On Monday, the Supreme Court grappled with a nationwide settlement involving Purdue Pharma, the manufacturer of OxyContin, that would protect the Sackler family, who own the company, from civil lawsuits related to the opioid crisis.
The justices appeared hesitant to dismantle a painstakingly negotiated agreement, yet also expressed concern about potentially rewarding the Sacklers.
The settlement, negotiated with state and local governments and victims, would allocate billions of dollars to combat the opioid epidemic. The Sacklers would contribute up to $6 billion, relinquish ownership of the company, but retain billions more. The company would emerge from bankruptcy as a new entity, with profits directed towards treatment and prevention.
Over the summer, the high court paused the settlement due to objections from the Biden administration. Justice Elena Kagan encapsulated the quandary facing some of the justices. "It seems as though the federal government is standing in the way of that as against the huge, huge, huge majority of claimants," Kagan stated.
However, she later noted that in bankruptcies, protection against lawsuits comes at a cost. "You get a discharge when you put all your assets on the table," she said. "The Sacklers didnt come anywhere close to doing that."
The courtroom was packed for the nearly two-hour-long arguments, its doors draped in black in memory of retired Justice Sandra Day OConnor, who passed away on Friday. Chief Justice John Roberts paid tribute to the first woman to serve on the court, stating, "She changed the world."
Outside the court, a small group of vocal protesters expressed their opposition to the Purdue Pharma agreement. Banners read, "Shame on Sackler" and "No Sackler immunity at any $$."
The justices must determine whether the legal protection bankruptcy offers can extend to individuals like the Sacklers, who have not declared bankruptcy themselves. Lower courts have delivered conflicting rulings on this issue, which also has implications for other significant product liability lawsuits settled through the bankruptcy system.
The US Bankruptcy Trustee, a branch of the Justice Department, argues that bankruptcy law does not allow for the protection of the Sackler family from lawsuits. During the Trump administration, the government supported the settlement.
Justice Department lawyer Curtis Gannon suggested to the court on Monday that negotiations could recommence and potentially lead to a better agreement if the current settlement were halted.
Supporters of the plan argue that third-party releases are sometimes necessary to reach an agreement, and federal law does not prohibit them. "Forget a better deal," lawyer Pratik Shah, representing victims and other creditors in the bankruptcy, told the justices. "There is no other deal."
Attorneys for over 60,000 victims who support the settlement described it as "a watershed moment in the opioid crisis," acknowledging that "no amount of money could fully compensate" victims for the damage caused by the deceptive marketing of OxyContin, a potent prescription painkiller.
Justice Ketanji Brown Jackson appeared more sympathetic to the opponents, stating that the Sacklers' demand for a shield against all lawsuits is "causing this problem." Conversely, Justice Brett Kavanaugh seemed inclined to allow the deal to proceed.
He suggested that the government was seeking to prevent payment to victims and their families, as well as funding for prevention programs "in exchange really for this somewhat theoretical idea that theyll be able to recover money down the road from the Sacklers themselves."
OxyContin was introduced to the market in 1996, and Purdue Pharma's aggressive marketing of the drug is often blamed as a catalyst for the nationwide opioid epidemic, encouraging doctors to prescribe painkillers with less regard for the risk of addiction.
The Purdue Pharma settlement would be among the largest reached by drug companies, wholesalers, and pharmacies to resolve epidemic-related lawsuits filed by state, local, and Native American tribal governments and others. These settlements have totaled more than $50 billion.
However, the Purdue Pharma settlement would be one of only two so far that include direct payments to victims from a $750 million pool. Payouts are expected to range from about $3,500 to $48,000.
A decision in Harrington v. Purdue Pharma, 22-859, is expected by early summer.
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