Purdue Pharma judge overrides DOJ to approve $6 billion opioid settlement – Reuters.com | Vette Leader

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March 9 (Reuters) – The judge overseeing Purdue Pharma’s bankruptcy on Wednesday approved a $6 billion opioid settlement funded by owners of the Sackler family, overcoming objections from the Justice Department and 20 states who opposed the deal were overruled.

As part of the settlement, the Sacklers would pay between $5.5 billion and $6 billion to a trust that will be used to settle claims from states, addiction victims, hospitals and others who have argued that Purdue pain reliever OxyContin was a key role in the US opioid epidemic.

The revised settlement has yet to be written into a new reorganization plan before final approval by the bankruptcy court.

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Members of the Sackler family have denied wrongdoing. They said in a statement last week that they “sincerely regret” that OxyContin “unexpectedly became part of an opioid crisis.”

According to the US Centers for Disease Control and Prevention, there have been nearly 500,000 opioid overdose deaths in the US over the past two decades.

US bankruptcy judge Robert Drain in White Plains, New York, called the settlement an “extraordinary” improvement over previous offers by the Sacklers and condemned the US Department of Justice as “reprehensible” for its continued opposition.

The Department of Justice’s office of the US Trustee, which oversees bankruptcy administration, said the bankruptcy court does not have the authority to approve the settlement because an appellate court must first decide whether the Sacklers can receive broad immunity in exchange for payment.

“Why are we here anyway?” Justice Department attorney Nan Eitel asked at the hearing, arguing that the deal was premature.

Drain repeatedly raised his voice to Eitel, saying that the Justice Department appeared uninterested in improving the deal and was only interested in “finding ways to kill it.”

“I find that reprehensible,” Drain said.

A lawyer for Purdue’s official creditors’ committee said the Justice Department appears willing to risk a multi-billion dollar settlement to back its argument that bankruptcy courts should not use their powers to protect non-bankrupt companies like the Sacklers.

A Justice Department spokesman said after the hearing that the agency stands behind her attorney and her arguments and will pursue her appeal.

The Sacklers’ payment is contingent on their facing opioid lawsuits. However, a US District Judge ruled in December that the protections they sought did not fall within the jurisdiction of the bankruptcy court. Purdue is appealing this decision to the US 2nd Circuit Court of Appeals.

The new agreement replaces an earlier $4.3 billion settlement that was overturned after nine attorneys general and others argued the Sacklers shouldn’t be given such comprehensive legal protection.

After agreeing to the previous deal, 20 states rejected the new settlement because it includes a $277 million payment exclusively to states that negotiated the $6 billion deal. Some have said it would unfairly reduce the percentage of funds devoted to tackling the opioid crisis in their own states.

States still have time to negotiate, Drain said, and may be forced to accept terms they don’t like rather than initiating the dog eat dog process that would ensue if the deal fails.

Purdue said last week the settlement would provide additional funds for opioid control programs, overdose relief medication and for victims, while putting the company on track to resolve its bankruptcy case “on an accelerated schedule.”

On Thursday, victims of the opioid epidemic will address members of the Sackler family in a hearing chaired by Drain. The hearing is being conducted by Zoom due to COVID-19 restrictions and the Sacklers are unable to respond.

Purdue filed for bankruptcy in 2019 after it and members of the Sackler family were accused of starting the opioid epidemic by misleadingly marketing OxyContin, a highly addictive pain reliever.

Purdue pleaded guilty to charges of misbranding and fraud related to its OxyContin marketing in 2007 and 2020.

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reporting by Dietrich Knauth and Tom Hals; Edited by Noeleen Walder, Bill Berkrot and Aurora Ellis

Our standards: The Thomson Reuters Trust Principles.

Tom Hals

Thomson Reuters

Award-winning reporter, covering US courts and law from the COVID-19 pandemic to high-profile criminal cases and Wall Street’s biggest failures, with over two decades of international financial news experience in Asia and Europe.

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