What the Supreme Court’s ruling on Purdue Pharma settlement means

June 27, 2024

The Supreme Court’s ruling on Thursday blocking a bankruptcy deal to immunize the family that owns Purdue Pharma throws the case into uncertainty as it heads back to lower courts, with the only immediate outcome of the ruling being that the financial settlement will now take longer to reach victims of the opioid epidemic.

The bankruptcy deal approved last year shielded members of the Sackler family, who previously controlled Purdue Pharma, and their numerous associates from future liability in opioid lawsuits. The Biden administration had argued the bankruptcy court could not release the Sacklers from the claims.

In a split 5-4 decision, Justice Neil Gorsuch wrote in the majority opinion Thursday that federal law does not allow the Sacklers, who did not file for bankruptcy themselves, to be released from liability for contributing up to $6 billion to the settlement.

“All the majority did was just to say no, bankruptcy code doesn’t authorize this. Didn’t really offer much by way of solutions,” Carl Tobias, William Chair in Law at the University of Richmond, told The Hill.

“I think the only thing that’s clear is the Sacklers are not going to be immunized. What that means for the money they said they would kick in is not clear. Exactly what is going to happen going forward is unclear.”

Both Purdue Pharma and claimants agreed Thursday’s ruling signals more negotiations for the future. The pharmaceutical manufacturer called the ruling “heart-crushing” in a statement.

“We will immediately reach back out to the same creditors who have already proven they can unite to forge a settlement in the public interest, and renew our pursuit of a resolution that delivers billions of dollars of value for opioid abatement and allows the Company to emerge from bankruptcy as a public benefit company,” the company said.

North Carolina Attorney General Josh Stein (D) said in a statement, “The Court’s ruling means we now have to go back to the negotiating table. Purdue and the Sacklers must pay so we can save lives and help people live free of addiction. If they won’t pay up, I’ll see them in court.”

“With this decision, we will double down on our efforts to hold those who are accountable for the damage that’s been done to our State. We’ll be examining new ways to bring this case to closure,” West Virginia Attorney General Patrick Morrisey (R) said following the ruling.

According to Sarah Whaley, senior practice associate at the Johns Hopkins Bloomberg School of Public Health, going back the drawing board eliminates the certainty that states will receive settlement funds they were counting on.

“States can’t count on money that they like don’t have and there’s like no insurance anymore, that they will get any money from Purdue,” Whaley said.

Tobias echoed that the ruling will likely “delay resolution for hundreds of thousands of individuals, cities and counties and others.”

“A lot of energy and resources were poured in to this short term, if you will, conclusion that doesn’t really satisfy anybody,” he added.

Whaley noted, however, that the proposed bankruptcy deal is far from the only opioid epidemic settlement issued in the U.S. Several billion have already been promised from other settlements, and the renewed doubt over the Purdue Pharma deal places pressure on the existing funds to be properly dispersed.

“Without the promise of like any additional funds from the Purdue settlements, it’s like even more critical that states are maximizing the effectiveness of the dollars that they do have through like thoughtful planning and investment,” said Whaley.