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The California Attorney General announced a $6 billion settlement with Purdue Pharma and the Sackler family over their role in the opioid epidemic. California is estimated to receive approximately $486 million from the settlement to fund opioid addiction treatment and prevention.

If approved, the settlement will keep intact provisions of the Purdue bankruptcy plan forcing the company to be dissolved or sold by 2024 and banning the Sacklers from the opioid business. The initial bankruptcy plan required Purdue and the Sacklers to make public over 30 million documents. The settlement forces disclosure of additional records previously withheld as privileged legal advice.

Neither this agreement nor the prior bankruptcy plan releases the Sacklers from any potential future criminal liability.

Highlights from the proposed settlement include:

– – The Sackler family must pay up to $6 billion to the bankruptcy estate – $1.7 billion above the initial bankruptcy plan. The payments will be spread over 18 years, with larger payments frontloaded so states receive more money, sooner as compared to the previous bankruptcy plan.
– – If it is confirmed, the enhanced bankruptcy plan will provide California with nearly half a billion dollars that will be used to fund opioid addiction treatment and prevention.
– – The Sackler family must allow institutions to remove the family name from buildings, scholarships, and fellowships.  
– – Responding to state requests, mediator Judge Shelley C. Chapman urged the Bankruptcy Court to require members of the Sackler family to participate in a public hearing where victims and their survivors would be given an opportunity to directly address the family.
– – Purdue must make public additional documents previously withheld as privileged legal advice, including legal advice regarding advocacy before Congress, the promotion, sale, and distribution of Purdue opioids, structure of the Purdue Compliance Department and its monitoring and abuse deterrence systems, and documents regarding recommendations from McKinsey & Company, Razorfish, and Publicis related to the sale and marketing of opioids. These documents will be held in a repository co-hosted by the University of California San Francisco, which also hosts an archive of tobacco industry documents.
– – States reserve the right to object to nonconsensual third-party releases, including advising the court that agreement to the settlement does not indicate belief that those releases that remain in the Purdue bankruptcy plan are legal. The settlement also preserves the right of the states to file amicus briefs arguing against nonconsensual third-party releases if the case makes it to the U.S. Supreme Court.

The Attorney General’s Office filed a lawsuit against Purdue and members of the Sackler family in 2019, for unlawful practices in the promotion and sale of opioids. The lawsuit alleged that Purdue’s misleading marketing and sales practices, which the Sackler family approved, played a major role in contributing to the nationwide opioid crisis. The deceptive sales and marketing practices, which misled healthcare providers and patients about the addictive nature of opioids, contributed to an over-supply of opioids in the market and helped create the crisis the country faces today.

Purdue Pharma filed for bankruptcy in September 2019. In 2021, the bankruptcy court approved an inadequate Purdue bankruptcy plan that unlawfully blocked states like California from pursuing claims against the family, even though the Sackler family members had never themselves declared bankruptcy. The plan required the Sackler family to pay $4.3 billion over nine years to the states, municipalities, and others. California, Connecticut, Delaware, Maryland, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia objected to and ultimately appealed the plan. The United States Trustee, an arm of the U.S. Department of Justice, also appealed.  

In December 2021, the U.S. District Court vacated the Purdue bankruptcy order, agreeing with the non-consenting states that the bankruptcy court lacked authority to force states to release their claims against the Sackler family. In the wake of this victory by the states, the Sacklers have agreed to pay more than $1 billion to obtain releases from the ten states that objected to the bankruptcy plan. Purdue has appealed to the United States Court of Appeals for the Second Circuit, and that appeal will proceed.