Day – The Sacklers should pay dearly, but will they?
By rejecting the bankruptcy settlement of OxyContin maker Purdue Pharma, U.S. District Judge Colleen McMahon has opened up the possibility that the Sackler family could be held financially responsible for their drug sales schemes. Unfortunately, this could lead to another result as well. Purdue Pharma could be dissolved via bankruptcy, leaving many plaintiffs largely compensated, while the Sacklers remain out of reach.
Connecticut and Attorney General William Tong were among many plaintiffs who opposed the settlement which was supported by the majority of plaintiffs in the very complex class action lawsuit. The evidence is overwhelming that to increase billions of dollars in sales, Purdue Pharma pursued a strategy of lying about the addictive nature of its Oxycontin product, marketed it to physicians as safe for their patients, and funded studies and organizations to promote the disinformation campaign.
When drug patients could no longer get prescriptions, they turned to black market sources for them or to cheaper, easier to obtain heroin and, often unknowingly, lethal fentanyl.
Purdue Pharma filed for bankruptcy protection in 2019 as it faced thousands of lawsuits seeking compensation for the suffering its plans had caused, but only after the Sacklers withdrew billions of dollars. dollars from the company, based in Stamford.
In September, Judge Robert Drain, a White Plains, NY bankruptcy court judge, approved a settlement to dissolve Purdue Pharma and rename it to a new company called Knoa Pharma. Profits from the new company would go to states and communities to fund opioid treatment and prevention efforts. The Sacklers agreed to relinquish the property and contribute $ 4.5 billion to the treatment and prevention program, bringing total compensation to around $ 10 billion.
What made the settlement agreement so controversial, and led many states, including Connecticut, to oppose it, was a provision that protected the Sacklers from all current and future claims related to Purdue’s opioids, although ‘no member of the family has personally filed for bankruptcy.
Tong celebrated Justice McMahon’s decision to dismiss the settlement on appeal.
“It is a seismic victory for justice and accountability that will reopen the deeply tainted bankruptcy of Purdue and force the Sackler family to face the pain and devastation it has caused,” Tong said.
As hateful as it was to see the Sacklers being protected, the advantage of the settlement was that it would have made resources available to help the crisis now. It also avoided the uncertainty and delays that will accompany further litigation. McMahon’s decision is now under appeal in an attempt to restore the original deal.
More than 100,000 Americans died of drug overdoses between May 2020 and April 2021 – a new record, according to the Centers for Disease Control and Prevention. An estimated 93,000 of these deaths are due to opioid overdoses. The number of fatalities is three times the number of traffic accidents and twice the number of gun deaths.
Connecticut recorded nearly 1,400 overdose deaths in 2020, a record too.
McMahon’s decision to block the deal was not about good or bad, right or wrong, but the law. The bankruptcy code, she found, does not explicitly give a judge the power to grant such protection to the Sacklers. It is a legal question that the courts of appeal must resolve. Better yet, Congress should pass a law prohibiting business owners from having such protection unless they are parties to bankruptcy.
If fairness prevails over legal maneuvers, the Sacklers will be stripped of their fortunes. Documents presented to court show members of the Sackler family, watching the company under legal attack, transferred $ 10.4 billion from Purdue Pharma in the decade before the bankruptcy, most of it transferred to offshore accounts and trusts inaccessible to US authorities. A congressional review estimated family wealth at $ 11 billion.
We wish Attorney General Tong, and others who believe they can achieve a fairer outcome in bankruptcy proceedings, the best of success. But, make no mistake, this is a bet with no guarantee that it will pay off for those who need the resources that the settlement would have provided.
The Day’s Editorial Board meets regularly with political, business and community leaders and meets weekly to formulate editorial perspectives. It is made up of President and Editor Tim Dwyer, Editor-in-Chief Izaskun E. Larrañeta, Editor Erica Moser and the retired Associate Editor. Lisa McGinley. However, only the editor and the editor of the editorial page are responsible for the preparation of editorial notices. The board operates independently of the Day newsroom.