Aggressive marketing of opioids

Judge says Not so fast.

A federal judge on Thursday evening unraveled a painstakingly negotiated settlement between Purdue Pharma and thousands of state, local and tribal governments that had sued the maker of the prescription painkiller OxyContin for the company’s role in the opioid epidemic, saying that the plan was flawed in one critical area.

The judge, Colleen McMahon of the U.S. District Court for the Southern District of New York, said that the settlement, part of a restructuring plan for Purdue approved in September by a bankruptcy judge, should not go forward because it releases the company’s owners, members of the billionaire Sackler family, from liability in civil opioid-related cases.

Although the Sacklers did not file for personal bankruptcy protection, they had made immunization from opioid claims an absolute requirement in exchange for contributing payments amounting to $4.5 billion to the agreement.

The judge says the bankruptcy code doesn’t spell that out so nope.

Lawyers for a small group of states that had appealed the plan immediately hailed the ruling. “This is a seismic victory for justice and accountability that will re-open the deeply flawed Purdue bankruptcy and force the Sackler family to confront the pain and devastation they have caused,” said William Tong, the attorney general of Connecticut.

That’s capitalism.

The Sacklers appear to have taken careful steps to protect their billions as the corpses piled up.

During oral arguments, Judge McMahon said she was troubled by what she saw as a red flag: the more than $10 billion that the Sacklers withdrew from Purdue between 2008 and 2018, as the opioid epidemic was cresting. The Sackler dividends were largely deposited in offshore accounts and trusts that are inaccessible to American authorities.

And notably, she said, the withdrawals escalated after Purdue and three top executives pleaded guilty in 2007 to federal criminal and civil charges related to aggressive marketing of opioids, paying more than $600 million.As Judge McMahon wrote: “Concerned about how their personal financial situation might be affected, the family began what one member described as an ‘aggressive[]’ program of withdrawing money from Purdue almost as soon as the ink was dry on the 2007 papers.”

Those withdrawals left the company without deep cash reserves to resolve thousands of opioid lawsuits that, by late 2019, forced Purdue to seek shelter in bankruptcy. But to settle the lawsuits and emerge from bankruptcy, Purdue needed the Sacklers’ contribution.

That reliance put the Sacklers in a position to make a line-in-the-sand demand: They would only give the money if they received immunity from all opioid-related cases filed in civil courts.

They’ll be running for president next.

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