U.S. Bankruptcy Judge Shelley C. Chapman, the mediator for negotiations between Purdue Pharmaceuticals and nine states that have not joined the potential nationwide opioid settlement, has announced that a new deal has been reached.
The results of the settlement negotiation will take place alongside the broader settlement with the other 41 states. According to Law 360, under these new settlement terms, the Sacklers will be forced to increase their contributions to opioid abatement trusts from the previously agreed $4.3 billion to at least $5.5 billion.
This increase must come from the Sacklers themselves and there is the potential for the contribution amount to increase to $6 billion depending on the amount of proceeds received from the Sacklers' sale of other, independent companies bearing the Sackler name. The potential $1.7 billion will be divided separately from the rest of the settlement.
The full amount will break down into three main groups:
- $1 billion in cash paid out in installments over the next 18 years to a supplemental opioid abatement fund created by the settlement.
- $175 million paid into the main disbursement trust created under the existing plan.
- Up to $500 million in cash based upon the amount received by the Sacklers selling their interests in independent, non-Purdue entities.
This increased financial payout will coincide with other, non-monetary penalties to the Sackler family.
Included is a requirement for the Sacklers to give institutions bearing the family name the opportunity to remove it from “facilities, buildings, programs or scholarships.” This clause does specify that the statement announcing the name change may not disparage the Sackler family.
In addition to having their names scrubbed, the Sacklers must publish a public statement expressing regret about the opioid crisis. Notably, this statement will only express “regret” and not “liability” or “guilt” for their alleged part in fueling the opioid epidemic with their flagship product: OxyContin.
This settlement agreement is not without controversy. According to the agreement, the newly added funds will only be split among the nine states and the territories that did not already sign on to the previous Chapter 11 plan.
The nine states held out because they believed that the original Chapter 11 plan was too lenient on the Sackler family.
The Florida Attorney General who represented the state in these proceedings objected to the deal, arguing that it treated the other 41 states unfairly because they had already accepted the terms of the settlement.
In the objection, the state AG writes, "Florida's simple position has been and continues to be that whatever proceeds are achieved from this settlement should be distributed in accordance with the allocation the States agreed upon that this Court approved."
The objection goes on to describe the new settlement as “desperate,” accuses Purdue Pharmaceuticals and the Sackler family of buying consent for the settlement plan, and states that the new settlement violated the tenets of the bankruptcy code.
In justifying that last statement, the objection cites the requirement that all “similarly situated” creditors receive equal treatment in Chapter 11 bankruptcy proceedings. By contrast, Purdue has stated that it is happy with the mediation’s results in bringing the case to a satisfying close for all parties involved.