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OAKLAND – California Attorney General Rob Bonta today announced a $6 billion settlement with Purdue Pharma and the Sackler family over their role in the opioid epidemic. As part of the agreement, the Sackler family must allow removal of the Sackler name from buildings and institutions. The settlement ensures that if Purdue’s reorganization plan is confirmed, the Sacklers will pay up to an additional $1.675 billion to help abate the opioid crisis nationwide, bringing total plan relief to as much as $6 billion. If this plan is ultimately approved, California is estimated to receive approximately $486 million from today’s settlement to fund opioid addiction treatment and prevention.
As part of the settlement, Purdue’s plan no longer provides the Sacklers with nonconsensual releases from state law enforcement claims. However, the plan still provides nonconsensual releases from private claims against Sackler family members by individuals directly harmed by their misconduct. This is not consistent with the law, and the Attorney General urges the United States Court of Appeals for the Second Circuit to block plan confirmation until it is addressed.
“No settlement can reverse the devastating harm Purdue and the Sacklers have caused this country through their illegal practices that led to the opioid epidemic,” said Attorney General Bonta. “Nearly one million lives have been lost – a number that continues to rise – and more continue to struggle with addiction. This is a crisis that calls not only for accountability from the companies that have caused it, but real relief for the communities working to control it. This isn’t just a California problem, it’s a national problem that has called on us to step up and help provide a national solution. Today’s announcement also underscores a key injustice in our nation’s bankruptcy system. This settlement is possible only because we fought confirmation of the Purdue bankruptcy plan, which would have given the Sackler’s protection from civil liability through non-consensual third-party releases. Once we threatened that liability shield, the Sacklers agreed to pay an additional billion dollars, underscoring the harm nonconsensual third-party releases can cause, and the uneven playing field they can provide the wealthy.”
If approved, today’s 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 announced today 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.
In addition to today’s up-to-$6 billion settlement with Purdue and the Sackler family, the Attorney General’s Office has helped secure up to $32.5 billion in relief nationwide, including a $26 billion settlement with opioid manufacturer Johnson & Johnson and distributors Cardinal, McKesson, and AmerisourceBergen; as well as a $573 million settlement with McKinsey & Company. These settlements will bring up to $2.6 billion to California communities.
Highlights from today’s settlement include:
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.
Today’s settlement is subject to court approval and creation of final settlement documentation.
A copy of the mediator’s report is available here. A copy of the motion for approval which includes the settlement term sheet is available here.