida, Connecticut, Massachusetts, Tennessee, California, Colorado, Illinois, Delaware, Pennsylvania, Oregon, Texas, Vermont, Virginia and West Virginia.
But the settlement must now be sold to all plaintiffs – not just the remaining states and thousands of local governments, but hundreds of Native American tribes and approximately 140,000 personal injury victims.
While many of those who accept the deal find the Sacklers’ reserve fund to be a difficult pill to swallow, the reality is that, despite many years of In the Purdue litigation, not a dollar has yet been sent to the plaintiffs, affected by the immediate and ongoing harms of the opioid crisis. In recent months there has been an urgency to strike a new deal so the money can finally start flowing. Under the latest terms, those who oppose the deal are free to file new lawsuits against the Sacklers. Under the previous agreement, they were prohibited from doing so.
Indeed, the legal reserve fund for the Sacklers could quickly run out: Already, lawsuits against the Sacklers have been threatened by a handful of states, counties, cities and individuals.
A spokesperson for Washington State, which has successfully prosecuted other drug companies instead of signing national settlements, said the state was evaluating its options.
States, which are responsible for the majority of payments to the reserve fund, are supposed to keep a minimum of $200 million in the account, with contributions capped at $800 million. After five years, unused funds will begin to revert to the states.
Final calculations on how much of Purdue’s total deal would be deducted to pay lawyers, consultants and administrative costs are still in question.
The Sacklers would pay nearly $3 billion in the first three years, with payments remaining over 12 more years.
If the plan is approved by plaintiffs and confirmed by a federal bankruptcy judge, Purdue would emerge by the end of this year from the bankruptcy that has protected it since 2019. It would immediately pay $897 million in cash to parties who signed on to the deal.
The 15 years of Sackler payments would also begin at that point. And most of the lawsuits that began more than a decade ago – which ultimately morphed into an ungainly combined litigation brought by cities, states, tribes, hospitals and individual victims, and supported by countless teams of lawyers – would, presumably, finished.
In the plan rejected by the Supreme Court, the Sacklers, long depicted in films, television and print articles as the public face of predatory opioid manufacturers, sought a bond for having set aside $6 billion: a bar against any current or future lawsuits against them related to Purdue and opioids.
Purdue itself gets such protection as a standard benefit conferred when a company emerges from bankruptcy. But because the Sacklers did not personally file for bankruptcy, the Supreme Court ruled in June that granting them permanent civil immunity was outside the purview of bankruptcy law.
The purpose of the legal reserve fund, in which, essentially, plaintiffs will pay to defend the Sacklers against other plaintiffs, is to satisfy the court’s ruling.
“If states are expected to contribute funds to the Sacklers’ legal defense, plaintiffs and the public will want to know more about the impact of that money going to the Sacklers and their lawyers rather than reducing opioids,” Melissa said B. Jacoby, a bankruptcy expert at the University of North Carolina School of Law.