US Supreme Court strikes down Sackler family’s immunity, casting Purdue opioid settlement into doubt

A $9bn legal settlement agreed between Purdue Pharma, the drug company whose misleading marketing helped to trigger the US opioid epidemic, and more than 600 states, cities, and native tribes will have to be renegotiated after the US Supreme Court struck down clauses that would have protected Purdue’s owners, the Sackler family, from litigation by opioid victims who had not accepted the settlement deal.

The deal, first agreed five years ago after many years of negotiations, has been held up in the courts by challenges to its use of the bankruptcy system to shield the Sacklers from further litigation. Corporations have increasingly relied on US bankruptcy law to limit future liability when agreeing tort settlements. Typically their liability is transferred to a specially created subsidiary that then declares bankruptcy, with assets equal to the agreed settlement amount.

In the current case, however, Purdue itself would declare bankruptcy, but the Sackler family members would not, even though most of the final payment, up to $6bn, would be drawn from their personal wealth, not the company’s. The deal gave the family protections from further lawsuits that are normally only afforded to people who declare bankruptcy.

Purdue Pharma was founded by three New York brothers, Arthur, Raymond, and Mortimer, all psychiatrists. Arthur sold his stake before 1996, when the …