Settlement Approved

A federal bankruptcy judge said he would approve a settlement requiring Purdue Pharma to pay at least $7.4B to resolve lawsuits over the company's role in the opioid crisis.

Context

Purdue Pharma filed for bankruptcy in 2019 while facing more than 2,600 lawsuits from states, local governments, hospitals, and individuals. The lawsuits accused the company of contributing to the opioid epidemic through its marketing and sale of OxyContin and other addictive pain medications. Internal Purdue documents showed the company was aware their products were addictive, but marketed them as if they weren't. The bankruptcy case has lasted six years, making it one of the longest and most expensive corporate bankruptcies related to the opioid crisis.

Judge Approves Plan

A US bankruptcy judge said on Friday that he would approve Purdue's restructuring plan, which includes a settlement of at least $7.4B. Under the plan, Purdue will be wound down, and most of its operating assets will be transferred to a newly formed entity, Knoa Pharma. 

The settlement resolves claims from state and local governments, individuals who became addicted to OxyContin, and others harmed by the opioid crisis. The judge is expected to issue a full written decision on Tuesday.

Settlement Details

Under the new plan, the Sacklers – Purdue's family owners – agreed to contribute between $6.5B and $7B over 15 years, while Purdue itself will contribute roughly $900M in cash. Most of the settlement funds will go to state and local governments for opioid treatment programs and addiction services.

More than 99% of voting creditors that filed claims against Purdue supported the settlement plan, though creditors can opt out of waiving their claims against the Sacklers and pursue their own lawsuits instead. Members of the Sackler family expressed regret for their company's role in the crisis but denied any wrongdoing.

Company's Future

The Supreme Court had rejected an earlier version of the settlement in 2024, forcing Purdue to scale back legal protections for the Sackler family, who had previously agreed to pay up to $6B.

Purdue will be dissolved and converted into a nonprofit company (Knoa Pharma) to focus on developing and distributing medications that reverse opioid overdoses and treat addiction. Purdue also agreed to create a public library of internal company documents related to its development and marketing of OxyContin, including emails from Sackler family members.