Purdue settlement finalized, leaves many victims without funds

The main point: Following a nearly seven-year legal saga, the settlement with Purdue for its role in fueling the opioid crisis is finalized and could go into effect as soon as this week.

• A judge sentenced Purdue to pay more than $5 billion in criminal penalties for its role in fueling the opioid crisis, clearing the way for the company to finalize its broader settlement resolving thousands of lawsuits from states, local governments, and individual victims.

The details:

• In 2020, Purdue pleaded guilty to conspiracies to defraud the U.S. and violate the anti-kickback statute. The federal government agreed to collect just $225 million to clear the way for Purdue to reach the separate settlement of the thousands of lawsuits it faced from states and other groups.
• The sentencing cements the broader $7.4 billion settlement with Purdue and the Sacklers agreed to last year.
• As part of that settlement, Purdue will dissolve and become Knoa Pharma, “a new independent public-minded company focused on innovative solutions to help address the opioid crisis.” Billions of dollars will go toward states, local governments, and individual victims, and troves of Purdue documents will be released.
• The settlement could take effect as soon as May 1.

But: While the settlement is one of the few opioid settlements to provide funds specifically for individual victims, many individuals harmed by the company’s products will not be receiving funds.

• Reminder: The Supreme Court in 2024 rejected the first bankruptcy settlement proposed with Purdue because it shielded the Sacklers from future lawsuits, but last November, a judge approved a new plan. This $7.4 billion bankruptcy plan includes $870 million set aside for individual victims. But this will shut out tens of thousands of people who originally applied for a settlement.
• The new plan slashed payments for victims, imposed tougher eligibility requirements, and eliminated compensation for teens who bought Purdue drugs on the street.
• When Purdue filed for bankruptcy in 2019, nearly 140,000 people filed claims against the company. Fewer than half will get any kind of help under the new plan.
• Estimated settlement amounts for people whose family members fatally overdosed dropped to as little as $8,000, compared to the previous payout of $48,000.
• The new plan removed a provision that allowed victims to submit a sworn affidavit, in lieu of a prescription or other medical or legal records, to prove they purchased Purdue opioids. Similar sworn statements have been permitted in other major bankruptcy cases to account for harm done years earlier where physical evidence is hard to obtain. Doctors, hospitals, and pharmacies generally only have to keep prescription records for a few years.
• Purdue moved to formally eliminate from any payout most of the 80,000 individuals who filed claims but missed the deadline for filing, and a judge approved the motion last week.

The response:

• Proponents of the new plan point to a higher minimum payment for all qualifying claimants and say it will streamline the process so payments go out faster. The Sacklers put an additional $100 million in the victims’ fund, and claimants largely voted in favor of the plan (though some were unaware of the tighter evidence requirements).
• The judge who sentenced Purdue this week to clear the way for the settlement had delayed the sentencing by a week to allow victims to attend the court proceedings in person. Many people who lost loved ones or had addiction themselves asked the judge to reject the negotiated sentence. In response to those who said they could be rejected for payments because they cannot locate decades-old prescriptions, the judge told Purdue lawyers to ensure there are additional ways to prove they were harmed.

Read more: Purdue Pharma to pay $5B for role in fueling opioid epidemic; OxyContin maker Purdue Pharma set to dissolve after judge approves its criminal sentence“A Punch in the Gut”: After Years of Waiting, Many Opioid Victims Will Be Shut Out of Purdue Settlement; After waiting years for justice, many Purdue opioid victims are defeated – by paperwork