Purdue bankruptcy case before the Supreme Court: opioid maker.
recovery from the opioid epidemic by the Sackler family.
At the same time, the controversy also raises broader questions about when and how acceptable it is to resolve massive civil cases - such as airplane malfunctions or problems with defective products - through the bankruptcy system.
Pharma, the OxyContin opioid deal, was first marketed in 1996. The company ran an aggressive marketing campaign selling it as an option for relieving a variety of pain - from cancer to long-term sports injuries - and made about $35 billion. The company claimed that because the drug contained a slow-release shell of the active ingredient, it was less prone to abuse. However, OxyContin''has proven to be extremely addictive and has caused a major public health crisis. Between 1999 and 2019, more than a quarter of a million people died from overdoses of prescription analgesic drugs, including OxyContin. Opioids have become the leading cause of accidental death in the United States, surpassing automobile accidents and gunshots.
Purdue Pharma has twice pleaded guilty in federal criminal cases related to the marketing of OxyContin. Along with members of the Sackler family, some of whom were heavily involved in the development and marketing of the company's drugs, they are also defendants in thousands of civil lawsuits alleging deceptive advertising of the drug.
Faced with these civil lawsuits, Purdue Pharma''filed for bankruptcy in 2019. In October 2019, a bankruptcy court in New York stayed the legal cases against the company and members of the Sackler family. In September 2021, the bankruptcy court approved a restructuring plan that would transform the company into a nonprofit organization focused on public health issues related to the opioid epidemic, including funding the development of drug sprays and medications to reverse the diversion of overdosed opioids. Sackler family members, who received $11 billion in pre-tax payments from Purdue Pharma between 2008 and 2016, agreed to contribute up to $6 billion to the plan. In return, the plan contains provisions protecting Sackler family members from''civil liability in connection with the opioid crisis.
Bankruptcy Judge Robert Drain called the deal a "bitter result," but he noted the costs and risks of continued litigation and opted to let the appeals court's decision stand. In December 2021, a federal district court in New York reversed the bankruptcy court's decision to approve the plan.
But U.S. Judicial Custodian William Harrington, a Justice Department official appointed by the attorney general to oversee bankruptcies in (among other places) New York City, objected to the plan provisions exempting the Sackler family from civil liability. After an appeals court refused to stay his decision, Harrington appealed to the Supreme Court, which agreed to stay the plan and take a stand.
There are two main issues before the Supreme Court. The first is whether Harrington and the federal government have a''s right to challenge the approval of the plan at all. Purdue Pharma and the Official Committee of Unsecured Creditors, a committee appointed by the judge along with the proceeds excluded from Purdue Pharma's estate, insist they are not. The trust, Purdue Pharma writes, has "no specific interest in this bankruptcy" and therefore "there are no consequences if it destroys the plan." Purdue Pharma insists that the trust is merely an "outsider" that has no right to "destroy a plan that the real victims created and maintain," so the judges should dismiss the case without addressing its merits, leaving the 2nd Circuit's decision in place. Both the trust and a group of Canadian creditors, including Canadian cities and the original peoples' tribes, object that it does not have''values whether the U.S. trust has standing to challenge the plan because Canadian creditors have such standing.
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