The manufacturer of OxyContin had sought an agreement that excluded the Sackler family from future legal disputes.
A federal judge in the United States has dismissed a comprehensive bankruptcy settlement of OxyContin maker Purdue Pharma, which sought to resolve thousands of lawsuits related to the company’s role in the opioid epidemic.
Federal Judge Colleen McMahon ruled Thursday that an important provision of the settlement – that members of the Sackler family, who own the company, could not face separate lawsuits – was not legal.
In her ruling, she said that because the bankruptcy code “does not give such authority, the order confirming the plan must be evacuated”.
Forty-three states had previously approved the plan, but the Department of Justice and a handful of other states questioned it. They argued that it denied victims the right to sue the company.
US Attorney General Merrick Garland welcomed Thursday’s ruling.
“The bankruptcy court did not have the power to deny victims of the opioid crisis the right to sue the Sackler family,” he said.
The settlement in question, approved by a judge in September, saw the Sackler family give up ownership of Perdue Pharma and pay $ 4.5 billion to fight the opioid crisis. Under the terms of the transaction, the company is expected to be sold by 2024 and replaced with a new trust-managed entity. His involvement in the sale of opioid products would be restricted.
The company’s profits would go towards combating the ongoing US crisis that has caused more than 500,000 overdose deaths. Under the agreement, the company would also develop new drugs for addiction and overdose and offer them at little or no cost.
In her ruling, Judge McMahon acknowledged that the lifting of the immunity granted to the Sacklers “will almost certainly result in the undoing of a carefully crafted plan that would do many wonderful things, including funding much-needed opioid addiction programs . ”
Meanwhile, Steve Miller, chairman of the Purdue board of directors, said the ruling would “delay and potentially end the ability of creditors, communities and individuals to receive billions worth of billions to help contain the opioid crisis.”
The company has announced that it will appeal the ruling.
Connecticut Attorney General William Tong, who was among a handful of state officials trying to reverse the deal, described the verdict as “a seismic victory for justice and accountability.”
Tong said the ruling will “reopen the deeply flawed Purdue bankruptcy and force the Sackler family to face the pain and devastation they have caused”.
Amid an avalanche of legal battles from individuals and local and state governments, Purdue Pharma also pleaded guilty to three criminal charges last year for its aggressive efforts to sell OxyContin, a highly addictive prescription pain reliever.