One of the major issues in the settlement that state and local governments have reached with Purdue Pharmaceutical in the opioid crisis lawsuits is how the Sackler family will be treated. Purdue is a privately held company owned by the Sackler family. The Sacklers have amassed a fortune of billions of dollars in part from the sale of opioids which they are now having to answer in court. One of the major sticking points that threatens to derail the settlement agreement that is reached is how much of their fortune the Sacklers can keep after the agreement is executed as the Sacklers are trying to hold firm to keeping as much of their money as possible.
Purdue is alleged to have fueled the opioid crisis through its sales practices. The company encouraged the sales of its highly addictive and powerful drug OxyContin. Purdue flooded the market with these dangerous pills, saturating numerous area to the point where there were thousands of pills delivered for each and every single resident. In the process, the Sacklers became one of America’s richest families.
As a result, thousands of governments have sued Purdue seeking reimbursement for the costs that they have borne due to the opioid crisis. Purdue settled with one government, but facing thousands of lawsuits, the company has looked for an exit strategy. In this settlement agreement, they largely exit the opioids business with a payment to the states and a prepackaged bankruptcy.
The opioid settlements have been controversial and opposition to the settlement has largely broken down on political lines. At least 20 states have indicated that they will not enter into the settlement agreement reached by the majority of the state. The states that are rejecting the deal are doing so because they believe that the settlement lets the Sacklers off easy.
In addition to surrendering the assets of Purdue and going through Chapter 11 bankruptcy, the settlement requires the Sackler family to pay $3 billion of their own money. The settlement agreement gives them seven years in total to pay the money to the governments. While on the surface, this seems like a large amount, this is not a majority of the family’s money. The Sackler family is reported to be worth roughly $13 billion when the two parts of the family are combined. Nearly all of that net worth comes from the sales of OxyContin. The number has grown further as the Sackler family is alleged to have taken at least $1 billion out of the company and moved it to their own accounts prior to entering into the settlement.
There are numerous lawsuits being contemplated by jurisdictions with the aim of taking more of the Sackler family fortune away from them. There is the perception that the family is literally getting away with murder due to the tens of thousands of people who have died from the improper prescription and sales of these medicines. In the view of these states, the settlement should take more of the Sackler’s personal money since they are escaping their company with billions of dollars in assets.
However, the Sacklers have been rejecting calls to require them to give up more of their money. There has been talk that if states who have not signed the settlement agreement try to go after the Sacklers for their money, that the family will walk away from the agreement. However, there is still controversy that this settlement is overly generous to the family. Many have viewed these lawsuits as a way to hold the Sacklers accountable for their actions, but the perception is that they are escaping responsibility and paying little personal price.
It is primarily states with Democratic attorneys general who are objecting to the deal. One of the controversial provisions is that the $3 billion can come from either cash or the sale of a business. These attorneys general say that the Sacklers have the option of satisfying the terms of the settlement without even cutting a check, a deal that they decry as overly generous for the family. Some of settlement may even be funded by future opioid sales and not come from the Sackler’s own money since the Sacklers may use the proceeds from the sale of an international division to meet their obligations. In other words, the settlement will be funded by selling more opioids at the expense of the money coming from the Sacklers’ own account.
Of course, the Sacklers’ motivation is to walk away from their company with as much of their money as possible. As a result, the states rejecting the settlement have started filing personal lawsuits against the Sacklers.
Much of the outcome will depend on the rulings of the bankruptcy court judge, who now controls the company’s fate. This judge can reject the settlement agreement as being too generous to the Sacklers or the judge can demand changes to the agreement. There is an expectation that the current form of this agreement will likely not be the final executed form once the bankruptcy court judge has their say.