OxyContin maker Purdue to use trusts and Sackler cash to settle opioid lawsuits - Money

The billionaire Sackler family, who own OxyContin maker Purdue Pharma, has agreed to pay nearly $4.3 billion to resolve thousands of lawsuits accusing them of fueling the opioid crisis in the United States.

The huge payment from the Sacklers is part of a larger restructuring plan filed by Purdue on Monday night that intends to get the Connecticut-based pharmaceutical giant out of bankruptcy.

Purdue’s $10 billion plan to emerge from bankruptcy calls for it to be transformed into an entity that would see the Sacklers relinquish control of the company and steer revenue directly to plaintiffs.

The billion dollar contribution from the Sackler family, who have denied any wrongdoing, would see them freed from opioid-related litigation.

The plan was filed late on Monday night in US Bankruptcy Court in White Plains, New York after months of negotiations.

The nearly $4.3 billion payment from the Sackler family is part of a larger restructuring plan filed by Purdue on Monday night that intends to get the Connecticut-based pharmaceutical giant out of bankruptcy. Kathe Sackler and David Sackler are pictured during a congressional hearing before the House Oversight Committee last year

The Sacklers are one of the wealthiest families in the US. Pictured above is some of the Sackler family: Dr Richard Sackler, standing second from left and Jonathan Sackler standing second from right. Seated is Raymond and Beverly Sackler

Purdue had filed for bankruptcy back in September 2019 in the face of more than 2,900 lawsuits accusing the company of fueling the national opioid crisis through deceptive marketing.

The plan, which marks the company’s formal offer to settle the lawsuits, sets up trusts that would indirectly control the new entity to distribute money to states, local governments and tribal organizations for opioid abatement programs.

It also establishes trusts to pay out to private entities and individuals that have brought opioid-related lawsuits against Purdue, including hospitals, insurance carriers and legal guardians of children born with addiction-related issues.

In its proposal, the company said the Sackler family members would contribute nearly $4.3 billion over a decade, the company would kick in $500 million upfront and its sales would generate another $1 billion through the end of 2024.

The company says additional money would come from insurance claims.

Individual victims and their families would share $700 million to $750 million over time. With nearly 135,000 such claims, that would work out to average payments under $5,600. Personal injury payments are expected to range from $3,500 to $48,000.

The new entity will be overseen by a board comprising independent managers selected by states and local governments in consultation with Purdue and its unsecured creditors’ committee, according to its plan.

The Sacklers will not be part of that selection process.

Purdue said the new entity will not promote opioid products to healthcare providers.

The huge payment from the Sacklers is part of a larger restructuring plan filed by Purdue on Monday night that intends to get the Connecticut-based pharmaceutical giant (pictured above) out of bankruptcy

Purdue had filed for bankruptcy back in September 2019 in the face of more than 2,900 lawsuits accusing the company of fueling the national opioid crisis through deceptive marketing with its drug OxyContin

Most of Purdue’s plan is similar to what the company proposed a year and a half ago when it first sought bankruptcy protection – a move that halted lawsuits against both the company and Sackler family members.

The plan must receive approval from US Bankruptcy Judge Robert Drain in White Plains, New York.

Purdue initially had support from about half of the US states and other governmental entities for its proposed settlement.

Many other states have opposed Purdue’s plan, taking issue with the public trust arrangement and the size of the initial $3 billion contribution from the Sacklers, which they said should be larger.

‘The Sacklers became billionaires by causing a national tragedy. Now they’re trying to get away with it,’ Massachusetts Attorney General Maura Healey said in a statement.

‘We’re going to keep fighting for the accountability that families all across this country deserve.’

The true size of the family’s fortune is unclear.

An earlier court filing said family members received transfers of $12 billion to $13 billion from Purdue over the years, though a lawyer said much of that went to taxes or was reinvested in the company.

In letters to the US House Oversight Committee last week, the two branches of the family that own the company said the family members who were board members had net assets of far less – about $1.1 billion.

Complicated litigation continues to play out in courts across the country in efforts to hold the drug industry accountable, including in thousands of cases filed in federal court being overseen by one Cleveland-based judge. Purdue was removed from those cases and others when it filed for bankruptcy protection.

Trials in state and federal cases are scheduled to begin this year in California, New York, Ohio and West Virginia.

Separately, Purdue has pleaded guilty to federal criminal charges and settled civil complaints.

Purdue itself struck a deal with the Justice Department to pay $225 million toward a $2 billion criminal forfeiture.

The Justice Department agreed to forgo the rest if the company developed a reorganization plan that would establish a public benefit company or similar entity that would dedicate the remaining $1.775 billion to U.S. communities battling the opioid crisis.

The plan filed on Monday appears to comply with that.

In a separate federal deal announced at the same time, Sackler family members agreed to pay $225 million to the federal government but admitted no wrongdoing.

Purdue began selling OxyContin 25 years ago, encouraging doctors to drop long-held reservations about opioids and focus more on easing the pain of patients.

Court documents show company officials continued to push to maintain sales even as it became clear the drug was being abused.

More than 470,000 deaths in the US since 2000 have been linked to opioids, including both prescription drugs and illegal ones such as heroin and fentanyl.

The US topped 50,000 opioid-related overdose deaths for the first time in 2019 and several states last year reported a record pace of overdose deaths due to all drugs.

WHO ARE THE SACKLERS?

Purdue Pharma, which is run by some members of the wealthy Sackler family, has made tens of billions on opioid sales. Here is a breakdown of who the Sacklers are, including those who have and haven’t been involved in Purdue Pharma:

ARTHUR SACKLER

Arthur, a doctor and psychiatrist, founded a research laboratory in 1938, but Arthur’s real genius was in marketing and he leveraged it to sell a number of medications, including the anti-anxiety drug, Valium.

He and his younger brothers Mortimer and Raymond owned a small pharma company called Purdue Frederick that they purchased in 1952. That company produced betadine and earwax.

Arthur remained a relatively silent partner in the old Purdue and died in 1987 before it became the company we know it as today.

He never saw any of Purdue’s OxyContin profits.

He donated the funds to open a number of medical education programs, libraries and museums.

Arthur was inducted into the Medical Marketing Hall of Fame upon his death in 1987.

After his death in 1987, his brothers bought Arthur’s portion of the company.

One of his four children, daughter Elizabeth, has largely taken over his philanthropy work.

Arthur and his heirs have had no involvement in Purdue Pharma or with OxyContin.

MORTIMER SACKLER

Mortimer was an American physician and psychiatrist.

He and his brothers, the older Arthur and the younger Raymond published prolific medical research before buying a number of pharmaceutical companies, including, in 1952, Purdue Frederick.

After Arthur’s death Mortimer and Raymond bought out his descendants’ share of Purdue Frederick, and in 1991 they created the company that would become a pain management giant we now know, Purdue Pharma.

Mortimer became a lavish arts patron, known for equally extravagant donations and parties, beginning in the 1970s.

He died in 2010.

RAYMOND SACKLER

Raymond was a doctor like his older brothers, and the three were partners in all things until each of their deaths.

Together with Mortimer, Raymond found success with their opioid painkiller, OxyContin, which became the Purdue Pharma’s signature drug.

Raymond was milder and more private than his brother, Mortimer.

Raymond had two children, Richard and Jonathan, before his death last year.

ILENE SACKLER

Mortimer’s eldest daughter with his first wife.

She was listed as a director of Purdue’s sister company, UK-based Napp Pharamaceutical Holdings, as of December 2016.

She lives in an apartment in an iconic Upper West Side which she owns.

Its total value is estimated to be more than $122million.

KATHE SACKLER

Kathe is one of the directors of Napp, a UK-based company which also sold OxyContin.

She owns two suburban properties in Connecticut which are separated by another owned by someone else and she lives in an Upper East Side townhouse with her wife, Susan Shack Sackler.

The house was owned by both Raymond and Mortimer. Their children share it.

Kathe and Ilene had a brother, Robert, is deceased.

JONATHAN AND RICHARD SACKLER

Raymond’s two son by wife Beverly.

Jonathan formerly lived with his wife in Greenwich, Connecticut, in a property next to his mother’s.

Richard’s former family home is not far away in neighboring Stamford.

They have a cancer research center named after them at Yale and have both held positions at Purdue.

RICHARD SACKLER

Richard Sackler followed in his father’s footsteps, getting his medical degree at New York University School of Medicine.

He came to Purdue after medical school, leading the research and development that ultimately produced the extended release form of OxyContin that would elevate the family’s fortune to previously unfathomable.

He became president of Purdue in 1991, pioneering marketing campaigns that enticed droves of medical professionals to buy Purdue’s opioid.

Richard became co-chairman in 2003, by which point $1.6 billion in OxyContin had been sold.

His marketing schemes sparked suspicion, and in 2015, Richard was deposed before his company paid out a $24 million settlement.

The company appealed in 2017, but the case has not moved forward.

ELIZABETH SACKLER

Arthur’s daughter has publicly and persistently attempted to distance herself from branch of her family that has profited from OxyContin.

Elizabeth is a licensed psychiatrist and well-known philanthropist.

She is the founder of an eponymous Center for Feminist Art at the Brooklyn Museum in New York.

She has previously expressed disgrace for her uncles’ business.

Elizabeth has previously told DailyMail.com: ‘I, nor my siblings, nor my children have ever owned or benefited from Purdue Pharma or OxyContin or oxycodone.

‘It’s another branch of the family.’

BEVERLY AND THERESA SACKLER

Theresa, 69, owns a $45million Upper East Side apartment building but lives mostly in the UK on a 10-acre estate in the Berkshire countryside.

She is known in the UK as Dame Theresa Sackler, a title she was awarded for her sustained philanthropy and support of the arts.

Theresa is more visible than her sister-in-law.

Beverly, 94, is Raymond’s widow. She lives on a Greenwich, Connecticut waterfront estate which has an estimated land and property value of almost $50million. She also owns a 17-floor Fifth Avenue building in Manhattan.

When her husband was still alive, they donated the Raymond and Beverly Sackler Institute for Biological, Physical and Engineering Sciences at Yale. It now employs 50 people across 20 departments.

MORTIMER DAVID ALFONS SACKLER

Mortimer the only son of founding brother Mortimer, Mortimer II’s mother is Gertraud Wimmer, Mortimer’s second wife.

Mortimer David owns a luxury condo building in Boston and lives in New York City with his 42-year-old wife Jacqueline.

The couple are a regular fixture on the Manhattan social circuit.

DAVID AND JOSS SACKLER

David is intensely private but his wife, Joss, is not.

She runs the members-only women’s social club, LBV.

Among its events are group workouts at the model haven gym Dog Pound and talks such as ‘how to have the money talk with your kids.’