Purdue Pharma judge overturns DOJ decision to approve $6 billion opioid settlement

March 9 (Reuters) – The Purdue Pharma bankruptcy judge on Wednesday approved a $6 billion opioid settlement funded by the owners of the Sackler family, overruling objections from the Justice Department and 20 opposing states to agreement.

As part of the settlement, the Sacklers would pay between $5.5 billion and $6 billion to a trust that will be used to pay claims from states, drug abuse victims, hospitals and others who have argued that the Purdue painkiller OxyContin played a pivotal role in the United States. opioid epidemic.

The revised settlement must still be entered into a new plan of reorganization before obtaining final approval from the bankruptcy court.

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Members of the Sackler family have denied any wrongdoing. They said in a statement last week that they “sincerely regret” that OxyContin “unexpectedly became part of an opioid crisis.”

There have been nearly 500,000 opioid overdose deaths in the United States over two decades, according to the US Centers for Disease Control and Prevention.

US Bankruptcy Judge Robert Drain in White Plains, New York, called the settlement an “extraordinary” improvement over the Sacklers’ previous offers, and he called the US Department of Justice “reprehensible” for its continued opposition.

The Justice Department’s Office of the U.S. Trustee, which oversees bankruptcy administration, said the bankruptcy court does not have the power to approve the settlement because an appeals court must first decide whether the Sacklers can enjoy extensive legal immunity in exchange for payment.

“Why are we even here?” Justice Department lawyer Nan Eitel asked during the hearing, saying the deal was premature.

Drain repeatedly raised his voice to Eitel, saying the Justice Department didn’t seem interested in improving the deal and only wanted to “find out ways to kill him.”

“I find it reprehensible,” Drain said.

A lawyer for Purdue’s official creditors’ committee says the Justice Department appears willing to risk a multibillion-dollar settlement so it can bolster its argument that bankruptcy courts shouldn’t use their authority to protect entities. not bankrupt like the Sacklers.

A Justice Department spokesperson said after the hearing that the agency supports his lawyer and his case and will pursue his appeal.

The Sacklers’ payout hinges on ending their exposure to the opioid lawsuits. But a U.S. district judge ruled in December that the protections they seek are outside the jurisdiction of the bankruptcy court. Purdue is appealing this decision to the United States Court of Appeals for the 2nd Circuit.

The new agreement replaces an earlier $4.3 billion settlement, which was overturned after nine attorneys general and others argued the Sacklers should not have such extensive legal protections.

After agreeing to the previous deal, 20 states opposed the new settlement because it includes a $277 million payment exclusively to states that negotiated the $6 billion deal. Some said it would unfairly reduce the percentage of funds going to solving the opioid crisis in their own states.

States still have time to negotiate, Drain said, and could be forced to agree to terms they don’t like rather than invite the “dog eat dog” litigation that would result if the settlement fails.

Purdue said last week that the settlement would provide additional funding for opioid reduction programs, overdose relief medication and for victims, while putting the company on track to resolve its bankruptcy case. on an “accelerated schedule”.

On Thursday, victims of the opioid epidemic will address members of the Sackler family in a hearing overseen by Drain. The hearing will be conducted via Zoom due to COVID-19 restrictions and the Sacklers will not be able to respond.

Purdue filed for bankruptcy in 2019 in the face of thousands of lawsuits accusing it and members of the Sackler family of sparking the opioid epidemic through the deceptive marketing of OxyContin, a highly addictive painkiller.

Purdue pleaded guilty to misbranding and fraud charges related to its OxyContin marketing in 2007 and 2020.

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Reporting by Dietrich Knauth and Tom Hals; Editing by Noeleen Walder, Bill Berkrot and Aurora Ellis

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