Sackler family members 'may be unwilling' to contribute to opioids settlement

Edward Helmore in New York
Photograph: Seth Wenig/AP

OxyContin-maker Purdue Pharma has warned a bankruptcy court that the Sackler family members who own the company “may be unwilling – or unable” to contribute billions to a $10–$12bn settlement toward the costs of the US opioid crisis if lawsuits against them are allowed to proceed.

The claim, made in bankruptcy court in New York on Wednesday, comes as the billions that the family will personally contribute to the settlement – tentatively agreed last week with some of the parties suing both the company and the family – have become a central sticking point in efforts to resolve thousands of lawsuits against it.

Purdue Pharma filed for bankruptcy protection early this week, following litigation agreements with multiple US states, counties and cities in a controversial plan that would direct future profits from a restructured Purdue towards addiction treatment and anti-overdose drugs.

Under the terms of the tentative settlement, the Sackler family say they would inject between $1.5bn and $3bn over three years, depending on the sale price of its international arm based in the UK, Mundipharma.

But several state attorneys general have complained that the Sacklers, whose fortune is valued at at least $13bn by Forbes, may have taken as much as $10bn out of Purdue Pharma profits, and they have sued eight individual members of the family.

States have split over the controversial tentative settlement agreement. One group of states is in favor of accepting the settlement, joining forces in that decision with the plaintiffs fighting a giant case that bundled more than 1,200 city and county lawsuits together in a federal court case in Cleveland, Ohio. Those lawsuits involve both the company and the family members.

Another group of states, led by New York, Massachusetts and Connecticut, is not in favor of the settlement and want to haul Purdue and the Sacklers into court.

In Purdue’s bankruptcy filing the company wants to shield itself from all the lawsuits against it and now the Sacklers who are being sued are appealing for similar protection. Arguments in the federal bankruptcy court in White Plains, in the southern district of New York, began in court on Tuesday and are continuing.

According to the Washington Post, family patriarch Richard Sackler was warned by a Purdue board member adviser in 2008 that “the most certain way for the owners to diversify their risk is to distribute more free cash flow to themselves.”

A lawsuit filed by the state of Massachusetts says the family transferred more than $4bn from the company to personal accounts between 2008 and 2016. Oregon claims the family potentially took $10bn out of the company, the report said.

States that have not signed on to the agreement claim the transfers amount to “fraudulent conveyance” and have vowed to go after it. The Sackler family, through a spokesman, has denied that the family improperly took money from Purdue, currently valued at around $3.5bn.

But in the latest twist, Purdue is warning that the Sackler family may pull out of contributing to any settlement unless it is offered protection from the lawsuits – a provision that North Carolina’s attorney general, Josh Stein, who sued eight members of the family, says should only come if the family is forced to give a detailed accounting of its wealth.

“They have billions and billions and billions of dollars that they have sucked out of Purdue Pharma,” Stein told the Post, adding that he is “fine” with a deal “as long as they meaningfully address the problem” caused by the opioid epidemic and the money is used “to right the wrongs that they have done”.

Connecticut’s outspoken attorney general, William Tong, has warned: “We will not allow Purdue Pharma to cry poverty after illegally transferring hundreds of millions of dollars to members of the Sackler family – unearned funds these individuals reaped as Connecticut families suffered.”

Purdue has asked the bankruptcy court to temporarily halt lawsuits against the family. Purdue and the Sacklers deny all wrongdoing.

But halting the lawsuits against the eight Sacklers who are personally being sued, and who are part of a much larger, sprawling transatlantic family, would be unusual since Purdue, and not the family members, are filing for bankruptcy, lawyers said.

Purdue claims that if the family are “forced to bear the risk of adverse money judgments, the [Sackler family] may be unwilling – or unable – to make the billions of dollars of contributions contemplated by the Settlement Structure.”