Front Burner - Will Purdue’s opioid settlement be overturned?

Episode Date: December 6, 2023

A bankruptcy deal for OxyContin maker Purdue Pharma gave a legal shield to the Sackler family that ran the company. Now, a challenge to the settlement has gone to the U.S. Supreme Court. Why are families of opioid victims split on whether they want the multi-billion dollar settlement to stand? How could the ruling change who can get immunity from lawsuits in massive corporate settlements? Why have the Boy Scouts of America and U.S. Conference of Catholic Bishops submitted briefs calling for Purdue’s deal to stand? David Ovalle is a national reporter with the Washington Post focusing on opioids and addiction. For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts Transcripts of each episode will be made available by the next workday. An earlier version of this episode stated that the movie Pain Hustlers was inspired by Purdue and Oxycontin. That film was based on a different company which also sold opioid based pain medication. We've corrected this episode to remove that error.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Damon Fairless. In 1996, Purdue Pharma introduced the opioid OxyContin to the world. The company, and the family behind it, the Sacklers, are now infamous for the roles they played ushering in the opioid crisis. And you might have thought that Perdue's story more or less ended after it got hit with tens of trillions of dollars in lawsuits and filed for bankruptcy. Or in 2021, when the Sackler family

agreed to pay billions in the resulting settlement deal. But on Monday, the U.S. Supreme Court heard arguments about whether or not to undo that settlement. At the heart of it, how the settlement shields the Sackler family from future lawsuits, even though they haven't personally gone bankrupt. It's an issue that's divided families who have lost loved ones to opioids, and it's a case that has implications for other cases of mass harm in the U.S. So today, I'm joined by The Washington Post's David Oveye. He's a national reporter focusing on opioids and addiction.

Hey David, thanks so much for coming on FrontBurner. Thank you, I appreciate it. Okay, so I want to start with a reminder of what was happening before Purdue Pharma filed for bankruptcy in 2019. So it was the subject of thousands of lawsuits from different states, different cities, different organizations, victims, victims' families. Remind me, what kind of harm Purdue and its owners, the Sackler family, was accused of causing across the U.S.? So Purdue Pharma was the maker of a blockbuster painkiller called OxyContin in the mid-1990s. And they are accused, and it's been pretty widely reported, that the company really aggressively marketed its product and really just sort of jump-started the opioid crisis. I got my life back. Now I can enjoy every day that I live.

Since I've been on this new pain medication, I have not missed one day of work. This medication does not turn you into a zombie. It has turned me into an active person again. So this really potent painkiller was just getting prescribed for pain just left and right, for things that probably a lot of experts now believe were not necessary. That trickled out into the black market and just sort of unleashed the floodgates there in terms of prescription pills hitting the United States. And so they are sort of seen as the symbol of corporations capitalizing on opioid addiction. And I mean, part of the marketing issue, the promise of Oxy was that it didn't have the addictive qualities that other opioids did, right? Right. Some patients may be afraid of taking opioids because they're perceived as too strong or addictive. But that is far

from actual fact. Less than 1% of patients taking opioids actually become addicted. Less than 1% of patients taking opioids actually become addicted. And that was because it had this time release element. But what was not taken into account fully by a lot of doctors is that people could just crush it up and, you know, snort it or smoke it or whatever they wanted to. And so it was very powerful, you know, pretty early on. In 2001, when Richard Sackler was head of the company, he wrote this email. We have to hammer on abusers in every way possible, he wrote. They are the culprits and the problem. They are reckless criminals. The emails are part of a court filing by the Massachusetts attorney general. The filing alleges Richard Sackler directed Purdue staff

not to tell doctors the truth about how powerful OxyContin was. And I should mention, too, in addition to the opioid crisis there in the States, too, that Canada's provincial health care systems made claims for $67 billion U.S. in damages from Purdue to address the cost of the crisis. the cost of the crisis. Correct. Right. And it's such a broad spectrum of entities that have filed suit against Purdue and frankly, all of the major pharmaceutical companies, drug distribution companies, pharmacies, retailers. I mean, there's just such a, you know, Purdue is just one highly visible, but really only one player in a whole range of entities that are believed to have really contributed to what is now just an unprecedented public health crisis. Okay, so I want to get into the settlement that's now before the Supreme Court, and I'm going to do a very of years of further negotiations in 2021, it finally approves a plan for dealing with the lawsuits and reorganizing the company. So according to that settlement, as it was approved, what were Purdue and the Sacklers supposed to do for their end of the deal? So just to be clear, they have always insisted that they don't bear any legal responsibility. They've expressed

regret, but they say, you know, they didn't do anything that was unlawful, right? But the initial settlement called for the Sacklers to contribute more than $4 billion over 18 years to the settlement to help ease the opioid crisis. Most of that money would be going toward the states to help them, you know, basically help save lives, help treat addiction, do education campaigns. They would make a treasure trove of internal documents available for public consumption so that people can better understand the origins of the crisis and Purdue's role in it. And then they would be giving up control of Purdue Pharma. Purdue Pharma would be reorganized into a public good company that would basically all of its sales and its medications would go toward helping the

opioid crisis. Purdue Pharma, which makes OxyContin, would become a non-profit company and then make Narcan. That was the initial deal. And then a few of the states objected. Ultimately, the Sacklers agreed to kick in up to $6 billion over 18 years to help ease the opioid crisis. Yeah, those are the broad strokes of it. was those are the broad strokes of it. Okay. So, you know, a huge part of that settlement is the money that victims can claim. But can you help me understand that there's protection for the Sacklers there as well, right? What kind of legal protection would they get? Right. So the Sackler family, and here's the key part, the Sackler family members have never declared bankruptcy themselves. And it's not even clear all of them are even eligible to be bankrupt because some of them have moved overseas. So it's a pretty big family.

So, yes, they would be exempt from civil lawsuits once this deal goes into place. That was the deal. A district court judge overturned it, said no. This provision that allows the Sacklers to get immunity from future civil opioid-related lawsuits, isn't allowed under the bankruptcy code. Then it went to the appeals court, right? And the appellate court in New York came back and said, this is perfectly allowable under bankruptcy code.

It's actually necessary. That happened in May, and now it's gone before the Supreme Court. The Supreme Court took it up. It's an issue that, frankly, a lot of bankruptcy experts have been calling for some sort of clarity on. And so this is, you know, a really high profile case, but, you know, one that has wider reaching ramifications for these types of bankruptcy dealings. Okay. There's something that I was hoping you could help me understand. As I understand it, the accusers got to vote on whether the settlement could be approved and 95% of them who actually voted did want it approved. But what proportion of accusers or

victims voted in this? I don't really understand that process. Right. So the Department of Justice, which is challenging this bankruptcy plan, has pointed out that only a fraction of those who are actually eligible to vote actually did. So they sort of say, hey, it's a little misleading to say 95 percent of creditors, which is the people that are basically suing Purdue, agreed to this because there's a whole lot more who are eligible that did not. Okay. So, you know, of course, it's going to range from the person whose son passed away of an opioid overdose to someone maybe wouldn't have much of a case because it's far removed. Maybe they can't prove that it was a Purdue product to, you know, the different governments and states and, you know, hospitals and tribes.

And so there's so many different entities and people that are, you know, sort of have a stake in seeing what happens with the settlement. So it's incredibly complex. in seeing what happens with the settlement. So it's incredibly complex. Okay, so it's been quite a long and winding road leading up to the settlement being examined by the Supreme Court. The question over who should be protected from lawsuits in the settlement caused a couple courts, as you mentioned, to overturn the settlement and then re-approve it. And now part of the Justice Department, called the Office of the U.S. Trustee,

has challenged it again, making it a fairly rare bankruptcy case to reach the Supreme Court. So I guess what I'm interested in, what specifically does the Office of the U.S. Trustee say is wrong with the settlement? not authorize a court to basically strip someone's right to sue a company without them having agreed to it. The justices heard arguments yesterday over whether the owners of Purdue Pharma, the Sackler family, can be protected from future lawsuits under terms of the settlement. Under the bankruptcy deal, the Sackler family would pay about $6 billion to settle lawsuits with opioid victims and state governments. But the Biden administration says by guaranteeing immunity, the deal violates federal law. So it's sort of a, you know, it's a broader principle that they're objecting to.

And they have said point blank in the arguments and, of course, in the legal filings that this is a corruption of the bankruptcy system that's sort of allowing this, you know, well-heeled family to get away with it, right? To not get the full possible settlements for, you know, a broader range of people and that people have the right to sue if they want to, right? So that's sort of the broader principle of what the trustee is alleging. And the trustee is the bankruptcy watchdog. can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization,

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the people I speak to, 50% of them do not know their own household income? That's not a typo, 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, and your partner create a financial vision together to listen to this podcast, just search for Money for Cops. That's a fairly principled argument, but there's also kind of the pragmatics of, you know, victims and victims' families getting paid out. So I guess what I'm wondering is how the families who've been affected by the crisis are feeling about this settlement potentially being overturned. Right. And so that is sort of been one of the most interesting dynamics of this whole legal odyssey is that the victims themselves, the

families of victims are split, right? You have this large amount of families who want this to go forward. Some of them really need money to help them rebuild their lives. I mean, I believe it's about 780 million that will go toward victims and the their lives. I mean, I believe it's about $780 million that will go toward victims. And the compensation can range from about, I think, $3,500 to $48,000, depending on the particulars of the case. So none of it is going to be huge, huge amounts of money, but it helps. And I guess they also see it in the broader principles, right? A lot of this money is going to go to the states. And the states would then use that to invest in medications that reverse overdoses, education campaigns, beefing up addiction treatment,

all kinds of stuff that will help ease the opioid crisis. So for a lot of the families, it's very personal. Justice Elena Kagan questioned whether the government should end an agreement that was approved by opioid victims. It's overwhelming, the support for this deal. And among people who have no love for the Sacklers, among people who think that the Sacklers are pretty much the worst people on earth, they've negotiated a deal which they think is the best that they can get. But there are some that say, you know what, there's already a

lot of money flowing into the states from other companies and settlements, and that there's no amount of money that the Sacklers could pay to atone for what they've done as the architect of this opioid crisis. Ellen Isaacs does not think it's the best deal they can get. She and her son Ryan were both OxyContin users. He died of an overdose five years ago. You've done this to our families. You've killed our children. You've created all kinds of mental health problems across the entire country. And it's just wrong. And you need to finally step up. So it's a real, it's sort of a moral conundrum that family members are wrestling with. And frankly, it sounded like the justices themselves in the oral arguments were wrestling with that same fact, sort of this pragmatic thing like, well, what do we do? Is the

whole thing going to get undone? Will there be any money at all? I mean, these are sort of a lot of unknown questions that they seem to be grappling with. So is that the main driver for the families who want to keep the settlement that essentially a pragmatic argument that this is likely the best they're going to get? Yes, I think that's certainly the best way to put it. A lot of them think like, look, if we are not going to be able to, a lot of us are not going to have the resources, the legal resources, the sophistication to take all of these claims to court, we're going to be the lowest in the totem pole in terms of collecting. So, you know, it's going to be very hard for us to prove that, you know,

a particular Sackler family member was to blame for my loved one's death. There is no way any family, even now, could go after the Sacklers. You know, you needed, the bankruptcy included all the states, the municipalities, all the attorney generals of all the states. You needed the power of all these people in order to get this kind of settlement. It also says that my son's life was worth something, you know, rather than worth nothing. I mean, that it's the symbolism of it to me is also important. So it's going to be very hard. And this sort of the thing you hear talked about the most is sort of this race to the courthouse steps, right? So whatever states with really sophisticated lawyers that can get to trial first and get a lion's share of what Purdue is valued at, they're the ones that are going to get all the money.

So they see this as the equitable way to really distribute all of the money that's needed. I'm curious, too, about the people you've talked to who actually want this agreement overturned. I'm curious how they see the protection for the Sacklers in the settlement. Do they see this as a gross injustice? Yes, they definitely see it as an injustice. They see it as blood money and they point out, among other things, that the Sacklers are worth a lot more money than they're going to be putting in. And it's over 18 years, right? So it's not like this is $6 billion that's going to happen right away. This is going to be stretched out over a very long time.

And so they think that basically the Sacklers are getting off too easy. After I lost my son. Alexis Plaus' oldest son, Jeff, overdosed when he was just 28. Alexis Plaus's oldest son, Jeff, overdosed when he was just 28. Until they give their money back that they earned from killing our kids, justice has not been served. This is also a case that has legal implications beyond the opioid crisis. Purdue Pharma and the Sacklers aren't the only groups who've seen getting protection from mass lawsuits like this by going into bankruptcy, right? Right.

And this has happened with other drug companies and people involved in the prescription opioid business where they've gone into bankruptcy and it's sort of limited their exposure and they've had to do settlements and sometimes with third party releases, these, you know, immunity claims. But yes, it's happened with the Boy Scouts of America. It's happened with some of the church law, sexual abuse lawsuits. So this really is something that has happened a lot. I think what the Supreme Court decides could really reshape how these massive, complex mass litigation cases unfold.

So I just want to go back to what you mentioned about the Boy Scouts and the Catholic Church. So as I understand it, the Boy Scouts of America and the U.S. Conference of Catholic Bishops have actually submitted briefs in this case supporting keeping the Purdue settlement. Can you help me understand why? What's their involvement? Right. Well, they're concerned because the settlements that they've reached also involve releases of lawsuits, right? So basically immunity from future lawsuits for, for example, the Boy Scouts, the different people involved or their individual chapters, you know, the rec centers that were hosting Boy Scout meetings, you know, so for them, it's something that made the settlements possible. And so, you know, with these huge mass litigation cases where you have so many plaintiffs and

you have so many different people sort of all vying for a piece of the pie, they see it as something that is absolutely necessary to be able to close these cases. Otherwise, they would just be inundated with litigation and the cost of litigating for years and years. And it would just basically bleed these entities dry and nobody would get anything. So is that why the lawyers for Purdue and the Sacklers are arguing that it's important to be able to get this kind of legal protection in these kind of mass litigation cases? Yeah. Yeah. And I think the justices really

seem to be grappling with that because even some of the more liberal justices who you might think, well, maybe they're inclined to overturn this settlement, you know, they seem to be grappling with the victims getting any kind of money for sort of the tragedies that they've suffered. I just want to go back to what the lawyers from the Office of the U.S. Trustee have been arguing as they challenged the settlement. Why do they say this is unfair to people who might want to get their day in court against the Sacklers in the future? You know, it's the principle of it, right? I mean, you have the right to sue. Why should people who are not bankrupt be able to dictate whether you could sue or not, right? So that was one of the things that they brought up

is, well, you know, they could just easily go into bankruptcy themselves and declare bankruptcy. So it's sort of the broader legal principle, and they believe that the bankruptcy code does not allow for it. You know, it's been sort of existing in this gray area for legally for a long time where some jurisdictions allow for it, others don't. But it's been used for over three decades. So there's some interesting issues that the justices are really going to have to sort out.

You heard the arguments before the Supreme Court on Monday. Now we're supposed to get the decision on this by June. Do you have any sense where the justices were leaning as of Monday? You know, some of them obviously were very skeptical of both sides. I thought they asked pretty tough questions. Justice Jackson, for example, certainly was pressing hard on the Sacklers and why they couldn't, you know, declare bankruptcy and, you know, why the Sacklers had so much say in all of this. Only because the Sacklers have taken the money offshore, right? I mean, it's necessary to do this because the Sacklers have taken the money and are not willing to give it back. It's hard to tell. Usually you can kind of tell in some of these cases which way they're leaning, but, you know, I don't think anyone can say with any certainty which way they're going to

rule. So David, say the settlement is ultimately overturned, where would that leave the families? Well, that's a great question. I mean, if you talk to the government and some of the people that oppose the settlements, they believe that future settlement can still be reached. If you talk to the other side, they say, well, no, the Sacklers aren't going to give anything unless they get those releases. So it's just kind of all up in the air. You know, government says, hey, we think there would still be a deal maybe outside of the bankruptcy system, certainly without these non-consensual releases. But a lot

of families are not very hopeful at all. They feel a lot of the ones that support the settlement feel like the money will never start flowing and that lives will be lost because, you know, that's money that's not going to go toward easing the opioid crisis. Right. So on the flip side, if the settlement keeps its approval now, it would protect the Sackler family from future civil suits. But what other kind of legal action could be taken against them? Well, in theory, and I think families on both sides of the settlement debate still harbor hopes that the Department of Justice could go after individual Sackler family members who were serving in leadership roles with Purdue and gone criminal charges. But, you know, whether that's going to happen, it seems doubtful. I mean, they've certainly had a lot of time to be able to put together cases against Sackler

family members. The Department of Justice wouldn't comment on those questions of whether they could face criminal charges. But certainly nothing that is done in the bankruptcy court or with this settlement would preclude Department of Justice from going after any individual Sackler family members. David, thanks so much. It's been great talking to you. Appreciate it. Thank you. All right, that's it for today. I'm Damon Fairless. Thanks for listening to FrontBurner. I'll talk to you tomorrow. For more CBC Podcasts, go to cbc.ca slash podcasts.