RI AG Announces $45M Settlement with Purdue Pharma and Sacklers -- Family Will Remain Billionaires

RI AG Announces $45M Settlement with Purdue Pharma and Sacklers -- Family Will Remain Billionaires

The Sackler family -- who made billions from their ownership of opioid maker Purdue Pharma -- has reached an agreement with Rhode Island Attorney General Peter Nehrona and eight other attorney generals.

The family has been chronicled as profiteering from manufacturing and marketing the highly addictive and too often deadly drug.

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In 2017, the New Yorker wrote a major profile of the family, "The Family That Built an Empire of Pain - The Sackler dynasty’s ruthless marketing of painkillers has generated billions of dollars—and millions of addicts."

The Sacklers rose to be one of the richest families in America.

In 2015, Forbes named the Sacklers the 19th richest family in America. “The OxyContin Clan: The $14 Billion Newcomer to Forbes 2015 List of Richest U.S. Families.”

The settlement with Purdue Pharma and the Sackler family for their role in the opioid epidemic will increase the amounts of funds paid by the Sacklers from $4.325 billion under the original plan to at least $5.5 billion, and up to $6 billion.

The settlement is just a fraction of the family's net worth.

As part of the agreement, the Sackler family will issue a statement of regret for their role in the opioid epidemic and allow institutions to remove the Sackler name from buildings and scholarships. Many universities and museums around the world have stripped the Sackler name of their buildings.

Rhode Island will receive approximately $45 million from the settlement, more than doubling its recovery of approximately $20 million from the initial bankruptcy plan. All funds will be used to fund opioid treatment and prevention. 

It is unclear how the settlement and future operation will impact a major manufacturing plant that produced billions of opioids. The plant directly tied to the Sacklers and Purdue is named Rhodes Technologies is located in Coventry and historically employed hundreds of employees.

The settlement keeps intact provisions of the Purdue bankruptcy plan, forcing the company to be dissolved or sold by 2024 and banning the Sacklers from the opioid business. The initial bankruptcy plan also required Purdue and the Sacklers to make public over 30 million documents, and the settlement announced today forces disclosure of additional records previously withheld as privileged legal advice. 

The settlement is the product of a court-ordered mediation, which began on January 3, 2022 under Judge Shelley C. Chapman, a federal bankruptcy judge. The mediation consisted of dozens of in-person, video and telephonic negotiation sessions, including Rhode Island’s participation in a multi-day negotiation session in New York. Today’s resolution would not have been possible without Judge Chapman’s tireless efforts throughout this process. 

According to Neronha, the settlement includes:  

- The Sackler families must pay a total of at least $5.5 billion, with the potential for up to $6 billion.

- The new deal brings an additional $1 billion more than the initial bankruptcy plan, as well as $175 million that was previously conditioned on certain approvals, but that now must be paid on the effective date.

- The new deal further provides for up to an additional $500 million from the sale of certain international assets in the event those assets are sold for an amount above a specified benchmark.

Under this settlement, Rhode Island’s recovery more than doubles, from about $20 million to about $45 million. The first payment is expected next summer. A portion of the funds secured through the bankruptcy will flow directly to Rhode Island’s cities and towns, as with the distributors and J&J settlements announced earlier this year. 

Neronha's office has repeatedly refused to answer questions about why his office has not entered into litigation against the pharmacy chains including CVS, Walgreen and Walmart for their roles.

In November, jurors in a federal court case concluded that actions by the pharmacy chains CVS, Walmart, and Walgreens helped create a public nuisance that resulted in an oversupply of addictive pain pills and the diversion of those opioids to the black market.

Rhode Island Democratic candidate for Governor Helena Foulkes was the head of the pharmacy at CVS during a portion of the time in which the violations occurred. The verdict was confirmed by lawyers for the plaintiffs. The jury only assessed liability. It is up to U.S. District Judge Dan Polster to decide how much the companies must pay in Ohio's Lake and Trumbull Counties according to Reuters.

Purdue must make public additional documents previously withheld as privileged legal advice, including legal advice regarding advocacy before Congress; the promotion, sale, and distribution of Purdue opioids; the structure of the Purdue Compliance Department and its monitoring and abuse deterrence systems; and documents regarding recommendations from McKinsey & Company, Razorfish, and Publicis related to the sale and marketing of opioids.  

States reserve their rights to oppose non-consensual, non-debtor releases before the U.S. Supreme Court, should an appeal be heard there.  

States reserve their rights to oppose non-consensual, non-debtor releases in any other bankruptcy proceeding.

California, Connecticut, Delaware, Maryland, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia objected to and ultimately appealed the plan. The United States Trustee, an arm of the Department of Justice, also appealed. New Hampshire also objected to the original Purdue bankruptcy plan but did not file an appeal.