Supreme Court Halts Purdue Pharma's $6B Settlement: Sackler Family's Shield From Opioid Lawsuits Challenged

On Thursday, the Supreme Court temporarily blocked a $6-billion bankruptcy settlement by Purdue Pharma, the maker of the opioid OxyContin, that would shield the Sackler family from civil lawsuits related to the opioid crisis. The court also announced that it will hear a challenge to the settlement by a U.S. bankruptcy trustee.

The directive from the court requires the parties involved to submit legal documents addressing the issue of whether a Chapter 11 reorganization can be sanctioned by bankruptcy courts, allowing non-debtor third parties to be released from claims by non-debtors, even if the claimants have not given their consent, as reported by CNBC.

The Opioid Settlement Background: In May, Purdue Pharma arrived at a settlement with numerous U.S. states and local governments that could ultimately be worth over $10 billion. As part of the agreement, the Sackler family, who owns the Stamford, Connecticut company, consented to give up control.

The Supreme Court will hear the case by the end of the year, and the temporary halt on the settlement will be removed after the court delivers its ruling.

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Previous Developments: A federal appeals court in New York had previously cleared the way for a bankruptcy deal that would protect the Sackler family from future lawsuits in exchange for a contribution of up to $6 billion. The Sacklers were expected to personally pay billions of dollars to help fight the ongoing opioid epidemic, a crisis many believe they played a significant role in creating. This decision was met with mixed reactions, with some calling it a "victory" and others expressing disappointment that the Sacklers' liability shield from private claims was not lifted. 

State Opioid Settlements: In a separate development, 15 states had landed on a deal with Purdue Pharma that cleared the way for a $4.5-billion settlement. As part of this deal, the Sackler family agreed to pay an additional $50 million. The settlement also included provisions for Purdue to release millions of documents detailing the company's role in the opioid epidemic. 

Impact And Reactions: The opioid crisis has claimed the lives of more than 564,000 people between 1999 and 2020, with over 106,000 deaths in 2021 alone. The Sackler family's involvement in the crisis has led to high-profile protests and demands for accountability. The Supreme Court's decision to block the settlement and hear the challenge adds a new layer of complexity to the ongoing legal battles surrounding Purdue Pharma and the Sackler family.

Related Stocks and ETFs: The legal challenges surrounding Purdue Pharma and the opioid crisis may have implications for other pharmaceutical companies. Investors may want to keep an eye on stocks like Johnson & Johnson JNJ and Teva Pharmaceutical Industries Ltd. TEVA, both of which have faced legal scrutiny related to opioids.

Related ETFs include the Health Care Select Sector SPDR Fund XLV and the iShares U.S. Pharmaceuticals ETF IHE, which invest in the broader pharmaceutical industry.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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