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Supreme Court Blocks Perdue Pharma Bankruptcy Settlement

The plan would have permitted the Sackler family to pay up to $6 billion to settle lawsuits in return from being released from future liability

Perdue Pharma cannot move forward with a bankruptcy recognition plan that would have shielded the Sackler family from civil claims following an order from the United States Supreme Court.

The nation’s highest court will hear a challenge from the Biden administration which questions the legality of the settlement.

The Sackler family, which controls Perdue Pharma, would have been allowed to pay up to $6 billion toward settlements with states, hospitals, and individuals that were impacted by the opioid epidemic. Then, under the terms of the now-frozen settlement, the family would be entirely released from any liability in future cases.

The pharmaceutical company is based in Stamford, Connecticut and filed for Chapter 11 bankruptcy in 2019. Perdue is accused of kickstarting the opioid epidemic in the US through its distribution of OxyContin and aggressive marketing. The majority of the company’s debt was created by thousands of related lawsuits.

“At issue is whether US bankruptcy law allows Purdue’s restructuring to include legal protections for the Sackler family, who have not filed for personal bankruptcy,” reports The Guardian.

In a statement, a Perdue spokesperson said the company was disappointed the Supreme Court is 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.”

“We are confident in the legality of our nearly universally supported plan of reorganization, and optimistic that the Supreme Court will agree,” the statement concluded, per Global News

Solicitor General Elizabeth Prelogar, who appealed to the Supreme Court on behalf of the federal government, pointed out that the Sackler family has withdrawn $11 billion from the company and that the agreement “constitutes an abuse of the bankruptcy system,” per NBC News. Prelogar wrote that potential plaintiffs had not agreed to release the Sacklers from liability.

In the last 20 years, approximately 500,000 people have died in America because of opioid-related drug overdoses. Synthetic opioids are the leading cause of fatal drug overdoses and were involved in nearly 75% of the 68,630 overdose deaths in 2020.

“In 2012, synthetic opioids were involved in 6 percent of 41,502 overdose deaths. That figure quickly climbed to 18 percent of 52,404 deaths in 2015, 51 percent of 70,630 deaths in 2019, and then 66 percent of 106,699 deaths in 2021,” reports the Common Wealth Fund.

 “In 2015, synthetic opioids were involved in at least 25 percent of overdose deaths in 11 states,” the organization observed. “By 2018, that number had grown to 28 states, with the impact concentrated in the Northeast, Appalachian, and Midwestern regions. Western states were less affected.”

The Court’s order reverses a ruling from the 2nd U.S. Circuit Court of Appeals in New York which said in May that the bankruptcy settlement could proceed. 

The Court will hear oral arguments in the case in December. A ruling would likely be released in 2024.

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