The US government has asked the Supreme Court to block Purdue Pharma from proceeding with a bankruptcy settlement that would protect its billionaire owners from lawsuits linked to the US opioid crisis.
Opioids are commonly used to treat pain and include medicines such as morphine, fentanyl and tramadol. However, due to their pharmacological effects, the drugs can cause breathing difficulties and opioid overdose can lead to death.
The number of opioid overdoses has increased in recent years, causing the US Department of Health and Human Services to renew its previously declared public health emergency in December 2022.
Purdue, which filed for bankruptcy in 2019 amid thousands of lawsuits, has been blamed for fuelling the crisis with the promotion and marketing of OxyContin (oxycodone).
The US Court of Appeals for the Second Circuit approved the company’s bankruptcy plan in May this year, ruling that its owners, the Sackler family, would receive full immunity to civil suits in exchange for a $6bn contribution to the broader settlement.
However, the US Department of Justice bankruptcy watchdog, the Office of the US Trustee, is now arguing that Purdue should not be allowed to move forward with its restructuring before the Supreme Court has a chance to weigh in on legal protections for non-bankrupt entities.
The US Trustee said the settlement is an abuse of bankruptcy protections as the Sacklers are not in “financial distress” and noted that the family withdrew $11bn from Purdue before agreeing to the $6bn contribution.
The Supreme Court has set a deadline of 4 August for Purdue to respond to the US Trustee’s petition.
If accepted, Purdue’s multi-year settlement fund would go towards rehabilitation programmes and other opioid addiction treatments. Roughly $750m would also be distributed to individual victims of the opioid crisis and their families.
The settlement would also see the Sackler family give up ownership of the company, which would be rebranded as Knoa, and send its profits to a fund to help treat addiction.
Steve Miller, chairman of Purdue’s board of directors, has previously said: “Our focus going forward is to emerge from bankruptcy and deliver billions of dollars of value for victim compensation, opioid crisis abatement, and overdose rescue medicines.”
He continued: “Our creditors understand the plan is the best option to provide assistance to those who need it most, the most fair and expeditious way to resolve the litigation, and the only way to deliver billions of dollars in value specifically to fund opioid crisis abatement efforts.”