Opioid Crisis and Corporate Accountability: Purdue's Settlement in the Spotlight

The U.S. Supreme Court is reviewing a contentious bankruptcy settlement involving Purdue Pharma, the maker of OxyContin, and its owners, the Sackler family. 

In 2019, Purdue Pharma filed for Chapter 11 bankruptcy as a response to the numerous lawsuits claiming that its opioid product, OxyContin, played a pivotal role in the opioid crisis, which led to over half a million overdose deaths in the U.S. in two decades. 

This settlement, if upheld, could grant the Sacklers legal immunity from future lawsuits in exchange for a substantial financial contribution to resolve existing claims, Reuters noted. 

This move has sparked a debate on using bankruptcy law to shield wealthy individuals from mass-tort liabilities.

Initially approved by a U.S. bankruptcy judge in 2021, the proposed settlement is estimated to provide about $10 billion in value to various creditors, including governments, hospitals, and individual victims.

The Biden administration, along with eight states, initially challenged this settlement. The states withdrew their objections after the Sacklers increased their contribution to the settlement fund. 

However, the administration persists in its opposition, contending that the deal is an abuse of bankruptcy protections and alleging that the Sacklers withdrew $11 billion from Purdue before agreeing to the $6 billion settlement.

The 2nd U.S. Circuit Court of Appeals upheld the settlement earlier, reasoning that federal bankruptcy law can extend legal protections to non-bankrupt entities like the Sacklers under extraordinary circumstances. 

The court emphasized that allowing lawsuits against the Sacklers would jeopardize Purdue's bankruptcy resolution efforts. However, outside the court, protests erupted, with demonstrators condemning the Sacklers and highlighting the devastating impact of the opioid crisis.

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