SCOTUS weighs controversial immunity deal for family that fueled deadly opioid crisis

The greed of the billionaire Sackler family led to hundreds of thousands of deaths between 1999 and 2019. Justices must decide whether they get to keep half their ill-gotten fortune in exchange for funding addiction treatment programs.

The Supreme Court heard arguments today over a deal finalized last year that would see Purdue Pharma, makers of the highly-addictive opioid OxyContin, and its billionaire owners the Sackler family pay billions in restitution to victims of the opioid crisis. The deal was struck in a US bankruptcy court in New York. The case involved thousands of creditors including individuals as well as municipalities, health centers and other institutions who were affected by the addiction epidemic from 1999 – 2019. More than 645,000 Americans died of opioid overdoses over this 20-year period, driven in large part by OxyContin.

Under the deal, Purdue would be converted to a public-benefit company whose profits would be dedicated to battling addiction. The Sackler family would contribute about $6 billion of their money towards a settlement that would benefit the individuals and institutions affected by the opioid crisis. Some victims are happy with the deal while others believe the Sacklers are getting off too easy.

Scot free

The Sacklers’ estimated worth stands at around $10 billion, the vast majority of which was reaped from OxyContin sales. Critics have described the Sacklers as a billionaire drug cartel.

Individual members of the Sackler family, including brothers Mortimer and Raymond Sackler (both deceased) who bought the company, were instrumental in pushing aggressive and deceptive marketing tactics for OxyContin. Both Sackler brothers were physicians and possessed full knowledge of OxyContin’s addictiveness and its potential harm. Nevertheless, they pushed through the adoption of these strategies, overruling the objections of other executives at the firm. This is well-documented in company memos and even in court-mandated admissions of wrongdoing from the surviving Sacklers who also had a hand in managing the firm.

In the New York bankruptcy court, Purdue surrendered its assets. The Sacklers did not. However, in exchange for their $6 billion contribution, the court has granted members the Sackler family full immunity from any future lawsuits from victims or institutions related to the addiction crisis. It also grants full immunity to over 100 other firms, institutions and individuals who aided and abetted the Sacklers in their crimes.

Deal or no deal

Over 95% of the thousands of creditors in the proceeding voted to accept the deal, arguing that this was the best deal they are likely to get. The Sacklers have had 20 years to hide their assets, and going after them would be both costly and time-consuming.

Some holdouts among the creditors do not believe that the Sacklers should be released from liability considering the harm they have caused.

Purdue Pharma had previously pleaded guilty to deceiving prescribers about OxyContin’s addictive power. In that case, Purdue had to pay out $600 million in fines and penalties. That settlement did not touch the Sacklers’ personal fortune, nor was their involvement in Purdue’s crimes made public under the agreement.

Despite having already been found criminally liable once, the Sacklers later pushed Purdue to double down on its deceptive and destructive marketing practices. Having dodged accountability once, the Sacklers’ greed contributed to hundreds of thousands more deaths between 2007 and 2021.

One of the purposes of such mass injury cases is to discourage similar wrongdoing by other parties in the future. Critics of the agreement say that allowing the Sacklers to keep about half of their ill-gotten gains while shielding them from further liability sends the wrong message.

William Harrington, the US government trustee responsible for monitoring the bankruptcy, also objected to the agreement and immunity deal. In his view, the bankruptcy court had no basis to grant immunity to the Sacklers, who were essentially a third party to the bankruptcy proceedings. Bankruptcy is meant to apply to “honest but unfortunate debtors” who make the entirety of their assets available to make restitution to their creditors. The Sacklers did not do that.

Overreach in bankruptcy court

The Department of Justice is presenting Harrington’s point before the Supreme Court. In a court filing, Solicitor General Elizabeth Prelogar wrote that the settlement shields the Sacklers from facing “claims alleging damages in the trillions” while allowing them to keep “billions of dollars that they siphoned from Purdue”.

DOJ lawyer Curtis Gannon pointed out that the Sackler family members withdrew billions from Purdue before agreeing to contribute the $6 billion to the settlement. Gannon said that this is incompatible with “the nuts and bolts” of bankruptcy law, because it “permits the Sacklers to decide how much they’re going to contribute.”

Also arguing before the court today were attorneys representing Purdue and attorneys representing groups of creditors who support the settlement, as well as creditors who are not supporting it. Gregory Garre, representing Purdue, warned that if the court rejected the agreement, “the billions of dollars that the plan allocates for opioid abatement and compensation will evaporate. Creditors and victims will be left with nothing and lives surely will be lost”.

The Justices were evidently conflicted about the deal. They acknowledged that the agreement was problematic in granting immunity to a third party, namely the Sacklers. However, they also expressed misgivings about blowing up a deal which would benefit thousands of victims and create much-needed support for addiction treatment. A decision in the case should come by the end of June 2024, if not sooner.

Supreme Court questions opioid liability protections for Sackler family (NBC – opens in new tab).

US Supreme Court torn over Purdue Pharma bankruptcy settlement (Reuters – opens in new tab).

Critics Want Sacklers To Face Criminal Charges For Role In Opioid Crisis (NPR – Nov. 2020 – opens in new tab).

Purdue’s Sackler embraced plan to conceal OxyContin’s strength from doctors, sealed deposition shows (STAT News – Feb. 2019 – opens in new tab).