Federal judge approves opioid settlement in OxyContin case

A federal bankruptcy judge on Friday approved a $7.4 billion bankruptcy settlement for OxyContin maker Purdue Pharma that will end years of litigation over the company's role in the opioid epidemic.

Why it matters: The plan ends the Sackler family's control of Purdue Pharma and states' litigation against the company and the family, but does not shield Sackler family members from future lawsuits stemming from the opioid crisis.

• The formal sign-off will come next week in U.S. Bankruptcy Court for the Southern District of New York.
• It follows more than a year of negotiations after the Supreme Court rejected a settlement that would have protected the Sackler family from future opioid-related lawsuits.

"Today cements the end of a long chapter, and brings us very near to the end of the book for Purdue," said Purdue board chairman Steve Miller.

• The company's assets will be transferred to a new company called Knoa Pharma, which will be oriented around addiction treatments and addressing the opioid crisis.

Catch up quick: Purdue Pharma, which the Sackler family owned privately, became a focal point of the opioid crisis because of the way it aggressively marketed OxyContin despite rampant abuse of the painkiller.

• The company filed for bankruptcy in 2019, and in 2021 a court approved a bankruptcy plan that would have protected the Sackler family from future opioid-related lawsuits.
• After a U.S. district court overturned that order, state attorneys general negotiated a new $6 billion settlement. That deal was overturned by the Supreme Court.

The bankruptcy proceedings drew more than $40 trillion in creditor claims against the company, per Bloomberg.

• Under the revised deal, the Sackler family will contribute about $6.5 billion to be distributed over 15 years, with the majority going to states in the first three years.
• Purdue lawyer Marshall Huebner told the court he wished he could "conjure up $40 trillion or $100 trillion to compensate those who have suffered unfathomable loss," AP reported.
• Absent that, he said: "The plan is entirely lawful, does the greatest good for the greatest number in the shortest available timeframe."