US Supreme Court rejects opioid settlement that shields Sackler family

Decision reverses a lower court’s ruling that had upheld plan to give Purdue Pharma’s owners immunity in exchange for paying up to $6bn to settle thousands of lawsuits.

The US Supreme Court has blocked OxyContin maker Purdue Pharma’s bankruptcy settlement, which would have shielded its wealthy Sackler family owners from lawsuits over their role in the deadly opioid epidemic in the United States.

The 5-4 decision reversed a lower court’s ruling that had upheld the plan to give Purdue Pharma’s owners immunity in exchange for paying up to $6bn to settle thousands of lawsuits accusing the company of unlawful misleading marketing of OxyContin, a powerful pain medication introduced in 1996.

The ruling on Thursday represented a victory for US President Joe Biden’s administration, which had challenged the settlement as an abuse of bankruptcy protections meant for debtors in financial distress, not people like the Sacklers, who have not filed for bankruptcy.

Purdue Pharma filed for Chapter 11 bankruptcy in 2019 to address its debts, nearly all of which stemmed from thousands of lawsuits alleging that OxyContin helped kick-start an opioid epidemic that has caused more than half a million US overdose deaths over two decades.

At issue in the case was whether US bankruptcy law lets Purdue Pharma’s restructuring include legal protections for the members of the Sackler family, who have not filed for personal bankruptcy. These so-called “non-debtor releases” originally arose in the context of asbestos litigation, but their use has been expanded by companies looking to use such protections as a bargaining chip.