Bankruptcy judge OKs federal settlement with Purdue Pharma

Bankruptcy judge OKs federal settlement with Purdue Pharma


Proposed settlements between the federal government and OxyContin maker Purdue Pharma and its owners cleared a major legal hurdle Tuesday when a bankruptcy judge said they could move ahead.

Last month, the company agreed to an $8.3 billion civil settlement with the U.S. Department of Justice related to claims about its role in the national opioid addiction and overdose crisis. It also pleaded guilty to three criminal charges.

Purdue will pay the federal government $225 million, with the rest being part of a planned settlement between the company and thousands of state and local governments and other entities that are suing it. Members of the wealthy Sackler family who own the company also agreed to pay $225 million to settle civil claims.

U.S. Bankruptcy Judge Robert Drain does not need to approve the Sacklers' federal settlement, but he did rule Tuesday that the payment portion of it was allowable. That came as he approved the Purdue deal after a daylong hearing held by telephone because of the coronavirus pandemic.

Drain, based in White Plains, New York, had a say on Purdue's federal settlement because the company is going through bankruptcy as part of its efforts to resolve the thousands of civil claims against it. The judge let it move forward despite opposition from about half the states, advocates for victims of the opioid crisis, a group of law professors and some members of Congress.

Opponents argued that accepting the settlement now locks the judge into accepting the company’s proposal to resolve the lawsuits, including some terms that remain contentious.

The company wants to convert into a public benefit corporation that would no longer be owned by members of the Sackler family. The plan calls for the new company to continue making OxyContin, but with the profits going toward fighting the opioid crisis,...

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