Appeals court approves $6B Purdue Pharma settlement granting opioid liability shield

May 31 (UPI) -- Purdue Pharma won a major appeal in its bankruptcy settlement filing that will shield the owners of the drug company from any civil liabilities for their role in helping fuel the opioid epidemic.

The ruling by the U.S. Court of Appeals for the 2nd Circuit in New York protects the Sackler family from all current and future legal claims by private citizens in exchange for paying $6 billion to the government to help address the continuing crisis.

California Attorney General Rob Bonta and eight other attorneys general agreed to the deal, allowing the settlement to move forward and the company to complete its restructuring under Chapter 11 after nearly four years in court.

When Purdue Pharma emerges from bankruptcy, the company will be rebranded as Knoa Pharma, which will continue to produce drugs, including OxyContin, while also focusing on long-term public health priorities like addiction treatment, the company said in a statement.

Communities in all 50 states will divide the $6 billion payout to fund opioid addiction treatment and prevention.

Judge Robert Drain must now sign off on the settlement agreement to make it final.

Bonta issued a statement following the ruling, saying his state would get nearly $500 million to help those caught in the web of addiction and noting that under the current agreement, the Sacklers would not be protected from state law enforcement claims in the event of criminal prosecutions, which Bonta said was not consistent with California law.

"Today's court decision allows nearly $500 million of Purdue Pharma's ill-gotten gains to be brought back to California, to heal our communities and provide real relief to countless suffering families," he said. "However, disappointingly, the decision does not require Purdue to lift the Sacklers' liability shield from private claims. The victims of this crisis deserve justice and they should have the option to take Purdue to court for it."

In a statement, Purdue hailed the settlement plan that has gained support from local governments, addiction counselors, schools, and hospitals after Purdue agreed to the reorganization plan in March to resolve lawsuits in nearly every state.

"The Second Circuit's ruling is a victory for Purdue's creditors, including all 50 states, local governments, and victims who overwhelmingly support the Plan of Reorganization. Our focus going forward is to emerge from bankruptcy and deliver billions of dollars of value for victim compensation, opioid crisis abatement, and overdose rescue medicines," said Steve Miller, chairman of Purdue's Board of Directors since 2018.

"We have nearly unanimous creditor support earned through productive negotiations and a collective focus on the public good. Our creditors understand the plan is the best option to provide assistance to those who need it most, the most fair and expeditious way to resolve the litigation, and the only way to deliver billions of dollars in value specifically to fund opioid crisis abatement efforts."

Purdue introduced OxyContin in 1995 and the prescription painkiller has been at the center of opioid addiction in the United States ever since.