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Federal Judges Are Asked To Pave Way For Purdue Pharma Deal

Updated on Friday, April 29, 2022 at 1:21 p.m. Lawyers for OxyContin maker Purdue Pharma and many of those who had claims against the company over the toll of opioids joined together Friday to urge a federal judicial panel to advance a plan that would settle lawsuits across the country.

Updated on Friday, April 29, 2022 at 1:21 p.m.

Lawyers for OxyContin maker Purdue Pharma and many of those who had claims against the company over the toll of opioids joined together Friday to urge a federal judicial panel to advance a plan that would settle lawsuits across the country.

The legal question facing the judges from the 2nd U.S. Circuit Court of Appeals in New York: Does a bankruptcy judge have the authority to grant members of the Sackler family who own the company protection from civil lawsuits over the toll of opioids?

Sackler family members have insisted on the legal shield in exchange for providing the money behind the proposed settlement. And as their offer was boosted over more than two years of negotiations and mediation, most of the parties came to support the deal — including all the states.

But the U.S. Bankruptcy Trustee’s Office, an arm of the Justice Department, has continued pushing back, asserting it’s improper to provide a legal shield for members of the wealthy family who have not themselves filed for bankruptcy protection.

“A non-debtor says: ‘I can get the benefit of a discharge but I don’t need to comply with any of the rules of the bankruptcy code and I don’t need to contribute all of my assets,’” Michael Shih, a lawyer for the office, told a three-judge panel of the 2nd Circuit in a hearing Friday in New York City. “That’s the fundamental inconsistency here.”

Lawyers for Purdue and others who support the settlement said that the protections for Sackler family members would be limited to cases involving opioids and are needed to get a fair outcome, rather than seeing the fight continue through many trials all over the country.

“The releases at issue are not only important to the plan, they are absolutely essential,” said Mitchell Hurley, a lawyer for the official committee of unsecured creditors in Purdue’s bankruptcy case told the judges.

Purdue lawyer Marshall Huebner pointed out that unlike other parties, the Bankruptcy Trustee’s office and federal government are not in line to receive any money from the settlement. He told the judges that allowing lawsuits against the Sacklers to move forward might not result in more money to fight the opioid crisis — in part because most of the family’s wealth is in trusts, much of it overseas.

“We are bringing in billions and billions of dollars to save lives,” Huebner told the court.

All three judges asked pointed questions on the positions of both Huebner and Shih.

The 2nd Circuit judges did not indicate when they would rule, but it often takes weeks or months after a hearing.

No matter how the 2nd Circuit rules on the case, an appeal to the U.S. Supreme Court is possible. If Purdue and its allies win, they still must go back to the bankruptcy judge to get the latest version of the deal approved.

Under the planned deal, Sackler family members would contribute $5.5 billion to $6 billion over time, plus give up ownership of the company. Purdue would then become a new entity known as Knoa Pharma that would dedicate its profits to fighting the nation’s opioid epidemic.

Most of the Sacklers’ money also would go to fighting the epidemic, but at least $750 million would be distributed to some individual victims and their families.

Other product-liability cases have been settled through bankruptcy court by using the sort of protections this deal would give the Sacklers. But opponents of the settlement are challenging the strategy based on the fact that a handful of parties still object to the deal.

Almost all the governments and other entities that originally sued Purdue have agreed to the settlement. Besides the bankruptcy trustee, the only official objectors left are Canadian local governments and First Nations, and two mothers of sons who died of opioid overdoses.

This week, more than 1,000 families who have lost loved ones to overdoses sent a letter asking the U.S. Justice Department to drop its opposition. They said individual victims would not receive payments if the settlement is derailed.

“Moreover, if this plan is not implemented, the states would have to wait years to recover money to be used for abating the opioid crisis,” their letter said. “With drug overdoses occurring at record rates, that is time we cannot afford.”

The federal judge overseeing Purdue’s bankruptcy case approved a settlement last year that was later rejected on an appeal brought primarily by attorneys general for eight states and the District of Columbia. The sides then went to mediation that ultimately persuaded the Sacklers to increase their contribution by more than $1 billion.

Purdue is perhaps the highest-profile player in the opioid industry. But several other drugmakers, distribution companies and pharmacies also have been sued by state and local governments. While a handful of cases have gone to trial, many also are being settled.

Earlier this year, drugmaker Johnson & Johnson and distribution giants AmerisourceBergen, Cardinal Health and McKesson finalized deals to provide a total of $26 billion. Most of the money is required to be used to fight the opioid crisis, which has been linked to more than 500,000 deaths in the U.S. over the last two decades.

Explainer: Where Do US Opioid Trials, Settlements Stand?

Three trials are underway now, in Florida, West Virginia and Washington state. New legal settlements are being reached practically every week to provide governments money to fight the crisis and in some cases funds for medicines to reverse overdoses or to help with treatment.

The effort to hold drug companies, pharmacies and distributors accountable for their role in the opioid crisis has led to a whirlwind of legal activity around the U.S. that can be difficult keep tabs on.

In all, more than 3,000 lawsuits have been filed by state and local governments, Native American tribes, unions, hospitals and other entities in state and federal courts over the toll of opioids. Most allege the industry created a public nuisance in a crisis that has been linked to the deaths of 500,000 Americans over the past two decades.

Collectively, businesses already have faced settlements, judgements and civil and criminal penalties totaling more than $47 billion. The main entities targeted are the companies that manufactured and sold the pills; the businesses that distributed them; and the pharmacies that dispensed them.

Here’s an overview of the litigation and settlements involving the various companies:

Purdue Pharma

Purdue is the maker of OxyContin, an extended-release version of oxycodone that packed higher doses into pills. The drug, released in 1996, became a heavily marketed blockbuster drug — and is associated closely with the epidemic’s first wave.

Like other opioids, it was promoted not just for post-surgery and cancer pain but for chronic pain — an area where doctors previously were reluctant to prescribe such powerful drugs.

Faced with thousands of lawsuits, the company went into bankruptcy protection in 2019 to help reach a settlement.

A deal is now in place, but it’s not final.

It calls for members of the Sackler family who own the company to give up their stakes, making way for it to become a new entity — to be known as Knoa Pharma — with profits funding the fight against the opioid crisis. Additionally, family members are to pay $5.5 billion to $6 billion over time, with a portion of the money going to victims.

Earlier this year, three members of the family attended an online hearing in which parents described losing children to addictions that started with OxyContin, and people recovering from addictions described their journeys.

As part of the exchange, Sackler family members would get protection from lawsuits over opioids.

For the settlement to be finalized, a higher court must overturn a judge’s ruling that threw out an earlier version of the deal. A hearing on that is scheduled for April 29 before the U.S. 2nd Circuit Court of Appeals.

In the meantime, activists and some U.S. senators are asking the Justice Department to consider charges against family members.

Other Drugmakers

In a major court victory for drugmakers last year, a California judge ruled against some local governments in their case against pharmaceutical companies Johnson & Johnson, Endo International and Teva Pharmaceutical Industries.

Some of those drugmakers — Johnson & Johnson, Allergan and Teva — are now on trial in West Virginia.

But companies have largely been settling suits.

Mallinckrodt, which was a leading producer of generic oxycodone, also used bankruptcy court to reach a settlement, agreeing to a $1.6 billion nationwide deal in 2020.

Johnson & Johnson has agreed to a $5 billion nationwide settlement. It was announced alongside a separate settlement involving the three biggest drug wholesalers. The company’s Janssen subsidiary stopped selling its fentanyl patches and pain pills in the U.S. in 2020. J&J was also the first drugmaker to be held liable for the opioid crisis in a trial, though the Oklahoma Supreme Court later overturned the ruling.

Endo made the opioid Opana, which was eventually removed from the market. The company has been reaching individual settlements with states. Deals since last year with Florida, New York, Texas, West Virginia and some district attorneys in Tennessee have totaled well over $200 million.

Late last year, a New York jury found Teva partly responsible for the state’s opioid crisis through its marketing of the fentanyl drugs Actiq and Fentora. Most of the other companies the state and two counties sued settled before or during a trial last year. A separate trial is to be held to determine damages.

Since the New York trial, Teva has reached settlements with Texas, Florida and Rhode Island totaling more than $250 million. It will also provide drugs to reverse overdoses and treat addictions.

Allergan, now a subsidiary of AbbVie, has been settling suits involving the extended-release morphine pill Kadian. It reached one major settlement with New York last year. Since then, it has been part of the multi-company settlements in Florida and Rhode Island.

Executives from drugmaker Insys were convicted in 2019 of bribing doctors across the U.S. to prescribe their sublingual fentanyl spray Subsys. Company founder John Kapoor was sentenced to 5 1/2 years in federal prison.

The company also paid $225 million to resolve federal investigations into allegations that it paid kickbacks and used other illegal marketing tactics.

Distribution Companies

The three big national companies — AmerisourceBergen, Cardinal Health and McKesson — finalized their settlement, worth a total of $21 billion over 18 years, in February.

The deal, combined with Johnson & Johnson’s, is expected to be the single biggest settlement between companies in the drug industry and governments.

The total amounts include separate settlements covering all federally recognized Native American tribes.

With settlement money starting to flow to state and local governments, officials are figuring out how to prioritize it. The funds are arriving at a precarious time: The number of U.S. overdose deaths from all drugs topped 100,000 in a 12-month period for the first time last year. The majority of those deaths are from opioids — and particularly illicit synthetic versions including fentanyl.

Unlike the tobacco settlements of the 1990s, there are safeguards intended to steer most of the opioid settlement funds to addressing the crisis. Public health experts have ideas for how to do that, but the decisions are up to government officials.

The distribution companies also went to trial last year in West Virginia. A judge has not yet ruled.

Closing arguments in Washington state’s trial against the distributors are expected this week.

Pharmacies

Pharmacy chains have been sued less often than companies that make or distribute opioids. In one groundbreaking case, a federal jury in Ohio last year found CVS, Walgreens and Walmart recklessly distributed massive amounts of pain pills in Lake and Trumbull counties.

Late last month, CVS settled in Florida. That left Walgreens to go to trial Monday.

Consulting Company

Global consulting firm McKinsey & Company also reached deals last year with the states, Washington, D.C., and U.S. territories for advising businesses on how to sell more prescription opioids amid the overdose crisis. Those settlements totaled more than $600 million.

A group of U.S. senators is pushing for a federal investigation, saying there were conflicts when the company consulted on opioid-related issues both for companies and the U.S. Food and Drug Administration.

Judge Gives More Time For Purdue Pharma Settlement Talks

Members of the Sackler family who own OxyContin maker Purdue Pharma will get protection from lawsuits for another three weeks, a judge said Wednesday, buying more time to work out a settlement of thousands of legal claims against the company over the toll of opioids.

The protections had been set to expire Thursday, but U.S. Bankruptcy Judge Robert Drain said in a hearing that they’d remain in place through March 23.

Also Wednesday, the mediator trying to broker a legal settlement between Purdue and a group of attorneys general said in a court filing that she would stay on the job, a possible sign that a deal to end the highest-profile litigation in the U.S. over the opioid epidemic is getting closer.

The hearing, conducted by video from Drain’s courtroom in White Plains, New York, was light on details. No one objected to extending the deadline or gave updates on where talks stand. But Drain noted that when he appointed another federal bankruptcy judge, Shelley Chapman, as mediator on Jan. 3, she was given the power to extend her service unilaterally only for “involvement in any secondary or drafting terms.”

“The mediation appears to me, though I am reading between the lines, to be progressing as Judge Chapman had hoped,” Drain said in the hearing, which lasted eight minutes.

The lawyers in the negotiations are under an order not to talk about it publicly — creating an opaqueness that has frustrated some advocates for victims.

As the maker of the highest-profile prescription opioid, Purdue faced a barrage of thousands of lawsuits from state, local and Native American tribal governments, along with unions, hospitals and others, blaming the company for helping spark an addiction and overdose crisis linked to more than 500,000 deaths in the U.S. over the past two decades. The company filed for bankruptcy in 2019 with the intent of reaching a sweeping settlement.

Most of the parties suing agreed to a deal last year that would have required members of the Sackler family to contribute $4.5 billion in cash and charitable assets plus give up ownership of Purdue, which would be converted to a new entity dedicating its profits to fighting the opioid crisis. Under the terms, Sackler family members would be protected from current and future civil suits over opioids. Most of the money would be restricted to uses to combat the crisis.

The attorneys general for California, Connecticut, Delaware, the District of Columbia, Maryland, Oregon, Rhode Island, Vermont and Washington state held out, arguing that the deal didn’t do enough to hold Sackler family members accountable.

On an appeal, a U.S. District Court judge ruled in December that bankruptcy courts don’t have the authority to accept such deals if not all the parties agreed. Purdue has appealed that ruling but also returned to mediation with the holdout attorneys general.

Last month, Chapman said that a “supermajority” of the nine were on board with a new plan that upped the Sacklers’ contribution to $5.5 billion to $6 billion and gave the holdout states control of some of the additional funds. It appeared that the $750 million to be awarded to victims of the crisis and their survivors would be unchanged.

Chapman did not specify which attorney general or group of them continued to dissent.

A group of 45 parents whose children died of opioid overdoses wrote a letter last week to the nine attorneys general who were challenging the settlement asking for them to say publicly where they stand on it now. The Associated Press obtained a copy of the letter.

The parents, all residents of states where the attorneys general were previously holding out, said that if the deal falls apart, it could mean there are no other funds earmarked for victims of the crisis. Other opioid settlements, including the $26 billion worth of deals finalized last week involving drugmaker Johnson & Johnson and distribution companies AmerisourceBergen, Cardinal Health and McKesson, do not have any provision for payments to victims.

“Please don’t prolong this painful chapter for us and let’s begin the work of compensating the victims and saving lives,” the parents said in the letter.

Suzanne Domagala, of Millville, Delaware, just wants to see the Sacklers pay as much as possible, saying that giving them immunity from further lawsuits seems outrageous.

Her son, Zach, a Marine Corps reservist, became addicted after injuring his shoulder during boot camp. When he died in 2017, she said she didn’t have the money to bury him and it took a few years before she could afford a headstone.

“That’s why when you’re looking at the costs of these things, money is such a trivial thing, but it’s the only way to exact any justice,” she said.

President Joe Biden called on Republicans and Democrats during his State of the Union address Tuesday to work together on ending the epidemic, underscoring how it continues to be a nightmare for so many.

“If you’re suffering from addiction, know you are not alone,” he said.

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Mulvihill reported from Cherry Hill, New Jersey, and Seewer from Toledo, Ohio.

Ex-Head Of Purdue Denies Responsibility For Opioid Crisis

The former president and board chair of Purdue Pharma told a court Wednesday that he, his family and the company are not responsible for the opioid crisis in the United States.

Richard Sackler, a member of the family who owns the company, was asked whether each bears responsibility during a federal bankruptcy hearing in White Plains, New York, over whether a judge should accept the OxyContin maker’s plan to settle thousands of lawsuits.

For each, he gave a one-word answer: “No.”

Richard Sackler’s denial of responsibility for the opioid crisis comes a day after another Sackler family member said the group wouldn’t accept a settlement without guarantees of immunity from further legal action.

The previous words of Richard Sackler, now 76, are at the heart of lawsuits accusing the Stamford, Connecticut-based company of a major role in sparking a nationwide opioid epidemic.

In the 1996 event to launch sales of OxyContin, he told the company’s sales force that there would be “a blizzard of prescriptions that will bury the competition.”

Five years later, as it was apparent that the powerful prescription pain drug was being misused in some cases, he said in an email that Purdue would have to “hammer on the abusers in every way possible,” describing them as “the culprits and the problem.”

For those reasons, the activists crusading against companies involved in selling opioids often see Richard Sackler — who was president of the company from 1999 to 2003, chair of its board from 2004 through 2007, and a board member from 1990 until 2018 — as a prime villain.

He has not appeared in public forums in recent years outside video of a deposition he gave in a lawsuit in 2015.

On a hearing conducted by videoconference on Wednesday, Sackler, now 76, said he had laryngitis, and his voice was sometimes soft.

In response to more than three hours of questions, mostly from Maryland Assistant Attorney General Brian Edmunds, his most common answer was, “I don’t recall.”

Sackler, whose father was one of three brothers who nearly 70 years ago bought the company that later became Purdue Pharma, didn’t recall emails he wrote a decade or more ago; whether Purdue’s board approved certain sales strategies; whether a company owned by Sackler family members sold opioids in Argentina; or whether he paid any of his own money as part of a settlement with Oklahoma to which the Sackler family contributed $75 million.

Often, he answered questions with more questions, asking for precision.

When Edmunds asked him if he knew how many people in the U.S. had died from using opioids, Sackler asked him to specify over which time period.

Edmunds did: 2005 to 2017.

“I don’t know,” Sackler said. He said that he had looked at some data on deaths in the past, though.

(The U.S. Centers for Disease Control has tallied more than 500,000 deaths in the U.S. to opioid overdose, including both prescription drugs and illicit ones such as heroin and illegally produced fentanyl, since 2000.)

At another point, Edmunds asked whether he ever had conversations with sales managers.

“Can you define what you mean by sales managers?” Sackler asked.

Edmunds did. Then Sackler said he didn’t recall any such conversations.

Edmunds asked about a disagreement over company sales targets at one point. Sackler corrected him.

“You used the word dispute,” he said. “It wasn’t a dispute. It was a difference of opinion.”

Sackler’s testimony came a day after his son, David Sackler, testified.

The younger Sackler, who also served on Purdue’s board, reiterated something that has long been the family’s position: They will agree to their part of the plan to restructure Purdue only if family members receive protection from lawsuits over opioids and other Purdue action.

If those provisions do not stay in the deal, David Sackler said, the family would instead face lawsuits. “I believe we would litigate the claims to their final outcome,” he said.

On Wednesday, Richard Sackler said the family would not agree if states that oppose the deal were not bound by it and allowed to move ahead with lawsuits against the company and family members.

Under the proposed settlement, members of the Sackler family would give up ownership of Purdue and contribute $4.5 billion over time in cash and control of charitable funds. Most of the money, along with Purdue’s future profits, would be used to abate the opioid crisis. Some would go to individual victims and their families.

U.S. Bankruptcy Court Judge Robert Drain said Wednesday that he expected testimony to be completed Thursday, final arguments to begin on Monday and a decision later next week.

West Virginia Holds Out In Purdue Settlement

A majority of states involved in Purdue Pharma’s bankruptcy case are ready to settle. West Virginia is not.

Attorney General Patrick Morrisey said Tuesday he doesn’t agree with the settlement formula, which would allocate funds largely based on population. He said West Virginia needs a bigger piece of the pie, since it was hit so hard by the opioid epidemic.

“Any such allocation formula fails to recognize the disproportionate harm caused by opioids in our state,” he said. “That is not acceptable. We are going to keep fighting that.”

Morrisey said he will argue this point before a bankruptcy court on Aug. 9 in New York.

The Sackler family, who founded Purdue Pharma, has put up $4.5 billion to resolve thousands of lawsuits alleging the drug company fueled the opioid crisis in communities across the U.S. The money would be dispersed over a decade.

Amid these lawsuits, Purdue Pharma filed for bankruptcy. Those suing the drug manufacturer need to sign off on the company’s bankruptcy plan before the Sacklers can give up ownership of the company.

The settlement plan would shield the Sacklers from further opioid litigation.

For 20 Years, Purdue Pharma Has Kept OxyContin Records Sealed In A W.Va. Courthouse. Now, There’s A Push To Open Them.

In three weeks, a West Virginia judge will take up a request to unseal court documents that include details about OxyContin-maker Purdue Pharma’s deceptive sales practices.

This story was originally published by Mountain State Spotlight. For more stories from Mountain State Spotlight, visit www.mountainstatespotlight.org.

The contents of the entire court file have remained secret for two decades.

Now, HBO, The Washington Post and a documentary film production company are asking Putnam County Circuit Judge Philip Stowers to unseal court records from a 2001 class-action lawsuit that accused Purdue Pharma of failing to supervise the use of the prescription painkiller OxyContin. The lawsuit was settled in 2007, but the terms of the deal weren’t disclosed.

Near the start of the litigation, the two sides agreed to a “protective order” that would allow Purdue Pharma to keep the court records under wraps.

HBO, the Post and PK Films — represented by West Virginia University law professor Pat McGinley and Charleston attorney Chris Smith — argued that “the public interest in disclosure of Purdue’s aggressive and unlawful opioid marketing practices substantially outweighs continuing secrecy.”

“Concealment of its unlawful practices allowed Purdue’s profits to soar to billions of dollars, while the opioid epidemic took thousands of American lives and addicted hundreds of thousands,” McGinley told the judge in the motion.

McGinley previously worked with the Charleston Gazette-Mail, HD Media and a Washington Post lawyer to force disclosure of a massive database of pain pill shipments to pharmacies across America.

Stowers has scheduled a hearing for Jan. 29.

The 2001 lawsuit alleged Purdue “encouraged widespread use of OxyContin for off-label uses and doses, while misleading [patients] about the safety and effectiveness of the drug,” according to a summary of the case after it briefly was transferred to federal court.

The opioid manufacturer also allegedly enlisted doctors and others “to mislead [patients] to purchase and take the drug, while withholding information about its dangers, particularly its addictiveness,” the summary stated.

West Virginia has the highest drug overdose death rate in the nation, and overdoses have spiked during the COVID-19 pandemic.

HBO and the Post are seeking documents, videos and audio recordings that Purdue Pharma has kept under seal in the Putnam case from beginning to end.

In 2019, Purdue filed for bankruptcy in New York, just days after agreeing to a tentative settlement with states, counties, cities and towns that had filed lawsuits against the drugmaker.

In November, a federal judge approved an $8.3 billion settlement proposal. The agreement, which hasn’t been finalized, mandates Purdue can no longer operate as a privately-owned profit-making business.

Later that month, the company pleaded guilty to three felonies, admitting it sold OxyContin to health care providers, while knowing the powerful — and potentially deadly — painkiller was being diverted to drug abusers. Members of the wealthy Sackler family, owners of Purdue, agreed to pay a $250 million fine to the federal government and divest from the company. The Sacklers haven’t faced criminal charges.

McGinley argued that Purdue Pharma’s secrecy deal in Putnam County is meaningless because the company pleaded guilty to criminal charges and the firm is being shut down and restructured as a “public benefit trust” that would use any profits to provide free or low-cost opioid addiction treatment and overdose-reversing drugs.

In recent years, judges have unsealed court records that Purdue had fought to shield from the public.

In 2016, a McDowell County judge opened court documents in a lawsuit that former West Virginia Attorney General Darrell McGraw had filed against Purdue Pharma some 15 years earlier. The company agreed to pay the state $10 million to settle the case in 2004. A Boston-based media outlet had asked the judge to release the files.

Despite opposition by Purdue, judges in Massachusetts and Kentucky also have unsealed court records that the opioid manufacturer had tried to keep hidden.

“These court-sanctioned protective orders shielded Purdue’s unlawful conduct, allowing it to continue marketing its opioid medications for almost 20 years,” McGinley wrote in the Dec. 17 motion. “The records…Purdue designated long ago as confidential competitive business records have no current or future relevance.”

In a statement emailed to Mountain State Spotlight, Purdue Pharma said it has already made available in bankruptcy court “tens of millions of documents, including thousands of privileged documents relating to its shareholders, further displaying the company’s cooperation and transparency in these proceedings.”

The company added: “We continue to act with this extraordinary level of transparency because our ultimate goal is to achieve a global settlement that would deliver more than $10 billion in value, including 100% of Purdue’s assets, to address the opioid crisis. Our proposed settlement structure would provide needed funds, as well as millions of doses of lifesaving opioid addiction treatment and overdose reversal medicines, to states, local communities and tribes to help abate the opioid crisis.”