Justice Department condemns Purdue Pharma bankruptcy plan: NPR
Toby Talbot / AP
The US Department of Justice condemns a proposed bankruptcy settlement for Purdue Pharma, the maker of Oxycontin. In court records Monday, two divisions of the DOJ described the plan as fatally flawed.
The Department of Justice’s US Trustee program, which serves as the national watchdog over the federal bankruptcy system, has declared the deal unconstitutional and illegal.
In a separate brief, the United States Attorney’s Office for the Southern District of New York said the plan violated the “constitutional right to due process” for people with potential opioid claims.
Under a proposed settlement negotiated over the past year, members of the Sackler family who own the business would contribute an estimated $ 4.3 billion of their private fortunes to help compensate individuals and communities harmed by the Oxycontin.
In return, the Sacklers and a long list of their associates who did not file for bankruptcy would be granted so-called “third party releases,” protecting them from future opioid lawsuits.
This provision has been very controversial, but in recent weeks a growing number of states have signed on to the plan.
In his objection, however, US trustee William Harrington described the disclaimers as “inadmissible”.
He accused the Sacklers and their associates of using the bankruptcy system to avoid liability for “alleged wrongdoing by concocting and perpetuating for profit one of the most serious public health crises ever in the United States. “.
The Sacklers, who they say have earned more than $ 10 billion from opioid sales, have said repeatedly that they have done nothing wrong and are acting ethically.
Harrington noted that under the settlement plan, many parties with immunity from opioid lawsuits would not have to pay money to indemnify Purdue Pharma’s debtors.
“Victims unwittingly have to ‘be content’ with what [bankruptcy plan] disclosure statement estimates can be as low as $ 3,500 in compensation for a life turned upside down from opioids because the Sackler family says so, ”Harrington concluded.
In her separate filing, Acting U.S. lawyer Audrey Strauss argued that the bankruptcy plan falsely denies people with potential opioid claims “a sufficient opportunity to be heard”, thereby denying them litigation. regular.
Both objections were filed in federal bankruptcy court, Judge Robert Drain, which is expected to broadly approve the Purdue Pharma settlement in a confirmation hearing scheduled for August 9.
During court hearings, Drain repeatedly described the settlement as an opportunity to avoid years of costly and uncertain litigation.
In an emailed statement to NPR, a spokesperson for Purdue Pharma said the reorganization plan would “transfer billions of dollars of value into trusts for the benefit of the American people.”
The company also noted that third party releases “have long been permitted by law in most jurisdictions.”
A spokesperson for a branch of the Sackler family declined to comment.
The aggressive marketing of Oxycontin by Purdue Pharma that began in the late 1990s is widely seen as a trigger for the deadly opioid epidemic in the country, which has killed more than half a million Americans. .
The company has twice pleaded guilty to federal criminal charges related to its marketing practices.
However, the members of the Sackler family who own the company and have served on its board of directors have never faced criminal charges and should not admit wrongdoing in connection with the bankruptcy plan. current.
Settlement talks with other companies nearing completion
Negotiators are close to a final opioid deal with Johnson & Johnson, McKesson, Cardinal Health and AmerisourceBergen, sources in two state attorney general offices told NPR.
The deal is expected to include payments of around $ 26 billion – a change for communities scrambling to fund addiction care after overdoses killed more than 93,000 people last year.
The plan would pay for drug treatment programs and other social services.
Johnson & Johnson sent a statement they released before saying “there continues to be progress towards finalizing this deal.”