Seven months after the Supreme Court struck down a deal that would have resolved thousands of opioid cases against Purdue Pharma, the company’s owners, members of the Sackler family, have increased their cash offer to settle the litigation — but with a novel catch.
Under the framework for a new deal, the Sacklers would not receive immunity from future opioid lawsuits, a condition that they had long insisted upon but that the court ruled was impermissible.
Instead, they would pay up to $6.5 billion — $500 million more than the previous agreement — but with a new condition: Claimants, including states, municipalities and individuals, would have to set aside as much as $800 million in an account akin to a legal-defense fund for the billionaires to fight such cases, according to people familiar with the negotiations.
Some details of the framework — but not the legal-defense fund — were announced on Thursday by the New York attorney general, Letitia James. She said the overall settlement totaled $7.4 billion, which would include $897 million from Purdue.
New York could receive as much as $250 million, she said.
“The Sackler family relentlessly pursued profit at the expense of vulnerable patients and played a critical role in starting and fueling the opioid epidemic,” Ms. James said.
When the deal is finalized, she added, the Sacklers will “no longer have control of Purdue and will never be allowed to sell opioids in the United States again.”
Echoing other settlements in nationwide opioid litigation, these payments are intended to fund efforts to prevent and treat addiction in hard-hit communities across the country.
How many claimants will agree to the new terms is unclear. Ms. James noted that 14 other states involved in talks were on board, including Florida, Connecticut, Massachusetts, Tennessee, California and West Virginia.
But now the deal has to be sold to all the claimants — not only the remaining states and thousands of local governments, but to some 140,000 personal injury victims and hundreds of Native American tribes.
The reserve legal fund for the Sacklers may well be depleted: Already, new lawsuits against the Sacklers have been threatened by a handful of states, counties, cities and individuals.
A spokesman for Washington State, which has successfully pursued other pharmaceutical companies rather than sign onto national deals, said the state was weighing its options.
The states, which are responsible for the bulk of those payments, would have to keep a minimum of $200 million in the account, with total contributions up to $800 million. After five years, unused funds would start reverting back to the states.
Final calculations for how much of the total would be deducted to pay lawyers, consultants and administration fees are still under discussion.
The Sacklers would pay nearly $3 billion in the first three years, with remaining payments over an additional 12 years.
If the plan is approved by claimants, an arm of the Justice Department that oversees the bankruptcy system called the U.S. Trustee and a federal bankruptcy judge, Purdue would emerge by the end of this year from the bankruptcy that has shielded it since 2019. It would immediately pay the $897 million of its own cash to the parties who signed on to the deal.
That process is expected to conclude around the end of the year.
At that point, 15 years of Sackler payments would also commence. And most of the lawsuits that began more than a decade ago — eventually morphing into an ungainly combined litigation brought by cities, states, tribes, hospitals and individual victims, and argued by countless teams of lawyers — would, presumably, end.
In the plan rejected by the Supreme Court, the Sacklers, long portrayed across films, television and news articles as the public face of predatory opioid manufacturers, demanded a guarantee for putting up $6 billion: that all current and future lawsuits against them related to Purdue and opioids would be barred.
Purdue itself gets that protection as a standard benefit conferred when a company comes out of bankruptcy. But because the Sacklers did not personally file for bankruptcy, the Supreme Court ruled in June that granting them permanent civil immunity was outside the purview of bankruptcy law.
The intention of the legal reserve fund, in which, essentially, claimants will be paying to defend the Sacklers against other claimants, is to satisfy the court’s ruling.
“If states are expected to contribute funds to the Sacklers’ legal defense, the public will want to hear more about the impact of that money going to the Sacklers and their lawyers rather than to opioid abatement,” said Melissa B. Jacoby, a bankruptcy expert at the University of North Carolina School of Law.